Wednesday, May 20, 2015

Massachusetts Case Demonstrates Significance of Contracts in Senior Living Options

This week I attended the 16th Annual Meeting of the Massachusetts Life Care Residents Association (MLCRA) near Boston.  Having last met with the group in 2011, I was impressed with the residents' on-going commitment to staying abreast of legal and practical developments affecting life care and continuing care (CCRC) models for senior living.  Their organization has some 800 individual members, representing a majority of the communities in the state. 

MILCRA Annual Meeting 2015In 2012, MLCRA was successful in advocating for passage of amendments that substituted "shall" for "may" in the laws governing key disclosures to be made to prospective and current residents. 

My preparation for the meeting gave me the opportunity to read one of those troubling "unpublished" -- but still significant -- opinions that shed light on attempts to make consumer protections stick.  Here the "contract" trumped the statute. 

In a February 2014 decision in Krens, v. 1611 Cold Spring Road Operating Company, a son who sought refund of his deceased mother's $282,579 partially "refundable" Entrance Fee was denied relief by a Massachusetts appellate court, despite the fact that Massachusetts law expressly mandated that a continuing care contract "shall provide" for a refund to be paid "when the resident leaves the facility or dies." The reasoning? The actual contract provided merely that the refund could be paid "within 30 days of actual occupancy of the vacated unit by a new resident." More than three years had elapsed since the mother's passing, apparently without the unit being "resold" or rented, and therefore the CCRC operating company took the position that no refund obligation had been triggered.

Continue reading

May 20, 2015 in Consumer Information, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Property Management, Retirement, State Cases, State Statutes/Regulations | Permalink | Comments (1) | TrackBack (0)

Monday, May 18, 2015

Drops in Occupancy Mark Challenges to Financial Health for Senior Living Industries

Publically-traded Brookdale Senior Living, founded in 1978, has grown to become the largest owner and operator of "senior living" communities in the U.S., including for-profit continuing care retirement communities (CCRCs). Thus, it is good to keep an eye on the finances of Brookdale for those of us interested in the long-term financial health of CCRCs and other senior housing options.

Steve Monroe at Irving Levin Associates notes that Brookdale "was no different than the rest of the market, posting sharp drops in first quarter occupancy" for 2015:

"The legacy Emeritus [a component of Brookdale, following a 2014 merger] properties posted a 110 basis point decline from the fourth quarter of 2014, and a whopping 200 basis point decline from a year ago. The legacy Brookdale properties dropped 80 basis points sequentially and 110 basis points from a year ago. This was not good news, but not unexpected. Oddly enough, the legacy Brookdale properties had a 250 basis point increase in community operating margin to 35.2% despite the occupancy declines. The Emeritus properties had a 90 basis point sequential drop in margin, which makes more sense."

How do you achieve a significant increase in "operating margin" despite "occupancy declines?" A good question to ponder.  Steve Monroe continues: "The reasons for the legacy Brookdale improvement were a combination of cost controls and more pricing flexibility. Move-ins have been increasing, which is great, but 'cost controls' always make me nervous, especially with the current acuity creep. Stay tuned."

The reference to "acuity creep" is to the increase in average age and frailty of new residents, compared with past years (especially before the financial crisis of 2008-10). This trend impacts CCRCs in several ways, both in terms of market appeal to healthier potential residents, and operating costs tied to an earlier need for higher levels of care.  An additional question may be whether low interest rates have supported a bubble in certain segments of senior housing despite the softer occupancy rates, and whether an eventual return to higher capitalization rates will result in lower values and additional consequences.

Along that same line, the Philadelphia Inquirer published a recent article in their "retirement" news edition, noting "Continuing-Care Retirement Community Choice Requires Diligence," by Harold Brubaker, with tips on what to ask if you are a consumer considering a CCRC option.

May 18, 2015 in Consumer Information, Current Affairs, Health Care/Long Term Care, Housing, Property Management, Retirement, Statistics | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 13, 2015

Are Seniors' Children Appropriate Sources of Reverse Mortgages?

