Elder Law and Special Needs | Begin the Begin

Changes to Maryland Laws Impacting Estate Planning and Elder Law

September 15, 2016

courthouse On October 1st (unless otherwise noted) a number of new laws will take effect in Maryland that may have an impact on you or those with whom you work. Below is a summary of a few key pieces of legislation of which you should be aware.

HB 507 – Maryland Fiduciary Access to Digital Assets Act: This Act authorizes a person with digital assets to direct the disclosure of information relating to those assets in certain circumstances. A previous Article provides the details.

HB 541 – Upon divorce or annulment, certain provisions of a revocable trust that relate to the spouse will be revoked. This new statute is comparable to what has been established for wills under Section 4-105(4) of the Estates and Trust Article of the Annotated Code of Maryland.

HB 887 – Section 14.5-303 of the Estates and Trusts Article of the Annotated Code of Maryland is amended to add a new subsection (7) allowing for virtual representation of a minor, incapacitated, unborn or unknown individual, by a grandparent or more remote ancestor, provided there is no conflict of interest. In addition, Section 14.5-304 is added to the Estates and Trusts Article permitting anyone to represent a minor, incapacitated, unborn or unknown individual, provided there is a ‘substantially identical interest’ and no conflict of interest exists. The purpose is to avoid having to appoint a guardian ad litem in a court proceeding involving trusts.

HB 888 – The new statute will allow trustees and beneficiaries to enter into a binding settlement agreement relating to the administration of a trust without having to involve the court. The actions that can be agreed upon within a non-judicial settlement agreement by the trustees and beneficiaries must be those that a court could have approved. For example, a non-judicial settlement agreement could address interpretation or construction of terms of the trust, approval of an accounting or trustee succession.

HB 431 – Requires the establishment of the Maryland ABLE Program to allow for savings accounts similar to 529 Plan accounts to be created for a person under a disability. This was effective as of July 1, 2016. Two previous articles discussed the ABLE Program.

HB 718 – Asset Recovery for Exploited Seniors Act: Allows for a civil action to be brought for damages against a person who knowingly and willfully takes from another, who is at least 68 years old, his or her assets. A criminal conviction is not necessary before bringing the civil action.

HB 1385 – If an individual does not have a health care directive, ‘any authentic expression’ made by such person, who is deemed to be competent, regarding his or her wishes and desires about their health care ‘shall be considered.’

#elderlaw #estateplanning #healthcare #Marylandlaw #incapacityplanning #specialneeds #digitalassets @bgnthebgn

National Grandparents Day

September 8, 2016

generations-hands Since 1978 the United States has celebrated grandparents on National Grandparents Day. The day falls on the first Sunday after Labor Day. This year, National Grandparents Day will be celebrated on September 11th, a day when many will pause to reflect on the terrible and tragic events that occurred 15 years ago in New York, Pennsylvania and outside Washington, D.C. A day when grandparents may have been taken from their families or when grandparents became the solid foundation for those who lost parents. Thus, this year in particular National Grandparents Day allows us to remember the impact grandparents may have had in our lives, but also reminds us the time marches on, and that the memories and stories that our elders have will be lost unless captured by the next generation. Those memories and stories may help plan or shape our journey. So in recognizing grandparents on National Grandparents Day, it is a chance to bring the generations together to build a legacy. What is it that you want your legacy to include? #GrandparentsDay #Buildalegacy #estateplanning #September11th #NeverForget @bgnthebgn

Facing a Tough Diagnosis – Four Lessons of Gene Wilder

September 1, 2016

flowers-2 With Gene Wilder’s death, the family released a statement that revealed to the world that Gene Wilder had died due to complications from Alzheimer’s disease. The family also stated that Wilder had not wanted to reveal his diagnosis earlier and risk “one less smile in the world.” In releasing the statement as they did, the family has provided us with a few valuable lessons about planning.

