Wednesday, June 18, 2014

What Happens to Upfront Fees Paid by Residents of CCRCs -- Especially in Bankruptcy Court?

Last week's news of a Chapter 11 Bankruptcy proceeding in the Texas-based senior living company Sears Methodist Retirement Systems, Inc. (SMRS)  has once again generated questions about "entrance fees" paid by residents at the outset of their move to a Continuing Care Retirement Community (CCRC).  CCRCs typically involve a tiered system of payments, often including a substantial (very substantial) upfront fee, plus monthly "service" fees.  The upfront fee will carry a label, such as "admission fee" or "entrance fee" or even entrance "deposit," depending on whether and how state regulations require or permit certain labels to be used. 

As a suggestion of the significance of the dollars, a resident's key upfront fee at a CCRC operated by SMRS reportedly ranged from $115,000 to $208,000. And it can be much higher with other companies.  So, let's move away from the SMRS case for this "blog" outline of potential issues with upfront resident fees.

Even without talking about bankruptcy court, for residents of CCRCs there can be a basic level of confusion about upfront fees. In some instances, the CCRC marketing materials will indicate the upfront fee is "refundable," in whole or in part, in the event the resident moves out of the community or passes away.  Thus, residents may assume the fees are somehow placed in a protected account or escrow account.  In fact, even if the upfront fee is not "refundable," when there is a promise of "life time care," residents may assume upfront fees are somehow set aside to pay for such care. How the facility is marketed may increase the opportunity for resident confusion. Residents are looking for reassurances about the costs of future care and how upfront fees could impact their bottom line. That is often why they are looking at CCRCs to begin with.  "Refundable fees" or "life care plans" can be important marketing tools for CCRCs. But discussions in the sales office of a CCRC may not mirror the "contract" terms.

One of the most important aspects of CCRCs is the "contract" between the CCRC and the resident. First, smaller "pre move-in" deposits may be paid to "hold" a unit, and this deposit may be expressly subject to an "escrow" obligation.  But,  larger upfront fees -- paid as part of the residency right -- are typically not escrowed. It is important not to confuse the "escrow" treatment of these fees.  Of course, the "hold" fee is not usually the problem.  It is the larger upfront fees --such as the $100k+ fees at SMRS -- that can become the focus of questions, especially if a bankruptcy proceeding is initiated.

The resident's contract requires very careful reading, and it will usually explain whether and how a CCRC company will make any refund of large upfront admission fees.  In my experience of reading CCRC contracts,  CCRCs rarely "guarantee" or "secure" (as opposed to promise) a refund, nor do they promise to escrow such upfront fees for the entire time the payer resides at the CCRC.  In some states  there is a "reserve" requirement (by contract or state law) for large upfront fees whereby the CCRC has a phased right to release or use the fees for its operation costs.  Thus, the contract terms are the starting place for what will happen with upfront fees. 

Why doesn't state regulation mandate escrow of large upfront fees?  States have been reluctant to give-in to pressure from some resident groups seeking greater mandatory "protection" of their upfront fees.  There's often a "free enterprise, let the market control" element to one side of regulatory debates. On the other side, there is the question of whether life savings of the older adult are proper targets for free enterprise theories.  Professor Michael Floyd, for example, has asked, "Should Government Regulate the Financial Management of Continuing Care Retirement Communities?"  

My research has helped me realize how upfront fees are a key financial "pool" for the CCRC, especially in the early years of operation where the developer is looking to pay off construction costs and loans.  CCRCs want -- and often need -- to use those funds for current operations. and debt service.  Thus, they don't want to have those fees encumbered by guarantees to residents. They take the position they cannot "afford" to have that pool of money sitting idle in a bank account, earning minimal interest.  This is not to say the large entrance fees will be "misspent," but rather, the CCRC owners may wish to preserve flexibility about how and when to spend the upfront fees.

The treatment of "upfront fees" paid by residents of CCRCs also implicates questions about application of accounting and actuarial rules and principles. That important topic is worthy of a whole "law review article" -- and frankly it is a topic I've been working on for months. 

In additional to looking for actuarial soundness, analysts who examine CCRCs as a matter of academic interest or practical concern have looked at whether CCRC companies and lenders may have a "fiduciary duty" to older adults/residents, a duty that is independent of any contract law obligations. Analysts further question whether a particular CCRC's marketing or financial practices violate consumer protection or elder protection laws. 

There can also be confusion about what happens during a Chapter 11 process. First, during the Chapter 11 Bankruptcy process, a facility may be able to honor pre-bankruptcy petition "refund" requests or requests for refund of fees for a resident who does not move into the facility.  Second, to permit continued operation as part of the reorganization plan, a facility will typically be permitted by the Court to accept new residents during the Chapter 11 proceeding and those specific new residents will have their upfront fees placed into a special escrow account, an account that cannot be used to pay the pre-petition debts of the company. 