One option for seniors needing more income late in life is using the equity in their homes, and "reverse mortgages" may make it possible for the older homeowner to stay in the home longer.  The Washington Post recently explored the option of having family members serve as the source of reverse mortgage funding.  When the Kids Provide a Reverse Mortgage for Mom and Dad outlines potential pros and cons of family-based financing, starting with the mechanics of the loan:

Here’s a simplified example: Say you and two siblings want to help Mom and Dad, who are in their late 70s. You and your siblings are all doing well enough that you have at least some cash to spare. Ultimately, you want to retain your parents’ house for the estate once your parents pass away, keep costs to a minimum and sell the property only when you, not a faraway bank, choose to do so.

 

So you sit down with Mom and Dad and determine that, at least for the foreseeable future, they will need about $1,500 in additional income a month. You and your siblings agree to apportion the payments among yourselves in some way, maybe a commitment of $500 a month each for a period of years. You also pick an interest rate that achieves a win-win result for you and your parents — say, 3 percent annually. That’s much lower than a commercial lender would charge but higher than what you’ve been earning on your bank deposits or money market funds. There are no required fees upfront — hey, it’s Mom and Dad.

Thanks to Maryland elder law attorney Morris Klein for the pointer to this article. 

May 13, 2015 in Consumer Information, Current Affairs, Federal Statutes/Regulations, Housing, Property Management, Retirement | Permalink | Comments (0) | TrackBack (0)

Monday, April 27, 2015

News Reports Spotlight Guardianship Issues in the Sunshine State

Recent news reports in the Sarasota Herald-Tribune have focused on "elder guardianships" in Florida.  The articles include:

  • The Kindness of Strangers: Inside Elder Guardianship in Florida, a three part "special project."
  • A Civil Dispute Over Guardianship, detailing a conflict between co-trustees for a man in his 90s over costs of care.  One trustee was concerned about what appear to be charities named as remainder beneficiaries and was described as making "imaginative" use of a guardianship to challenge the wife's role as the other named trustee.  A sidebar in this article describes bills pending in the Florida legislature seeking to clarify the legal effect of a "power of attorney" when a guardianship petition is filed. 
  • Film to Detail Horror Stories from Florida Guardianship, describing a video project to share "stories about Florida's adult guardianship system," supported by a local "nonprofit organization called Americans Against Abusive Probate Guardianship."

April 27, 2015 in Current Affairs, Dementia/Alzheimer’s, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Sunday, April 26, 2015

NYT: Financial Skills May Be "First to Go"

Sunday's New York Times has a feature article on aging and financial skills, and the message is not "just" for individuals with dementia:

"Studies show that the ability to perform simple math problems, as well as handling financial matters, are typically one of the first set of skills to decline in diseases of the mind, like Alzheimer’s, and Ms. Clark’s father-in-law, who suffered from mild dementia, was no exception. Research has also shown that even cognitively normal people may reach a point where financial decision-making becomes more challenging."

The article gives several example of individuals who were vulnerable to exploitation, because of their reduced interest in or understanding of financial decisions. David Laibson, an economics professor at Harvard, one of the researchers cited in the article said "he believed that crystallized intelligence tended to plateau when people reached their 70s." Further, "he wishes all 65-year-olds would start by simplifying their financial lives, reducing the money clutter to just a few mutual funds at a reputable institution."

The article, As Cognition Slips, Financial Skills Are Often the First to Go, offers several links to recent reports and studies, as well as examples of "early signs."  

Hat tip to Penn State's Dickinson Law 1L student Spencer Flohr for sharing the link to this article -- and noting the probable relevance to law students' studies of trusts and estates law. Good catch!

April 26, 2015 in Cognitive Impairment, Consumer Information, Dementia/Alzheimer’s, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Property Management | Permalink | Comments (1) | TrackBack (0)

Wednesday, April 22, 2015

Does "Age in Place" + "This Old House" = Affordable Plan?