What should ‘the public’ know? From the statement, it seems clear that in receiving an irreversible diagnosis, Wilder’s family talked about how to handle the news both publicly and privately. Families that have received terrible news of a terminal or debilitating illness are aware of the difficulties surrounding such information. Questions about who should be notified are common as well as discussion regarding how much information should be disclosed. In addition, the ‘public’ for each person is different. This means for some only immediate family members while friends, neighbors and colleagues have a less detailed picture. Immediate family may include certain close friends and may very specifically exclude others. What about professional advisors? How much information should they have? Each of us has various circles and those circles have to be evaluated to determine who should know and what should be known, which is important to clarify to avoid confusion in the dissemination of information.
What is the care plan? Certainly from a medical perspective there is a prognosis and then treatment plans that are outlined with various degrees of outcomes and complications. But what about the plan to care for minor children, if necessary? Or a caregiver spouse or partner? Who are or will be the caregivers? Has respite care been discussed for those caregivers? Are there modifications to a residence that are needed? What about access to financial information? Should such access be limited or restricted? Has there been discussion about involving a care manager? These are just a few of the questions to consider to determining the plan of action.
Your final moments. Are friends and family present? Is music played? Is a spiritual leader, such as a priest, rabbi or pastor present? Will the final moments be at home, wherever that may be at the time? The final moments are not only for the person dying, but the family and friends who are part of that passing. Discussions such as these are key in determining end of life care.
How to be remembered? An earlier article outlined six questions to ask surrounding the details of how you want to be remembered. Providing some information about wishes and desires regarding a funeral or service is a relief for family members because decision-making at this difficult is clouded by emotions and shouldn’t be overshadowed with the thought of “Is this really what was wanted?”

Thus, as many of us remember Gene Wilder and the various roles he played in the movies, we can also pause to reflect on how we would face such tough diagnosis with our family, and when the time comes, be prepared to have the important conversations. #GeneWilder #incapacityplanning #estateplanning #advancemedicaldirective #livingwill @bgnthebgn

Elder Law Update – Changes to Laws Impacting Virginia’s Seniors and the Disabled

July 21, 2016

On July 1st (unless otherwise noted) a number of new laws took effect in Virginia that may have an impact on you. Below is a summary of a few key pieces of legislation of which you should be aware.

Section 51.5-44.1 – It is a now a Class 4 misdemeanor to misrepresent your dog as a service dog to gain access to public areas with the animal.

SB 553 – Requires the Board of Health to promulgate regulations relating to audio and visual monitoring of residents in a nursing home by July 1, 2017. The regulations are to address privacy, notice, disclosure, liability, responsibility for equipment, costs and security, among other items.

Section 63.2-1806 – An assisted living facility is not required to provide or allow hospice care at the facility so long as this is disclosed to the resident prior to admission and is otherwise allowed by Federal law.

Section 64.2-2019 – A guardian of an adult incapacitated person is not permitted to ‘unreasonably restrict’ an incapacitated person’s ability to communicate with, visit, or interact with others with whom they have had an ‘established relationship’.

Sections 37.2-817, 37.2-837 and 37.2-838 – A person being discharged from involuntary admission in general or to mandatory outpatient treatment who does not have an advance medical directive must now be provided with a written explanation of the process for executing an advance medical directive and a form of an advance medical directive.

Sections 64.2-2011 and 64.2-2014 – The Department of Medical Assistance Services must now be notified of guardianship appointments, modifications and terminations.

Sections 64.2-2001 and 64.2-2009 – In a petition for a guardianship and/or conservatorship of an incapacitated individual who has not reached age 18, the statute clarifies that the court may enter an order for such guardianship/conservatorship appointing a guardian or conservator prior to age 18, but the court order should state whether the order is effective immediately or when the person turns 18.

Section 63.2-1605 – When investigating financial exploitation of an individual age 6o or older, if the department of social services or adult protective services believes there is ongoing exploitation totaling more than $50,000, then the police are required to be told so an investigation can ensue.

Section 8.01-220.2 – The principal residence held by tenants by the entireties (i.e., ownership between spouses) cannot be used to pay for one spouse’s debt incurred for emergency medical care unless the property is refinanced or transferred to new owners.

Section 23-38.81 – ABLE savings accounts are excluded as countable resources for means-tested public benefits. (Effective October 1, 2016.)