But what about the upfront fees already paid pre-petition by residents who also moved in before the bankruptcy petition?  Usually those upfront fees are not escrowed during the bankruptcy process.  Indeed, other "secured" creditors could object to refunds of "unsecured" fees. The Bankruptcy Court will usually issue an order -- as it did in SRMS's bankruptcy court case in Texas last week -- specifying how current residents' upfront fees will be treated now and in the future.  A bit complicated, right?  (And if I'm missing something please feel free to comment.  I'm always interested in additional viewpoints on CCRCs.  Again, the specific contract and any state laws or regulations governing for handling of fees will be important.)

Of course, this history is one reason some of us have been suggesting for years that prospective residents should have an experienced  lawyer or financial consultant help them understand their contracts and evaluate risks before signing and again in the event of any bankruptcy court proceeding. "Get thee to a competent advisor."   See also University of New Mexico Law Professor Nathalie Martin's articles on life-care planning risks and bankruptcy law. 

As I mentioned briefly in writing last week about the SMRS Chapter 11 proceeding, CCRC operators have learned -- especially after the post-2008 financial crisis -- that the ability of a CCRC to have a viable "second chance" at success in attracting future residents will often depend on the treatment of existing residents. Thus, one key question in any insolvency will be whether the company either (a) finds a new "owner" during the Chapter 11 process or (2) is able to reorganize the other debts, thereby making it possible for the CCRC company to "honor" the resident refund obligations after emerging from the Chapter 11 process.

During the last five years we have seen one "big" default on residents' upfront. refundable entrance fees during the bankruptcy of Covenant at South Hills, a CCRC near Pittsburgh.  A new, strong operator eventually did take over the CCRC, and operations continued. However, the new operator did not "assume" an obligation to refund approximately $26 million in upfront fees paid pre-petition by residents to the old owner. In contrast, Chapter 11 proceedings for some other CCRCs have had "gentler" results for residents, with new partners or new financial terms emerging from the proceedings, thereby making refunds possible as new residents take over the departed residents' units. 

For more on how CCRC companies view "use" of upfront fees, here's a link to a short and clear discussion prepared by DLA Piper law firm, which, by the way, is the law firm representing the Debtor SMRS in the Texas Chapter 11 proceeding. 

June 18, 2014 in Consumer Information, Federal Cases, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, Retirement, State Cases, State Statutes/Regulations | Permalink | Comments (1) | TrackBack (0)

Sunday, June 15, 2014

Sears Methodist Retirement Files for Chapter 11 Reorganization in Texas

According to news reports, on June 10 Sears Methodist Retirement System, Inc. filed a voluntary petition in bankruptcy court in Texas, seeking relief under Chapter 11.  Apparently the private company, organized as a nonprofit that currently operates eleven senior living properties in Texas, including Contining Care Retirement Communities (CCRCs), Assisted Living facilities and Veterans homes, is seeking to reorganize some $160 million in debts. The multi-company operation provides housing and services to some 1,500 residents.  A detailed early report by Peg Brickley at Daily Bankruptcy Reports explains the initial relief sought: 

The Texas nonprofit organization is asking the U.S. Bankruptcy Court in Dallas to authorize it to quickly borrow $600,000 from existing bondholders, warning that it would be forced to cease operations without access to the funds. 

 

"Such an abrupt cessation of the...businesses would have devastating effects on the residents at the senior living facilities such debtors own and/or operate, including leaving many residents without food, medical supplies, and the health and support services that they require," Chief Restructuring Officer Paul B. Rundell said in court papers.

 

"In fact, many residents may be forced to immediately relocate, causing extreme hardship and putting both their lives and health at risk," added Mr. Rundell, of Alvarez & Marsal's Healthcare Industry Group.

 

Sears Methodist blamed the declining property market for some of its troubles. Older people are having trouble selling their homes and liquidating their stock portfolios to raise the money for the upfront payment to get into the senior-living communities, according to court papers.

I would expect some of the SMRS properties to be financially stronger than others, and thus could be spun off or taken over by other senior living operators, perhaps those with expertise in the specific type of property. When CCRCs are involved, residents have often paid very large "entrance" fees and must continue to pay substantial monthly service fees.  Even when their entrance fees are described as "refundable," CCRC residents are usually treated under bankruptcy law as "unsecured" creditors and thus become especially nervous during the proceedings.

Over the last several years, I've seen growing recognition that reassurance of existing residents, if possible, is critical to the continuation of the CCRC as a viable operation once it emerges from bankuptcy. Fortunately, despite continuing ups and downs (downs and ups?) in senior living markets since the 2008 financial crisis, the market has seen fairly strong players emerging.  There is also better appreciation for appropriate -- and inappropriate -- levels of risk and the importance of maintaining resident confidence over the long-term.

June 15, 2014 in Health Care/Long Term Care, Housing, Property Management, Retirement | Permalink | Comments (1) | TrackBack (0)

Thursday, June 12, 2014

U.S. Supreme Court Addresses Status of "Inherited" IRA Accounts in Bankruptcy

On June 12, the U.S. Supreme Court issued its decision in Clark v. Rameker, concluding that "inherited" IRAs are not protected from a holder's creditors during bankruptcy.  Justice Sotomayor delivered the opinion for a unanimous court.  In so ruling, the Court rejected application of the "retirement fund" exemption, because unlike a holder's self-funded IRA, inherited accounts lack the "planning" motivation that justified protection of the funds as a retirement asset.  