Most of my family likes the PBS television show "This Old House." (Not me: I prefer "International House Hunters.")  I have a good friend-- we'll call her Louise --  who is getting ready to celebrate her 90th birthday and has the ability to turn a good phrase.  For years she has been saying her plan was to stay in her home, a lovely "old house" built in the 1920s, until "whatever happens next."  (She also refers to my writings here for Elder Law Prof as my "blobs.") 

Recently, however, Louise admitted to considering a new plan.  One thing after another in "this old house" was going wrong.  First it was her land-line phone that would intermittently crackle and pop, eventually making all calls impossible. Next it was seemingly random problems with loss of electricity to one side of the house or the other.  Finally, when everything in the kitchen lost power, she got serious. Soon there was a big trench behind the house, as the electricians tried to locate the problem. 

Eventually they found about a 4 foot length of burned wiring in the ground, inside of the buried conduit leading to the house (!).  They explained the wiring in and to Louise's house was just "too old." Fortunately, my friend could afford the massive repairs (not cheap), but that still meant living with her daughter 45 minutes away, and commuting to meet with the workers during the weeks without any power.  And as she asked, "what's next?"  Her house is about 3 years older than Louise.

Louise's story plus a recent article from the Patriot News got me thinking.  In Harrisburg, PA, the mayor was proposing a way to help a 92 year-old-woman get help to deal with sewer line repairs from the street to her house that cost $10,000.  Helping one person -- the proposal was for $2,000 -- was just the tip of the iceberg (so to speak -- I'm running out of metaphors).  The article explained:

Continue reading

April 22, 2015 in Current Affairs, Health Care/Long Term Care, Housing, Property Management, Retirement | Permalink | Comments (0) | TrackBack (0)

Friday, April 17, 2015

Searching for Answers to Questions about Continuing Care: Point/Counter Point

Scott E. Townsley, a very bright attorney, an adjunct associate professor at UMBC's Erickson School of Aging Studies, and a principal with CliftonLawsonAllen LLP, invited me to join him recently for a presentation to the 2015 Mid-Atlantic Region Resident Council Conference in Silver Spring, Md. (The lovely D.C. area cherry trees were in full bloom that day.) Cherry Trees at Riderwood Community 2015

Our theme was "Hot Topics in Continuing Care."  Scott, a regular consultant to nonprofit CCRCs, used his deep experience in senior housing to outline his perspective on the biggest issues facing CCRCs. In preparation for my part, I reached out to my contacts in resident groups around the country and asked them to share with me their biggest concerns. 

We then trimmed down our two respective lists and used a Point/Counter Point approach to the debate.  Do any of our readers remember 60 Minutes' James Kirkpatrick and Shana Alexander?  (Okay, how about Dan Aykroyd and Jane Curtin's lampoon of the Point/ Counter Point format?  I think it is fair to say that we were less political than the first combo, and more polite -- if less humorous -- than the SNL crew.  But we had fun.)

With a tip of the hat to David Letterman in borrowing his "top ten" format, here is a very distilled version of my list of Resident Concerns:

10. What does it really mean to be a nonprofit CCRC in 2015?

9.  Do we need to worry about conversions of nonprofit CCRCs to for-profit?

8.  What is the right response to the trend that residents are older and more disabled, even when first entering the community?

Continue reading

April 17, 2015 in Consumer Information, Dementia/Alzheimer’s, Discrimination, Health Care/Long Term Care, Housing, Property Management, Retirement, State Statutes/Regulations, Web/Tech | Permalink | Comments (4) | TrackBack (0)

Thursday, April 16, 2015

Comment Window Opens for Proposed Rules re Conflicts of Interest in Retirement Advice

The U.S. Department of Labor has released a new proposed rule intended to protect consumers from conflicts of interest among an array of folks who want to give advice about how and where to invest 401(c) and IRA retirement funds.  The new rule would impose a "fiduciary duty" standard on those advisors, rather than the current, lower "suitability" standard for investment advice.