#elderlaw #guardianship #Virginialaw #incapacityplanning #specialneeds @bgnthebgn

Maryland Enacts Fiduciary Access to Digital Assets Act

July 7, 2016

On October 1, 2016, Maryland’s Fiduciary Access to Digital Assets Act will come into effect, thereby giving a fiduciary (i.e., personal representative, guardian, agent or trustee) or a designated recipient (i.e., a person named using an online tool) the ability to request access to a person’s digital assets in certain circumstances. Digital Assets is defined as “an electronic record in which an individual has a right or interest.” The Act allows an individual to direct whether their digital content is disclosed, to whom and to what extent. This authority can be granted through an online tool provided by the custodian (e.g., Google has Inactive Account Manager or Facebook has Legacy Contact) or through an individual’s will, trust or power of attorney. Access may still be subject to the terms of service agreement and gives the custodian of such information (e.g., Google) some discretion as to the breadth of the disclosure and the ability to charge an administrative fee. If a request is made, the Act requires that a custodian comply no later than 60 days from the receipt of the request, including receipt of all the ancillary documentation associated with the request as detailed under the statute.

So, next steps for you? When creating accounts be sure to look for whether the website requires you to complete an online tool. You may want to opt out of using the online tool so that you can better control your wishes through your estate planning documents. Furthermore, if you reside in Maryland, you should review and update your estate planning documents to ensure that access to digital assets has been addressed in accordance with your wishes. Finally, you should create and store in a secure location a list of all your digital assets, including your credentials, so that your nominated fiduciaries know what assets to access during any period of incapacity and upon death. #estateplanning #estateadministration #digitalassets #MFADAA @bgnthebgn

Revised Elective Share Statute in Virginia

June 23, 2016

Beginning with the estates of decedents dying on or after January 1, 2017, the elective share statute to be applied in Virginia will be significantly changed. Under current law, a surviving spouse has the right to claim one-third (1/3) of a decedent’s estate if the decedent left surviving children or descendants, or one-half (1/2) of the decedent’s estate if the decedent had no surviving children or descendants. These calculations were based solely on the assets (or augmented estate) of the decedent.

Under the new law, a surviving spouse will have the right to claim a percentage of one-half (1/2) of the value of the marital property included in the augmented estate. What does this mean? First, the marital property consists of the following: (a) a decedent’s net probate estate, (b) a decedent’s non-probate transfers to others, (c) a decedent’s non-probate transfers to the surviving spouse, and (d) a surviving spouse’s property and non-probate transfers to others. (Yes, you read correctly. A surviving spouse’s assets are now included in the calculation.)

Of the total value of the marital property portion of the augmented estate, the surviving spouse may be able to claim up to fifty percent (50%). The determination of whether the surviving spouse can claim the full 50% depends on the length of marriage. Thus, if a couple is married for 5 years, then the surviving spouse could claim 30% of the 50% elective share available or 15% of the augmented estate.

Furthermore, under current law, certain statutory allowances are available to a surviving spouse who claims the elective share. Those statutory allowances include the family allowance and exempt property allowance, but specifically exclude the homestead allowance. Under the new law, a surviving spouse could claim all three allowances and still make a claim for the elective share.

Finally, current law has no explicit process by which an incapacitated surviving spouse can make his or her claim. Under the new law, an incapacitated surviving spouse, by way of his or her conservator or agent under a durable power of attorney, will have the ability to claim an elective share. In addition, any elective share amount that is awarded to an incapacitated surviving spouse must be set aside in a testamentary trust and administered for the surviving spouse’s needs. At the surviving spouse’s death, provided he or she has not regained capacity and terminated the trust, any remaining assets in the testamentary trust will be distributed in accordance with any residuary clause of the predeceased spouse’s will or to the predeceased spouse’s heirs by intestacy. Effectively, in that situation, the elective share will not benefit the heirs of the surviving spouse.

So, how does this change impact you? If you are considering getting married and plan on entering into a pre-nuptial agreement, or are already married and looking to enter into a post-marital agreement, the right to the elective share can be waived. But, you should first understand the right you are waiving. Second, if you are the conservator or agent under a power of attorney of an incapacitated individual whose spouse died leaving him or her very little, then the elective share may be a viable option depending on the length of the marriage.