 Forbes described the result as "an opinion with far-reaching implications."   

Hat top to ElderLawGuy Jeff Marshall as the first to send the link this decision. 

June 12, 2014 in Estates and Trusts, Federal Cases, Retirement | Permalink | Comments (0) | TrackBack (0)

IRS Phone Forum on "Retirement Plans After Windsor" on June 26

With thanks to Phoenix, Arizona Elder Law practitioner Thomas Murphy for the heads up, the Internal Revenue Service is offering a free phone forum on "Retirement Plans after Windsor," on Thursday, June 26 from 2:00 p.m. to 3 p.m. Eastern time.  The forum will be "rebroadcast" on July 8. 

Not a lot of details are available on-line about the forum.  Here are links to basic information, plus the June 26  registration page (registration is required, but it does not appear the forum is limited to registered agents). 

Here's a link to a separate registration site for the "rebroadcast" on July 8.

June 12, 2014 in Programs/CLEs, Retirement, Web/Tech, Webinars | Permalink | Comments (0) | TrackBack (0)

Thursday, May 29, 2014

Law & Society Annual Meeting on "Rethinking Elder Law's Rules & Norms" and More

Law & Society Association's Annual Meeting is always a feast -- with hundreds of presentations and papers, often with cross-discipline themes and presenters.  This year's four day program starts today in Minneapolis.  On tap are three elder law-themed sessions hosted by Aging, Law & Society. The session on "Rethinking Elder Law's Rules & Norms" will  be chaired by Nina Kohn, Syracuse University.

Scheduled paper presentations include:

  • Adult Protective Services and Therapeutic Jurisprudence, by Michael Schindler, Bar-Ilan University;
  • Age, Gender and Lifetime Discrmination against Working Women, by Susan Bisom-Rapp, Thomas Jefferson School of Law and Malcolm Sargeant, Middlesex University Business School;
  • Effective Affective Forecasting in Older Adult Caregiving, by Eve Brank and Lindsey Wylie, University of Nebraska-Lincoln;
  • Sexuality & Incapacity, by Alexander Boni-Saenz, Chicago-Kent College of Law;
  • Beyond the Law: Legal Consciousness in Older Age Care Contexts, by Sue Westwood, Keele University

Nancy Knauer of Temple Law School is chairing the session on "Accessing and Experiencing Jusice in Older Age."  Presentations include:

  • From Vienna to Madrid and Beyond, by Israel Doron, University of Haifa;
  • Lessons from Detroit: Retiree Benefits in the Real World, by Susan Cancelosi, Wayne State University Law School;
  • Older Persons Use of the European Court of Human Rights, by Benny Spanier, Haifa University;
  • Crossing Borders and Barriers: Assessing Older Adults' Access to Legal Advice in the Search for Effective Justice, by Katherine Pearson, Penn State University Dickinson School of Law, Joseph Duffy, Queens University Belfast, and Subhajit Basu, University of Leeds

A workshop on "Ethics of Care and Support in Law and Aging," to be chared by Sue Westwood, Keele University, includes:

  • Aging with a Plan: What You Should Consider in Middle Age to Plan for Caregiving and Your Own Old Age, by  Sharona Hoffman, Case Western Reserve University;
  • An Ethic of Care Critique of the UK Care Bill/Act, by Sarah Webber, University of Bristol;
  • Both Property and Pauper: Slaver, Old Age, and the Inverted Logic of Capitalist Exchange, by Alix Lerner, Princeton University;
  • Responding to Financial Vulnerability: Advances in Gerotchnology as an Alternative to the Substitute Decision Making Model, by Margaret Hall, Thompson Rivers University and Margaret Easton, Simon Fraser University

An international cast of characters, yes?  More soon, with details from the front.

May 29, 2014 in Current Affairs, Elder Abuse/Guardianship/Conservatorship, Ethical Issues, Health Care/Long Term Care, Housing, Retirement, Social Security | Permalink | Comments (0) | TrackBack (0)

Friday, May 23, 2014

International Elder Law and Policy Conference July 10-11 in Chicago

John Marshall Law School and Roosevelt University, both in Chicago, and East China University of Political Science and Law in Shanghai, are jointly sponsoring an International Elder Law and Policy Conference in Chicago on July 10-11.

Keynote speakers include Professor Israel Doron of the University of Haifa in Israel and Dr. Ellinoir Flynn and Professor Gerard Quinn, both from National Unviersity of Ireland, Galway School of Law.

Scheduled panel topics include:

  • Dignity and Rights of the Elderly
  • Elimination of Age Discrimination
  • Caregivers and Surrogate Decision Makers
  • Social Security, Pensions and Other Retirement Financing Approaches
  • Prevention of Elder Abuse
  • Access to Justice

Here's the link to the Registration website.