A DOL press release explains the goal: 

"This boils down to a very simple concept: if someone is  paid to give you retirement investment advice, that person should be working in  your best interest," said Secretary of Labor Thomas E. Perez. "As commonsense  as this may be, laws to protect consumers and ensure that financial advisers  are giving the best advice in a complex market have not kept pace. Our proposed  rule would change that. Under the proposed rule, retirement advisers can be  paid in various ways, as long as they are willing to put their customers' best  interest first."

 

Today's announcement includes a proposed rule that would  update and close loopholes in a nearly 40-year-old regulation. The proposal  would expand the number of persons who are subject to fiduciary best interest  standards when they provide retirement investment advice. It also includes a  package of proposed exemptions allowing advisers to continue to receive payments  that could create conflicts of interest if the conditions of the exemption are  met. In addition, the announcement includes a comprehensive economic analysis  of the proposals' expected gains to investors and costs.

The New York Times covers the new rules in "U.S. Plans Stiffer Rules Protecting Retiree Cash," and notes the history of opposition to this kind of reform from -- surprise, surprise -- the "financial services industry." There is a 75-day window for public comments on the latest proposal.

Perhaps my biggest surprise was the remarkably "consumer friendly" presentation of the proposed change by the Department of Labor on its webpage, beginning with this simple video describing conflicts of interest.   

April 16, 2015 in Consumer Information, Current Affairs, Estates and Trusts, Ethical Issues, Federal Statutes/Regulations, Property Management, Retirement | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 14, 2015

Tighter Rules Loom for Eligibility for Reverse Mortgages

The Washington Post reminds us that changes to federal law for government-backed reverse mortgages, adiopted in 2014, are about to kick in:

"Interested in a reverse mortgage without a lot of hassles? Better get your application in fast. As of April 27, the federal government is imposing a series of extensive 'financial assessment' tests that will make applying for a reverse mortgage tougher — much like applying for a standard home mortgage.

 

***

 

[D]uring the years of the recession and mortgage bust, thousands of borrowers fell into default because they didn’t pay their required property taxes and hazard insurance premiums. On top of that, real estate values plunged, producing huge losses on defaulted and foreclosed properties for the FHA. The losses got so severe that the Treasury Department had to provide the FHA with a $1.7 billion bailout in 2013, the first in the agency’s history since its creation in the 1930s.

 

All of which led to the dramatic changes coming April 27. Applicants are now going to need to demonstrate upfront that they have both the 'willingness' and the 'capacity' to meet their obligations. Reverse-mortgage lenders are going to pull borrowers’ credit reports from the national credit bureaus, just as they do with other mortgages.illion bailout in 2013, the first in the agency’s history since its creation in the 1930s."

For more details see the full Post article at Window Is Rapidly Closing to Get Hassle-Free Reverse Mortgage

Many thanks to Maryland-based Elder Law attorney Morris Klein for sending me this article.  Additional information on "home equity conversion mortgages"is available on the HUD.gov website.

April 14, 2015 in Current Affairs, Federal Statutes/Regulations, Housing, Property Management | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 31, 2015

Educating the Public about Powers of Attorney (With the Help of Friends Across the Pond)

As we have described often on this Blog, there is a fair degree of concern about whether members of the public understand the potential significance of a  Power of Attorney before they sign the document.  Apparently the U.S. is not alone in this concern. 

Recently, Northern Ireland's Law Society (for comparison purposes, an organization which somewhat of a hybrid of the American Bar Association and a state's licensing board or disciplinary authority), issued an interesting pamphlet about "enduring powers of attorney" or EPAs, to serve as a guide for members of the public, using a Q & A format. EPAs are similar to our durable POAs, and, of course, their utility depends on being executed in advance of any need.  Topics addressed include: 

  • Do I lose control when I sign an EPA?
  • Is this just a note of my wishes?
  • Do I need an EPA if I have a will?
  • If I don't have investments or property is there any point?
  • What if all my assets are jointly owned?
  • Can I have more than one attorney [agent]?
  • Who should I appoint as my attorney [agent]?
  • What power does an attorney [agent] have?
  • What responsibilities does my attorney [agent] have?
  • Is my attorney [agent] paid for work undertaken?
  • Can I change my mind and revoke an EPA?
  • If I recover my capacity, who is in charge of my affairs?
  • Is it expensive to make an EPA? 