Third, in subsequent marriages, the families (i.e., children) of the first marriage are generally concerned with the distribution of their parent’s assets, particularly if the new spouse is the surviving spouse. Now the length of the marriage is factored into the equation and the amount available to a surviving spouse is as low as 3% for less than 1 year of marriage (or 1.5% of the augmented estate). This is a huge difference from the one-third (1/3) share available under current law and may alleviate concerns about financial exploitation.

Thus, this change appears to be in response to shifting attitudes towards marriage, that is, marriage is an economic partnership and is less about avoiding spousal impoverishment. And the changes to the elective share statute help bring Virginia up-to-date with the current dynamics of marital relationships. However, as with any new law, only time will tell what tweaks may need to be made as the law is implemented and to determine whether there are any unintended consequences as a result of the changes. #estateplanning #electiveshare #incapacityplanning #estateadministration @bgnthebgn

How Divorce Can Impact Your Estate Plan – Special Needs

June 9, 2016

As we continue to explore the impact of divorce on an estate plan, another issue that arises is the care and support of children, particularly children with disabilities. Presumably, the property settlement agreement will handle ongoing financial support and initial custody, but what happens during the incapacity or upon the death of a parent? An earlier article discussed the benefits of planning for any life insurance requirements under the property settlement agreement. But in addition to a general plan for life insurance, it may be necessary to designate the life insurance to a special or supplemental needs trust to allow the disabled child to qualify for public benefits. The special or supplemental needs trust can be created within one’s personal estate plan (e.g., a subtrust under a Last Will and Testament or revocable living trust) or as a standalone trust created prior to incapacity or death. Setting the proceeds of the life insurance aside in such a trust will help protect those proceeds for the disabled child’s benefit, protect those proceeds from the child’s potential creditors and allow for flexibility in public benefits planning.

And what if the child is receiving public benefits like Social Security Income (SSI), is on Medicaid or receives a Medicaid Waiver and child support is awarded? In that situation it is prudent to consider the creation of a self-settled or (d)(4)(A) special or supplemental needs trust to receive the child support payments. Such self-settled trusts have very particular required provisions in order for the disabled child to maintain eligibility for public benefits, but will avoid reduction or elimination of the available benefits if properly structured and implemented. This is an issue that should be addressed during negotiations and to include in the property settlement agreement, and therefore, not to figure out after the divorce is final.

As for the guardianship/custody of the disabled child, how will that be handled? If the child is a minor, then the parents will hopefully reach an agreement as to co-parenting and incorporate that agreement in the property settlement agreement (or as determined by the court if agreement cannot be reached). For an adult child who is disabled, a guardianship proceeding to establish that the child is disabled and to appoint a guardian must be commenced. The resulting court order will address the parents’ authority to act jointly or separately, after making reasonable efforts to contact each other, regarding the child’s medical care and housing, including (a) emergency medical treatment, (b) non-emergency hospitalizations, (e) personal care appointments, (f) immunizations, (g) routine dental and vision appointments, (h) admission to a facility, and (i) developmental assessments, among other things. Furthermore, the court order will address what happens if a parent cannot continue acting as guardian due to incapacity or death. Ultimately, guardianship of a child with disabilities ends up being less about which parent has the child on a particular holiday (also important) and more about the type and quality of care the child will need and how that care will be provided.

So consider the following: (1) If you are divorcing and have a disabled child, how is that child being provided for upon the incapacity or death of a parent? (2) Is eligibility for public benefits preserved through a properly structured special or supplemental needs trusts? (3) Who has authority to make healthcare decisions for the child and in what manner? #divorce #specialneeds #estateplanning #specialneedstrust

How Divorce Can Impact Your Estate Plan – Beneficiary Designations

May 26, 2016

The last article regarding the impact of divorce on one’s estate plan talked about property settlement agreements and the obligations that must be incorporated into the estate plan. This next article will discuss how most individuals going through a divorce have qualified retirement accounts, life insurance policies and cash, savings or brokerage accounts that may have a beneficiary designation or payable on death or transfer on death designation that needs to be updated. Very often the named beneficiary is the former spouse. What happens if the beneficiary designation is not updated and a person dies having named his or her former spouse on these accounts?