  •    

May 23, 2014 in Elder Abuse/Guardianship/Conservatorship, Ethical Issues, Health Care/Long Term Care, Housing, Programs/CLEs, Retirement, Social Security | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 7, 2014

Planning Ahead: Extend Malpractice Insurance for Retiring Lawyers?

In part 6 of the ABA Journal's series on retirement issues, retiring lawyers are reminded that one important option is to purchase "extended reporting endorsements" (ERE) or "tail coverage" for existing professional liability insurance policies.  Such an endorsement permits a longer period to report  claims for coverage.  Mark Bassingthwaighte, an attorney and risk manager for Attorneys Liability Protection Society (ALPS) explains, "Tail coverage ... [is] not a new policy."  Rather, the existing policy explains the terms of any ERE coverage option, with the cost set as a fixed percentage of the expiring policy's premium. 

"'I recommend that the retiring partner talk with other partners and request to be kept in the loop within the applicable state statute of limitations for malpractice should the firm dissolve; even formalize an agreement that works best to protect all parties involved,' says Matt Lubaroff, ALPS director of client services. 'The firm's ERE can only be purchased at the time of dissolution, and for certain firms the best answer would be upon the first retirement.'"

Additional planning topics for retiring lawyers appear in "Retirement Reset" by Susan Berson in the May issue of the ABA Journal.

May 7, 2014 in Consumer Information, Legal Practice/Practice Management, Retirement | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 6, 2014

Honor Older Veterans by Helping Them Access Services

Last Sunday, the Philadelphia Inquirer carried an Op-Ed by Patrick Murphy, an Iraq war veteran, and Karen Buck, executive director for SeniorLAW Center in Philadelphia.  Their words provide a welcome reminder, contrasting with the news I reported earlier today about allegations of inadequate care for veterans in Arizona.  In part they write:

"Experts estimate that 14 percent of the adult homeless population has served in the U.S. military. After valiant service, beterans deserve the most basic of human needs:  safe shelter, protection from abuse, enought to eat. 

 

What can we do to change this story for older veterans? 

 

First, know who the veterans are in  your daily life and thank them for their service.  Peace at home is a gift made possible by the harsh sacrifice of others; it's easy to take for granted.  Join  us in doing more by showing gratitude through action.

 

...Help connect an older veteran with the services he needs -- and encourage him to access them.  Many older veterans don't know what resources are available or they associate asking for help with weakness.  Yet, from the VA, they may be eligible for income supports, home-based or nursing home care, health care, burial assistance, education, and other benefits.  Nonprofits can help provide free legal assistance to address issues that arise over housing, family, health care, consumer issues, elder abuse, and financial exploitation.  Legal services rank among the top unmet needs of veterans, but we can all become advocates to help vets get the support they need and deserve."

As Patrick and Karen demonstrate, support for local legal service organizations in your area can be effective in helping veterans access key benefits, while also providing another important watchdog to help reduce or prevent the likelihood of fullblown VA scandals.

Experts estimate that 14 percent of the adult homeless population has served in the U.S. military. After valiant service, veterans deserve the most basic of human needs: safe shelter, protection from abuse, enough to eat.

What can we do to change this story for older veterans?

First, know who the veterans are in your daily life and thank them for their service. Peace at home is a gift made possible by the harsh sacrifice of others; it's easy to take for granted. Join us in doing more by showing gratitude through action.

Volunteering is one form of action. Help connect an older veteran with the services he needs - and encourage him to access them. Many older veterans don't know what resources are available or they associate asking for help with weakness. Yet, from the VA, they may be eligible for income supports, home-based or nursing home care, health care, burial assistance, education, and other benefits. Nonprofits can help provide free legal assistance to address issues that arise over housing, family, health care, consumer issues, elder abuse, and financial exploitation. Legal services rank among the top unmet needs of veterans, but we can all become advocates to help vets get the support they need and deserve.

Read more at http://www.philly.com/philly/opinion/20140504_Don_t_forget_key_work_of_U_S__vets.html#qwbXm13qk5jXlIby.99

Experts estimate that 14 percent of the adult homeless population has served in the U.S. military. After valiant service, veterans deserve the most basic of human needs: safe shelter, protection from abuse, enough to eat.

What can we do to change this story for older veterans?

First, know who the veterans are in your daily life and thank them for their service. Peace at home is a gift made possible by the harsh sacrifice of others; it's easy to take for granted. Join us in doing more by showing gratitude through action.

Volunteering is one form of action. Help connect an older veteran with the services he needs - and encourage him to access them. Many older veterans don't know what resources are available or they associate asking for help with weakness. Yet, from the VA, they may be eligible for income supports, home-based or nursing home care, health care, burial assistance, education, and other benefits. Nonprofits can help provide free legal assistance to address issues that arise over housing, family, health care, consumer issues, elder abuse, and financial exploitation. Legal services rank among the top unmet needs of veterans, but we can all become advocates to help vets get the support they need and deserve.