You are curious about the answers, aren't you!  For the cleanly written answers to these questions, access the PDF from the Law Society here.   Thank you to my Dickinson Law colleague Laurel Terry for the pointer.

March 31, 2015 in Consumer Information, Ethical Issues, Property Management | Permalink | Comments (0) | TrackBack (0)

Friday, March 27, 2015

NOT Elder Law, But It Is CRIMINAL Law

As reported in the ABA Journal, "A New Jersey lawyer has been sentenced for 10 years in prison for her part in a scheme to steal $3.8 million from 16 elderly victims:"

Prosecutors say the group took control of the finances of their victims by forging a power of attorney or obtaining one under false pretenses. They then added their names to the victims’ bank accounts and transferred the victims’ funds into accounts they controlled. As part of a plea deal with prosecutors, Lieberman has agreed to pay $3 million in restitution and testify against her co-defendants. 

Here are more details.  And here. And here. And here And according to one news source, the attorney actually served on the New Jersey Supreme Court's Ethics Committee while already engaged in misusing client funds.  Hat tip to retired New York Attorney Karen Miller, now living in Florida, for sharing a link to the ABA Journal article on this sad set of facts.

March 27, 2015 in Crimes, Current Affairs, Ethical Issues, Legal Practice/Practice Management, Property Management, State Cases | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 24, 2015

Has Acceptance of Same Sex Marriage Created Opportunities for Recognition of Other "Family Relationships?"

Columbia Law Professors Elizabeth S. Scott and Robert E. Scott have a new article, "From Contract to Status: Collaboration and the Evolution of Novel Family Relationships." They describe the successful movement to achieve marriage rights for LGBT couples as creating potential opportunities for recognition of other legal relationships that do not depend on "traditional" notions of marriage or family, such as "cohabiting couples and their children, voluntary kin groups, multigenerational groups, and polygamists."

In analyzing relationships that may gain greater legal recognition, the authors examine the possible influence of statutory obligations, including Pennsylvania's filial support laws used to impose care obligations on adult children, or more recent statutes granting visitation rights to grandparents:

"Probably the strongest candidate for full family status is the linear family group composed of grandparent(s), parent(s), and child(ren). It is clear that this familiar type of extended family can function satisfactorily to fulfill family functions. Further, the genetic bond among the members, together with well-defined family roles, reinforces already existing norms of commitment and caring. The primary challenge for these extended families may be the creation of networks with other similar families pursue their goals of increasing public support and attaining official family status.More complex multigenerational groups pose a greater challenge because they are less familiar to the public and less likely to be bound by family-commitment norms than are linear family groups. Partly for this reason, regulators may find it more difficult to verify the family functioning of these unconventional multigenerational groups."

The article was published in the Columbia Law Review, March 2015.

March 24, 2015 in Discrimination, Ethical Issues, Health Care/Long Term Care, Property Management, Social Security, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Monday, March 16, 2015

Family Dynamics are Complicated, Particularly When We're Talking End-of-Life "Wealth" Transfers

GW Law Professor Naomi Cahn and Amy Zeittlow, affiliate scholar with the Institute of American Values, have collaborated on a new article that is fascinating.  In "Making Things Fair: An Empirical Study of How People Approach the Wealth Transmission System," to be published in a forthcoming issue of the Elder Law Journal, they ask fundamental questions about whether traditional laws governing testate and intestate wealth transmission reflect and serve the wishes of most Americans.  Professor Cahn previews the article as follows:

Based on an empirical study of intergenerational care for Baby Boomers, the article shows how the inheritance process actually works for many Americans.  Two fundamental questions about the wealth transfer system guided our analysis  of the data: 1) does the contemporary inheritance process respond to the changing structure of American families; and 2) does it reflect the needs of the non-elite, who have not traditionally been the focus of the system?    