Under Virginia law, upon the entry of a decree of divorce, “any revocable beneficiary designation. . .that provides for the payment of any death benefit to the other party is revoked. A death benefit prevented from passing to a former spouse by this section shall be as if the former spouse had predeceased the decedent.” Va. Code §20-111.1(A). The statute includes payments from life insurance, annuities, retirement accounts, compensation agreements or other contracts where assets are paid at death. This law is favorable for those that forget to update their beneficiary designations, however, there are exceptions. The law does not apply (a) if the property settlement agreement and/or divorce decree provides for the former spouse to be named; or (b) to any trust or any death benefit payable to a trust. Va. Code §20-111.1(C). Furthermore, the Virginia law may be preempted by Federal law.

If the Virginia law is preempted by a Federal law, the Virginia law states that in the event the death benefit is paid to a former spouse for no consideration and the former spouse was not otherwise entitled to such payment, the former spouse will be “personally liable for the amount of the payment to the person who would have been entitled to it were this section not preempted.” Va. Code §20-111.1(D). Thus, if a person remarries, but fails to name their new spouse as a beneficiary on their Federal retirement account and continues to name their former spouse, arguably, the new spouse could seek reimbursement from the former spouse.

However, in the case of Hillman vs. Maretta, a widow sued the decedent’s former spouse for the amount the former spouse received under the decedent’s federal employees’ group life insurance (“FEGLI”). The parties acknowledged that Va. Code §20-111.1(A) was preempted by Federal law. However, the widow argued that Va. Code §20-111.1(D) regarding personal liability was not preempted. After careful analysis and consideration, the Circuit Court of Fairfax County held in favor of the widow. On appeal to the Virginia Supreme Court, the Court ruled that the trial court erred and that Federal law trumps state law. Ultimately, the U.S. Supreme Court agreed with the Virginia Supreme Court.

Thus, in 2012, Virginia’s statute was modified to require every divorce decree to include a notice warning the parties that beneficiary designations may not be automatically revoked by operation of law as a result of the divorce. Therefore, the parties are responsible for updating their beneficiary designations to avoid any unintended consequences. As a result of the Hillman case, updating beneficiary designations, particularly beneficiary designations that are governed by Federal law, is critical.

So ask yourself – when was the last time you updated your beneficiary designations? #divorce #estateplanning #beneficiarydesignation

How Divorce Can Impact Your Estate Plan – Property Settlement Agreements

May 19, 2016

With the increased divorce rate in today’s society, many individuals experiencing a divorce focus on the issues directly involved in the divorce. For example, they may focus on spousal support, child support and the division of assets, but those same individuals forget that after a divorce or even during, there are additional considerations involving their estate plan. This article is the beginning of several articles that will highlight a number of those additional considerations. We begin with a discussion about property settlement agreements and the requirement to maintain life insurance.

As a result of most divorces, a property or marital settlement agreement (“PSA”) is executed in an effort to dictate the obligations of each party to the other party. In most cases the focus is on finalizing the PSA and not the effect of the PSA on other aspects of an individual’s life, such as his or her estate plan. However, during this phase of the divorce, it may be helpful to consult with an estate planning attorney to ensure that the PSA permits some level of flexibility from an estate planning perspective.

For example, if there are children from the marriage, very often the PSA will contain a provision requiring each party to maintain life insurance with a certain death benefit. Thus, one spouse may be required to maintain five hundred thousand dollars ($500,000.00) of life insurance and name the other spouse as the beneficiary, name the children as beneficiaries or name the other spouse as trustee for the benefit of the children. The purpose of such a provision is to provide a substitution for child support in the event of the death of either parent. Very often the requirement to maintain the life insurance ceases when the obligation to pay child support ends.