Read more at http://www.philly.com/philly/opinion/20140504_Don_t_forget_key_work_of_U_S__vets.html#qwbXm13qk5jXlIby.99

May 6, 2014 in Consumer Information, Health Care/Long Term Care, Retirement | Permalink | Comments (1) | TrackBack (0)

Monday, May 5, 2014

You've Got a Friend (Or Do You?) as You Grow Older

In an article for the May issue of the Journal of Gerontology (Series B: Psychological Sciences), a team of international researchers present a report on "Benefits of Having Friends in Older Ages: Different Effects of Informal Social Activities on Well-Being in Middle-Aged and Older Adults." The article is technical, but the implications and conclusions of their research are persuasive. It seems that having "friends" is more important to life satisfaction for older adults than it is for middle-aged adults. And their research points to the importance of friendships rather than "just" relationships with spouses and children. The authors conclude:

"Our results have strong implications for mental health promotion in older adults, as they suggest supporting older adults in building and maintaining friend-based social networks, for example, by encouraging volunteering in old age in elder-helping-elder programs . . . or programs aiming at increasing informal social interactions, such as cultural programs, . . . university programs, . . . or occupational therapy programs." 

I suspect that one potential limitation of the study may be the difficulty in measuring whether a lowered feeling of "life satisfaction" is actually a trigger for withdrawal from friends and friendship-based activities, rather than being simply an outcome of not being engaged with friends. The "chicken or egg" question of cause and effect?  Nonetheless, the research does underscore the potential importance of engagement in increasing the long-range potential for positive feelings and mood. So call up your friends and invite them on an outing; don't wait for them to call you.

May 5, 2014 in Cognitive Impairment, Current Affairs, Retirement | Permalink | Comments (0) | TrackBack (0)

Thursday, April 17, 2014

FINRA Arbitration Awards Damages, But Also Attorneys' Fees Under California Elder Abuse Laws

An arbitral award in March 2014 by Financial Industry Regulatory Authority (FINRA) ordered Signator Investors, Inc., a firm aligned with the John Hancock Financial Network, to pay an older couple and their elderly mother's estate $1.2 million for losses arising from failed retirement investments inappropriately marketed to them by a Signator broker. The award to the claimants included "compensatory" damages plus interest, and ordered rescission of all the claimant's investments in Colonial Tidewater Realty Partners.  The award also granted Signator's cross-claim against its former broker, James Robert Glover, for breach of contract, fraud and negligence as potential indemnification on the damage award.

As is true with most arbitration awards, the ruling on Docket No. 13-00579 (available via search at the FINRA website) is "bare bones," providing little in the way of explanation about which legal theories support the outcome. A detailed explanation is unnecessary for FINRA arbitration rulings, which cannot be appealed. 

The claimants, a husband and wife (both 70+) and the husband's mother (who died in 2012 at the age of 103), reportedly invested their entire retirement savings through Glover, who put them into securities not held or offered by Glover's brokerage company.  This practice is sometimes described as "selling away." Signator's defense that Glover's actions were therefore outside the scope of his authority with their company and not subject to their control or responsibility to supervise was implicitly rejected by the FINRA arbitrators.  News reports indicate some 40 other pending complaints connected to Glover's actions. Glover was sanctioned personally by FINRA in March 2013.

FINRA, created in 2007,  is the successor to NASD, the National Association of Securities Dealers, the former enforcement operation for member brokerage firms and exchange markets regulated by the Securities and Exchange Commission.  A single arbitral award of $1+ million through FINRA is interesting by itself.  For example, for the entire year of 2013, FINRA ordered a total of $9.5 million in restitution to harmed investors. 

But what caught my attention was the additional award of $453,970 in attorneys' fees for the claimants against Signator, "pursuant to California elder abuse statutes." The amount of the fees appears to be roughly 40% of the damage award.  Most securities claims are handled by attorneys on a contingency fee arrangement and a fee of 40%  of the award is not unusual in this challenging field.  Thus, even a successful claimant before FINRA may not be made whole, absent a contractual or statutory basis to claim attorneys' fees.  So the award of compensatory damages and interest, plus attorneys fees' is significant. 

Unlike many states, California has a comprehensive provision for attorneys' fees connected to civil actions for abuse of elderly or dependent adults, at Cal. Welfare & Institutions Code Sections 15657-15657.8, including Section 15657.5 providing for attorneys' fees where it is proven by a preponderance of the evidence that a defendant is liable for "financial abuse."   

April 17, 2014 in Current Affairs, Elder Abuse/Guardianship/Conservatorship, Ethical Issues, Retirement | Permalink | Comments (0) | TrackBack (0)

Monday, March 24, 2014

ABA Webinar on Retirement Issues for Lawyers, Especially Young Lawyers

From January through March, the ABA Journal has run an interesting series of articles on retirement planning for lawyers, with clear messages for all age groups. Following that series, the ABA is hosting a live Webinar on "Retirement Expectations and Trends for 2014" on Wednesday, March 26.  The program is scheduled to begin at noon Eastern time.  The faculty, including Sally Hurme from AARP, Dean Deanell Reece Tacha from Pepperdine School of Law, and financial planning consultants, will

"...go beyond the basics of retirement and financnial planning to discuss other factors that can make your retirement what you want, including goal-setting; making the actual transition to retirement; determining whether a second or part-time post-retiremetn career is right for you; and dealing with the emotions of being retired.  Faculty will also provide guidance on the ethics of transitioning out of your practice, transitioning your clients, and selling your practice."