Our study shows that the formal laws of the inheritance system are largely irrelevant to how property is  transferred at death. While the contemporary trusts and estates canon focuses on the importance of planning for  traditional forms of wealth in nuclear families, this study focuses on the transmission of wealth that has high emotional, but low financial, value. We illustrate how the logic of “making things fair” structured how families navigated the distribution process and accessed the law. Consequently, the article recommends that law reform should be guided by the needs of contemporary  families, where not only is wealth defined broadly but also family is defined broadly, through ties that are both formal and functional.  This means establishing default rules that maximize planning while also protecting familial relationships.

The article is part of a new book by the authors titled "Homeward Bound," with planned publication in 2016, and the authors welcome comments and suggestions. 

March 16, 2015 in Books, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Property Management, State Cases, State Statutes/Regulations, Statistics | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 10, 2015

8th Circuit Rejects "Attempt" to Create d4A Special Needs Trust to Permit SSI Eligibility

In Draper v. Colvin, petitioner sought judicial review of SSA's denial of her application for SSI benefits. Her claim was sympathetic, as "[e]ighteen-year-old Stephany Draper suffered a traumatic brain injury in a car accident in June 2006."

In an admittedly  "hard line" ruling on March 3, the 8th Circuit rejected her argument that her parents' intent to establish a valid third-party-settled special needs trust, using proceeds from a settlement of a personal injury suit on her behalf, should permit her to claim SSI. 

The ruling means that over $400,000 will be treated as "available resources," thus requiring spend down before she would be eligible for benefits.  The court explained (minus citations):

Admittedly, some evidence in the record supports Draper's claim that her parents intended to act in their individual capacities. Draper's parents identified themselves individually as settlors and trustees, and the trust document explicitly states that it was established “pursuant to 42 U.S.C. § 1396p(d)(4)(A)," a provision which notes that a third party, such as a parent, must create the special needs trust for the benefit of the disabled person. Nevertheless, as discussed [earlier in the opinion], other facts provide substantial evidence to support the conclusion that Draper's parents acted using the power of attorney when establishing the trust.

The Court continued on to its tough bottom line:

Continue reading

March 10, 2015 in Cognitive Impairment, Estates and Trusts, Federal Cases, Federal Statutes/Regulations, Health Care/Long Term Care, Medicaid, Property Management, Social Security, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Friday, March 6, 2015

Harvard Prof. Robert Sitkoff to Speak on Incapacity Planning at University of Illinois

Harvard Law Professor Robert H. Sitkoff is speaking at University of Illinois School of Law on Monday, March 9.  The topic is "Revocable Trusts & Incapacity Planning: More then Just a Will Substitute." Sitkoff-Publicity-HLS 

Here are details provided by Illinois Law Professor Richard Kaplan

The use of trusts has evolved from means of transferring property to mechanisms for managing assets and more recently, to will substitutes for avoiding probate and simplifying post-death transfers. But lawyers increasingly use revocable trusts in planning for possible client incapacity to avoid the costs and publicity associated with custodianship and guardianship. State-level reforms of trust law to accommodate older uses of these devices are not, however, well-suited to this newer use of trusts, and this lecture will examine those reforms in this context.

 

Professor Sitkoff was the youngest professor to receive a chair in the history of Harvard Law School. He previously taught at New York University School of Law and at Northwestern University School of Law. After graduated from the University of Chicago Law School with High Honors, he clerked for then Chief Judge Richard A. Posner of the United States Court of Appeals for the Seventh Circuit. Professor Sitkoff is an active participant in trust and estates law reform. He is a liaison member of the Joint Editorial Board for Uniform Trusts and Estates Acts within the Uniform Law Commission and has been a member of several drafting committees for acts involving trusts and estates matters. Sitkoff is also a member of the American Law Institute’s Council and has served on the consultative groups for the Restatement (Third) of Trusts and the Restatement (Third) of Property: Wills and Other Donative Transfers.