But what happens if a death occurs and the life insurance proceeds are paid out to the former spouse directly or for the benefit of minor children? In the first instance, the former spouse can receive and use the monies without much oversight. Hopefully, the PSA specifies the permitted uses, but the PSA may be silent and/or the former spouse may disregard the PSA. If the minor children are named as direct beneficiaries, then a court proceeding requesting guardianship of the child’s estate may be required and the court’s oversight continues until the child reaches age 18, at which point the child has the ability to receive unfettered access to the funds. If the PSA simply states that the former spouse is to be named trustee for the benefit of the children, what are the provisions of the trust agreement? Does the so-called trust remain discretionary and then become available when the child reaches age 18?

The complexity surrounding the beneficiary designation and possible involvement of the court can be resolved if the PSA permits the parties to name a revocable living trust that would include provisions for the benefit of the children. Therefore, the beneficiary designation is simpler since only the revocable living trust is named. Moreover, a properly drafted revocable living trust agreement would contain provisions specifically detailing the trustee, dispositive provisions for the funds and handling any ‘what ifs.’ For example, what if the named trustee (i.e., former spouse) predeceases or what if a child predeceases, who will manage the funds and what happens to the funds in those circumstances?

In the case where complex estate planning exists, such as irrevocable life insurance trusts, the need to review the estate planning is important to prevent negative tax consequences and to ensure that the proper beneficiaries ultimately receive the assets. Ideally, the initial drafting of such complex estate planning will take into account the possibility of a future divorce. For example, the trust agreements can address what happens in the event of divorce with respect to a spouse continuing as a beneficiary and/or trustee. The PSA would then detail how the assets connected to the complex estate planning are handled or distributed, and by revisiting the estate plan post-divorce, any necessary adjustments can be made.

Therefore, for those who have experienced a divorce or are in the midst of a divorce, have you revisited your estate plan recently? What obligations to maintain life insurance do you have? Does the PSA have certain requirements for the creation of a trust, and if so, what are those requirements? It is better to begin to review all these issues sooner before an event, such as incapacity or death, makes it impossible to resolve later. #estateplanning #divorce #lifeinsurance #revocabletrust

A Lesson from Sumner Redstone’s Competency Battle

May 12, 2016

For a variety of reasons, many have been following the drama filled court battle involving Sumner Redstone’s capacity that was dismissed earlier this week. Unfortunately, a battle over control of an individual and his or her money is not an uncommon occurrence. Typically, the higher the stakes the more likely a challenge will be lodged if a so-called beneficiary is cut out, which appears to be part of the rationale behind the Redstone case. For the individual who has been cut out, there may be nothing to lose by objecting. On the other hand, for the individual creating the Last Will and Testament or revocable living trust, there may be a desire to avoid a major legal battle between those beneficiaries who are to receive distributions after he or she is gone. If that is the case, then one way to deter such a battle is to have a ‘no contest’ or ‘in terrorem’ clause.

A no contest clause simply states that if a beneficiary objects to the provisions of the Last Will and Testament or revocable living trust, then they run the risk of completely losing or diminishing their share of any distribution. It may also mean that any of their descendants may lose or diminish their share depending on how the provision is drafted. The goal is to dissuade beneficiaries from objecting and possibly overturning the intent behind certain provisions of the Last Will and Testament or revocable living trust.

The use of no contest clauses depends on whether the jurisdiction in which one resides recognizes such provisions as valid. For example, not all jurisdictions recognize such clauses within revocable living trusts. Some jurisdictions place emphasis on a person’s final wishes as evidenced by the execution of a Last Will and Testament or revocable living trust and it is difficult to overturn that intent. Other jurisdictions void such clauses if there is good faith, probable cause or reasonable justification for bringing a suit, which may lessen the deterrent factor in using a no contest clause. However, these defenses also recognize that at times there are in fact valid reasons for objecting, such as undue influence, lack of capacity, or the like. In all three neighboring jurisdictions (Virginia, Maryland and the District of Columbia), each recognizes no contest clauses in some fashion.

Thus, it may be that in a case like Redstone’s, a no contest clause would have prevented court action. But if there is a likelihood of litigation, the use of such clauses should be carefully considered. #sumnerredstone #incapacity #competency #nocontestclause #estateplanning