The 90 minute program is free for ABA members and $50 for the general public; no CLE credits are attached to the program.  Registration is here. 

March 24, 2014 in Current Affairs, Legal Practice/Practice Management, Retirement | Permalink | Comments (0) | TrackBack (0)

Thursday, March 6, 2014

New GAO Report on "Retirement Security: Trends in Marriage, Work, and Pensions May Increase Vulnerability for Some Retirees"

GAO-14-272T: Published: Mar 5, 2014. Publicly Released: Mar 5, 2014.

The decline in marriage, rise in women's labor force participation, and transition away from defined benefit (DB) plans to defined contribution (DC) plans have resulted in changes in the types of retirement benefits households receive and increased vulnerabilities for some. Since the 1960s, the percentage of unmarried and single-parent families has risen dramatically, especially among low-income, less-educated individuals, and some minorities. At the same time, the percentage of married women entering the labor force has increased. The decline in marriage and rise in women's labor force participation have affected the types of Social Security benefits households receive, with fewer women receiving spousal benefits today than in the past. In addition, the shift away from DB to DC plans has increased financial vulnerabilities for some due to the fact that DC plans typically offer fewer spousal protections. DC plans also place greater responsibility on households to make decisions and manage their pension and financial assets so they have income throughout retirement. As shown in the figure below, despite Social Security's role in reducing poverty among seniors, poverty remains high among certain groups of seniors, such as minorities and unmarried women. These vulnerable populations are more likely to be adversely affected by these trends and may need assistance in old age.

March 6, 2014 in Retirement, Social Security | Permalink | TrackBack (0)

Friday, February 14, 2014

Call for Papers: Conference on Social Insurance & Life Cycle Events

Via University of Michigan Retirement Research Center, a call for papers connected to an upcoming conference:

With support from AARP, a conference on Social Insurance and Lifecycle Events Among Older Americans will be held on December 5th of 2014 in Washington, DC.

The conference will focus specifically on lifecycle events commonly encountered by older Americans, the responsiveness of current policies to those events, and new thinking about policies consistent with a changing political environment.

The conference will be organized into three sections dealing with the importance of:

  1. changing career/job patterns,
  2. changes in family structure, and
  3. health limitations.

Papers should focus on experiences and policies aimed at addressing Americans age 50 and older and highlight the experiences of different socio-economic groups, with a particular emphasis on the disadvantaged.

Funding is available for domestic travel to the conference for one author of each paper to be presented. It is anticipated that either a special issue of a scholarly journal or an edited volume will be produced based on papers delivered at the conference.

Paper proposals for the conference should be sent to Professor Kenneth Couch by March 15, 2014. Authors will be notified of acceptances by April 15, 2014. Drafts of papers to be presented at the conference will be due by the end of October. Additional details here. 

February 14, 2014 in Health Care/Long Term Care, Programs/CLEs, Retirement, Social Security | Permalink | Comments (0) | TrackBack (0)

Saturday, January 18, 2014

New report from SSA's Office of Retirement and Disability Policy addresses SS, SSI participation rates by African Americans

African Americans: Description of Social Security and Supplemental Security Income Participation and Benefit Levels Using the American Community Survey

Patricia P. Martin and John L. Murphy
Research and Statistics Note No. 2014-01 (released January 2014)

Intro/summary:  African Americans encounter significant economic disadvantages, making them a critical focus for social insurance programs. Examining how the African American population uses Old-Age, Survivors, and Disability Insurance (OASDI, or Social Security) benefits and Supplemental Security Income (SSI) payments clarifies the role these programs play in supporting at-risk populations.

Earlier research has explored various facets of the relationship between Social Security and African Americans. For instance, many studies investigate African Americans' low retirement benefit receipt rates relative to whites (Abbott 1977, 1980; Thompson 1975; Huntley 1979; Parsons 1980; Gibson 1987, 1991, 1994; Farley 1988; Hayward, Friedman, and Chen 1996; O'Rand 1996; Gendell and Siegel 1996; Choi 1997; Hendley and Bilimoria 1999; Gustman and Steinmeier 2004; Bridges and Choudhury 2007, 2009; Favreault 2010). Others examine the prominent role of children's benefits for African Americans (Newcomb 2003/2004; Tamborini, Cupito, and Shoffner 2011). This analysis contributes to that body of research by using a relatively new, publicly available, and comprehensive data source, the American Community Survey (ACS), to document the demographic and economic characteristics of African American OASDI beneficiaries and SSI recipients. It is designed to lay the groundwork for future detailed analyses of how African Americans interact with Social Security and related programs.

In this note, we first discuss the strengths of the ACS and the methodology of this analysis. Next, we present the demographic and economic characteristics of the African American population in the 2009 ACS. Then, we present ACS data on OASDI and SSI participation and benefit levels, comparing African American participants with overall participants in three age distributions: the full age range for which benefit statistics are available in the ACS (15 or older), working age (18–61), and retirement age (62 or older).