Word from Dick Kaplan is that Rob's  presentation will be available (eventually) via a recording, and his presentation will also be captured as an article in University of Illinois' Elder Law Journal

My students often ask why all casebooks can't be as engaging to read as the "Dukeminier" text on Wills, Trusts & Estates -- and I suspect one reason is that Rob Sitkoff, although uniquely prolific and gifted, is still only human and cannot write them all! 

Postscript:  I asked Rob to send me something other than his "official" Harvard photo.  The one above seems to capture his spirit and the smile I sometimes detect in his footnotes. 

March 6, 2015 in Books, Cognitive Impairment, Dementia/Alzheimer’s, Estates and Trusts, Health Care/Long Term Care, Programs/CLEs, Property Management | Permalink | Comments (0) | TrackBack (0)

Pennsylvania Bar Association Program on New Rules of Professional Conduct & Disciplinary Enforcement

On Wednesday, March 25, 2015 (1:30 to 3:30 p.m.), the Pennsylvania Bar Association (PBA)'s Elder Law Section is hosting a panel session at the annual PBA Section/Committee Day to discuss important changes in the Pennsylvania Rules of Professional Conduct and the Disciplinary Enforcement Rules. 

Several of the recent changes, including rules mandating greater oversight for trust accounts, timelier handling of complaints, and specific new prohibitions or restrictions on attorney involvement in marketing of "investment products," were a response, at least in part, to serious cases of attorney misconduct resulting in tragic financial losses for individuals.  In some instances the clients were older persons who entrusted large retirement assets to the care of a small number of attorneys. 

In planning the program, Elder Law Section Chair Jacqui Shafer commented that the program reflects the continuing commitment of the Bar and the Section to take affirmative steps to address and prevent misappropriation of funds from any client, including vulnerable seniors and their families.

Panelists include experienced private practitioners in elder law or estate planning practices and representatives of the Disciplinary Board and PBA's Legal Ethics and Professional Responsibilities Section.  Several participants were members of the Pennsylvania's recent Supreme Court Elder Law Task Force. 

Here is the link for more details on the program, including the link for required registration (free, including lunch).  The deadline for on-line registration is March 20.

March 6, 2015 in Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Legal Practice/Practice Management, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Thursday, March 5, 2015

ABA Webinars on Domestc Asset Protection Trust Planning

Yesterday I wrote about the Utah Supreme Court decision rejecting application of Nevada law to determine the nature of an asset protection trust.   Would the same result occur if the claimant was an "ordinary" creditor, rather than a spouse and co-settlor? 

One way to get in on the discussion would be the ABA's "Jurisdiction Selection Series" on "Domestic Asset Protection Trusts."  And as luck would have it, the next in the series of 5 webinar sessions covers Arizona, Maryland, New Hampshire --- and Nevada law.  The program is Tuesday, April 14, 2015, and will be followed by a session on June 9, 2015 covering Hawaii, Kentucky, South Dakota and Utah.  Here are some of the topics to be addressed:

  • What is an inter vivos QTIP trust and how can it help my clients?
  • Will domestic self-settled asset protection trusts benefit my clients?
  • Do the costs of creating a trust in one state for creditor protection or taxation benefits really outweigh the creation of such a trust in another?
  • Is the trust really protected from creditors?
  • Can the trust be used to avoid the income tax in the grantor's state of residence?
  • Can a same sex couple benefit from the use of these trusts?
  • Is using an offshore trust better?

A number of states have laws governing "full blown self-settled asset protection trusts" or permit some form of similar trust.  Here is the link to the details about registration, cost and timing for all of the ABA sessions.

Hat Tip to Penn State Law Professor James Puckett for sharing the timely info on this series.