Access the article here.

January 18, 2014 in Discrimination, Retirement, Social Security, Statistics | Permalink | TrackBack (0)

Monday, January 13, 2014

Supreme Court Accepts Cert on 401(k) Plan Investment Practices Case

Earlier today I posted about a new article on tightening scrutiny of investment plans and financial products marketed to seniors.  On the theme of liability for those who push completely unsuitable investments, I should add that the U.S. Supreme Court recently accepted cert on Fifth Third Bancorp v. Dudenhoeffer, where employees challenged the investment practices of their 401(k) plan administrators.  The issue is breach of fiduciary duties for continuing to encourage investment of employee retirement monies in the employer's securities despite the company's deepening involvement in the subprime mortgage market that drastically increased risk.  

The plan administrators argue that they are entitled to a "presumption of reasonableness" for investing in employee stock ownership plans (ESOPs) under ERISA law, citing 29 USC 1104(a)(2). The workers challenge application of such a presumption at the pleading stage. They assert continued recommendations to invest, rather than divest, combined with what they believe and allege was the plan administrators' knowledge of the risk, are sufficient to frame a cause of action for violation of fundamental fiduciary obligations under ERISA protections.  

I wish I could predict the Supreme Court's action means that employees and retirees will have a better chance of getting past motions to dismiss on pleadings in retirement plan cases.  Afterall, even a conservative such as Chief Justice Rehnquist rejected application of heightened standards at the complaint stage as grounds to dismiss civil rights cases, in Leatherman v. Tarrant County Narcotics (1993).  But, the fact that the Court accepted cert where the 6th Circuit actually ruled in favor of the employees makes me a little less than hopeful.   There is a split in the circuits, with, for example, the 2d Circuit ruling in 2011 in favor of plan administrators on similar allegations in In re Citigroup ERISA Litigation.

Lots of interesting blog commentary on this topic, including SCOTUS Blog.

AARP is filing an Amicus brief for the plaintiffs in the Dudenhoeffer case, as discussed by Drexel Law Professor Lisa McElroy in AARP's Blog.

January 13, 2014 in Federal Cases, Federal Statutes/Regulations, Retirement | Permalink | Comments (0) | TrackBack (0)

Thursday, January 9, 2014

NBER Bulletin on Aging and Health, 2013, Vol. 2 has been released


The National Bureau of Economic Research has released 2013/Vol. 2 of the Bulletin on Aging and Health.  The 2013 No. 2 Bulletin includes the articles below:

1)  The Value of Medicaid to Older Households
    by Mariacristina De Nardi, Eric French, and John Bailey Jones

2)  Who Uses the Roth 401(k)?
    by John Beshears, James Choi, David Laibson, and Brigitte Madrian

3)  Do Financial Incentives Induce Disability Insurance Recipients to Return to Work?
    by  Andreas Kostol and Magne Mogstad

Also:  Abstracts of Selected Recent NBER Working Papers

NBER Profile:  Michael Baker

View a printable PDF copy of the 2013 No. 2 NBER Bulletin on Aging and Health here.


The HTML version is available at the Bulletin's homepage.

January 9, 2014 in Health Care/Long Term Care, Medicaid, Retirement | Permalink | TrackBack (0)

Wednesday, January 8, 2014

ABA: "Road to Retirement" (Or Not) for Attorneys

The cover story for the January 2014 issue of the ABA Journal is "Road to Retirement: Ways to Make Retirement Anything but Resignation."  It is a surprisingly long piece, combining advice for younger workers with strategies across the decades, from late 20s to retirement, including the potential need for "life event adjusments."

Lots of interesting facts and quotes here, including observations on the theme of "reinvention" rather than retirement from Deanell Reece Tacha, "the 67-year old dean of Pepperdine Law School," now in her third year of law school administration, after serving 25 years as a judge on the 10th Circuit.   

The article notes the ABA estimates some 400,000 lawyers are presently age 62 or older. 

January 8, 2014 in Retirement | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 7, 2014

Common misconceptions about Roth IRAs...

Via Bankrate:

Sometimes what you don't know can hurt you, especially when it comes to individual retirement accounts. For instance, if you don't know that contributions for the prior year can be made up until the April 15 tax deadline of the current year, you may be missing out.  Some misconceptions are innocuous while others can lead to serious tax blunders. Don't feel bad; even financial advisers get tripped up by the intricate rules of IRAs. Figuring out how the accounts work and what's allowed could be a full-time job. As a result, the list of things most people don't know about IRAs could fill a book.

This article list nine common misconceptions about IRAs--read about them here.

 

January 7, 2014 in Property Management, Retirement | Permalink | TrackBack (0)

Monday, January 6, 2014

AALS Program Report: The Financial Challenges of Aging

Skating in NYC Photo (c) 2014 Katherine C. PearsonCatching up after a busy weekend at the Association of American Law Schools (AALS) Annual Meeting 2014 in New York City, I'm happy to report the presentations at the Section on Aging and the Law seemed to go smoothly and were well received, with a very engaged audience.  While the weather made travel to and from NYC a bit tricky, it also seemed to "encourage" strong attendance at sessions.  (I found myself skating even when not visiting the rink at Rockefeller Plaza!)

Section Chair Susan Cancelosi (Wayne State) was snowed out -- but I suspect Susan would be pleased by the reaction to the program she planned.  Thank you, Susan, for putting together the theme, securing speakers, making sure we were all on track, and creating a back-up weather plan.  We've decided you should be the moderator next year, if you don't mind!

Dick Kaplan (Illinois) led off the panelists, using his best "Dr. Phil" style to walk us through (both literally and metaphorically) the latest changes to Medicare triggered by the Affordable Care Act and other recent legislation.  Recognizing that many in our audience do not teach elder law or health care law, Dick offered information useful to all academics who "expect" to retire.  For example, recent information from the Employee Benefit Research Institute supported his forecast that a 65-year old person retiring in 2012 would need substantial saving just to cover out-of-pocket medical expenses, in the range of  $122,000 -$172,000 for men and between $139,000 - $195,000 for women (with projections also affected by prescription drug usage).  Dick reminded us that this figure does NOT include any costs for long-term care.  

Next on the panel was Laura Hermer (Hamline), who is new to our Section -- and a very welcome addition.  Using her health law background, Laura outlined the maze of programs, including state plan innovations and waiver programs under Medicaid, that may provide "long-term services and supports" (or LTSS -- the latest acronym that seems to be an intentional step away from a "care" model) for older persons.  Her presentation emphasized the shift to home or community based care, but Laura made clear that this shift depends heavily on unpaid care by family members. 

Incoming Section Chair Mark Bauer (Stetson) made effective use of visual images of 55+ communities in Florida to demonstrate his concern that exemptions from civil rights protections that permit age-restricted communities may not be matched by actual benefits for the older adults targeted as residents.  Mark stressed the percentage of housing that is not designed to match predictable needs for an aging population.  Examples included multi-story designs without elevators, steps into even ground-level units, and bathrooms without wheel-chair accessibility.  Mark's presentation expanded on his recent article in the University of Illinois' Elder Law Journal.

Speaking last, my topic was the latest state law developments tied to federal laws that authorize nursing homes to compel a "responsible party" to sign a prospective resident's nursing home contract.  States are creating potential personal liability for costs of care for family members, agents or guardians, or transferors or transferees of resources, if the resident is deemed ineligible for Medicaid.  Here are links to a copy of the slides I used for my  presentation on "Revisiting Nursing Home Contracts," as well as to a related short article I was invited to write for the Illinois State Bar Association's Trusts & Estates Section in December 2013.

The panel presentations were followed by great questions and observations from the audience, further highlighting the financial challenges of aging.  Plus, it was wonderful to see several new members volunteering to join the planning committee for future programs for the Aging and Law Section of AALS.  And welcome back to the board to Alison Barnes (Marquette Law).

January 6, 2014 in Consumer Information, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, Medicaid, Medicare, Programs/CLEs, Retirement, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 1, 2014

Problems With Oversight -- or Eligibility -- for VA Benefit Programs: Revisiting a NYT Article

Professor Morgan blogged about this interesting NYT article earlier, but I want to highlight a portion of Jessica Silver-Greenberg's "Winning Veterans' Trust, and Profiting From It."   The article is especially critical of "actors" active in representing or promoting VA benefits for aging veterans, including "lawyers, financial advisers and insurance brokers."

"Questionable actors are capitalizing on loose oversight to unlock the V.A. money and enrich themselves, sometimes at veterans’ expense. The V.A. accreditation process is so lax that applicants provide their own background information, including any criminal records. But the V.A. has only four full-time employees evaluating the approximately 5,000 applications that it receives annually. Once people get the V.A.’s stamp of approval, they rarely lose it, even if a customer complains or regulatory actions mount. Last year, the V.A. revoked its accreditation for two of its more than 20,000 advisers."

But it is one thing to question the standards for accreditation for individuals to represent or assist applicants for VA benefits. It strikes me there is an irony to the fact that the VA requires accreditation in order to serve as a paid advisor, yet that very accreditation is, according to the article, apparently part of the problem.

It seems to me the history described in the article also suggests the very real importance of VA benefits to individuals, especially those struggling to afford long-term care, such as 86-year-old Henry Schaffer, who seems to be in that gray zone of just enough inome to be "ineligible" for VA benefits, but not enough income to afford to pay privately.  Thus, the arguable need for "planning."   The article has a mixed message, one that I tend to question, as the article seems to imply that the increased rate of usage of VA benefits is due primarily to improper benefit awards, secured by manipulative "players" rather than experienced consultants working within the rules.

I noticed that the comments to the article are as interesting as the article itself, pointing to the need for better public understanding of VA benefits (including the availability of benefits for spouses of former members of the service).  The comments highlight the consequences of close calls on ineligibility, and therefore also emphasize the need for qualified legal or other knowledgeable assistance.

January 1, 2014 in Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Retirement | Permalink | Comments (0) | TrackBack (0)