March 5, 2015 in Current Affairs, Estates and Trusts, Ethical Issues, Property Management, State Cases, State Statutes/Regulations, Webinars | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 4, 2015

Utah Supreme Court Rejects Attempt to Specify Nevada Law as Controlling "Irrevocable" Trust

In Dahl v. Dahl, the Utah Supreme Court was asked to examine the effect of a choice-of-law clause in a trust that purported to be "irrevocable." The clause provided:

"Governing Law. The validity, construction and effect of the provisions of this Agreement in all respects shall be governed and regulated according to and by the laws of the State of Nevada. The administration of each Trust shall be governed by the laws of the state in which the Trust is being administered."

The first sentence of the provision was significant, because the trust granted husband-settlor continuing rights of control, even as he argued the "irrevocable" label was valid, prohibiting wife from claiming any marital interest in assets used to fund the trust.

Continue reading

March 4, 2015 in Books, Estates and Trusts, Ethical Issues, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Monday, March 2, 2015

The Economic Cost of Conflict of Interest for Advisors on Retirement Investments

The White House Council of Economic Advisors released "The Effects of Conflicted Investment Advice on Retirement Savings" in February 2015, and the report is a must-read for anyone teaching courses on aging policy. 

The major focus of the analysis is on evidence of  "conflicts of interest" for those advising individuals on roll-over investment of IRA accounts, but the findings undoubtedly have relevance beyond that window on retirement planning.

The decision whether to roll over one’s assets into an IRA can be confusing and the set of financial products that can be held in an IRA is vast, including savings accounts, money market accounts, mutual funds, exchange-traded funds, individual stocks and bonds, and annuities. Selecting and managing IRA investments can be a challenging and time-consuming task, frequently one of the most complex financial decisions in a person’s life, and many Americans turn to professional advisers for assistance. However, financial advisers are often compensated through fees and commissions that depend on their clients’ actions. Such fee structures generate acute conflicts of interest: the best recommendation for the saver may not be the best recommendation for the adviser’s bottom line.

The report focuses on the quantifiable cost from conflicted advice, concluding that savers receiving such advice "earn returns roughly 1 percentage point lower each year."  But isn't there also a deeper cost, as the large swath of middle-income Americans, who may have justified fears of being able to safely evaluate investment risk and their investment advisors, do nothing productive with their savings? 

The New York Times editorial board draws upon the White House Council's report to call for adoption of reality-based rules on fiduciary duties for the financial services industry.  See NYT's "Protecting Fragile Retirement Nest Eggs."   

March 2, 2015 in Consumer Information, Current Affairs, Ethical Issues, Federal Statutes/Regulations, Property Management, Retirement | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 10, 2015

Financial Decision-Making in Later Years

The Center for Retirement Research at Boston College has released a report, How Does Aging Affect Financial Decision Making? The introduction explains

 With the shift from defined benefit pensions to 401(k)plans, the welfare of retirees increasingly depends on their ability to make sound financial decisions. This situation has raised concerns that the cognitive decline that comes with age could compromise the elderly’s decision-making ability and thereby their financial well-being. This brief, based on a recent study,1 addresses this issue using a unique dataset that follows a group of elderly individuals over time. 

 The report is divided into four parts: literature review, data, analysis and conclusion. The conclusion paints an interesting picture

The findings confirm that declining cognition, a common occurrence among individuals in their 80s, is associated with a significant decline in financial literacy. The study also finds that large declines in cognition and financial literacy have little effect on an elderly individual’s confidence in their financial knowledge, and essentially no effect on their confidence in managing their finances. Individuals with declining cognition are more likely to get help with their finances. But the study finds that over half of all elderly individuals with significant declines in cognition get no help outside of a spouse. Given the increasing dependence of retirees on 401(k)/IRA savings, cognitive decline will likely have an increas-ingly significant adverse effect on the well-being of the elderly.

February 10, 2015 in Cognitive Impairment, Consumer Information, Dementia/Alzheimer’s, Property Management, Retirement | Permalink | Comments (1) | TrackBack (0)