Thursday, June 6, 2019
One piece of good news from Alabama that caught my eye was the passage of a new law regarding pensions and Special Needs Trusts. Here is the press release from the firm of one of the attorneys integrally involved in this legislative effort:
A new act has been passed by the Alabama Legislature and signed into law by the Governor that will allow participants in the Retirement Systems of Alabama (“RSA”) pension plan to direct proceeds to pass to a special needs trust for a beneficiary with a disability who receives government benefits. Sirote & Permutt shareholder, Katherine N. Barr, a member of the firm’s Private Clients Trusts and Estates Group, recognized the need for this important statutory change when doing estate planning for RSA employees and retirees who wanted to leave their RSA pensions to children with disabilities receiving SSI and Medicaid. The RSA provisions required the pension payment to be paid directly to the child, which caused a loss of these critical government benefits in most cases. With input from RSA, Ms. Barr prepared legislation to correct this problem. State Senator Cam Ward from Alabaster, Alabama introduced the legislation as SB 57 this session and State Representative Matt Fridy from Montevallo, Alabama introduced to it the House. Both the House and Senate passed it unanimously. Governor Ivey signed the legislation on May 22, 2019. The Act covers all RSA retirement plan participants and will become effective August 1, 2019. Ms. Barr states that it took more than three years to obtain this result. This legislation will benefit individuals with disabilities for years to come by allowing them to receive the pension payments in a manner that will not affect their Medicaid and SSI payments. The pension can now be directed to a certain type of special needs trust upon the death of the plan participant. The trust can be set up in advance or following the participant’s death. The Alabama Family Trust can be designated to receive the benefit, as can a private trust.
Well done Katherine!
Monday, April 1, 2019
Kristen Lewis has published a really great article in the March 2019 issue of Estate Planning Magazine. Planning Challenges for Beneficiaries With Special Needs. To accommodate adequately the particular circumstances of beneficiaries with special needs, multiple trusts may be required provides a comprehensive discussion of 10 challenges faced by estate planners when a beneficiary has special needs.
Consider the opening of this article
Disabilities do not discriminate based on a family’s socio-economic status. Families of great wealth have children or other beneficiaries with disabilities at the same rate as families of modest means. Estate planning attorneys, and the other allied professionals who serve these families, are no longer able to take the position that “We don’t do special needs planning,” or worse yet, recommend that the child or other beneficiary with a disability simply be disinherited (which is likely grounds for malpractice). A recent study by the Centers for Disease Control and Prevention concluded that the prevalence of Autism Spectrum Disorder (ASD) has risen to one in every 68 births in the U.S. A more recent study concluded that the estimated prevalence of children in the U.S. with a “parent-reported” diagnosis of ASD is now one in 40. The 2010 U.S. Census reported that almost 20% of the U.S. civilian non-institutionalized population claimed to have a disability. With statistics like these, estate planners and allied professionals must become, and remain, educated about the tools and techniques available to help clients secure the future of beneficiaries with disabilities within the broader context of estate planning. A critical first step is recognizing, and knowing how to overcome, the most common challenges to effective special needs planning. (citations omitted)
Read this article, then save it to your library as a resource. You will be glad you did!
PS-shameless plug: Mark your calendars for Stetson Law's 2019 Special Needs Planning Institute for October 16-18, 2019. Registration opens July 1. #StetsonSNT2019
Thursday, February 28, 2019
With the recent death of Karl Lagerfeld who is survived by his famous cat, Choupette, it is timely to think about pet trusts as part of estate planning. The story was covered by many news outlets. Here is info about the one that ran in CBS News, Karl Lagerfeld's cat to inherit a fortune, but may not be richest pet.
Choupette, a Burmese cat, stands to inherit a chunk of the designer'sestimated $300 million net worth, after he wrote her into his will in 2015, according to Le Figaro. Lagerfeld confirmed in an interview with Numéro last year that she, among others, would be an heiress to his vast fortune. "Don't worry, there is enough for everyone," he said. Among Choupette's most admired traits? "She doesn't talk," Lagerfeld told Numero in an earlier interview... Though Lagerfeld is German, the pair resided in France, where the law prohibits pets from inheriting their owners' wealth. German law, however, allows one's wealth to be transferred to an animal.
In the U.S., as the article notes, pet trusts are recognized but there may be limits on the amount, referencing the case of Leona Helmsely's dog, Trouble.
Friday, January 4, 2019
Recent news reports are focusing on the history of Frenchwoman Jeanne Calment, who died in 1997 at the purported age of 122 years and 164 days, a record that is still unsurpassed.
Some are convinced that she was not that old, and the possible motivation for the fraud is interesting. Did a daughter assume the identity of her mother, rather earlier in the history, to avoid paying inheritance taxes? One researcher notes the lack of any evidence of dementia as a clue.
For more, see "Researchers Claim World Record for Longest Life a Case of ID Fraud" from CBS News.
Wednesday, December 19, 2018
The more I work in the field of elder law, and teach classes, the more I am convinced that enterprises who market to families and seniors fail to realize greater transparency can help their commercial products and enterprises succeed.
Thus, it is useful to read a New York Times' column on annuities, one that appears to be the first of a series. The author, Ron Lieber, begins his column on The Simplest Annuity Explainer We Could Write:
Annuities can be complicated. This column will not be.
After I wrote two weeks ago about getting tossed out of the office of an annuity salesman, there was a surprising clamor for more information about this room-clearing topic. One group of readers just wanted a basic explainer on how annuities work. For that, read on.
Another group of readers worried that those hearing of my experience might assume that all annuities are bad, and that all people who sell them use subterfuge to do so. Neither of those is true: Next week, I’ll introduce you to some reasonable people who are trying to use certain annuities in new and improved ways.
My thanks to Dickinson Law colleague Laurel Terry for the heads up!
Monday, December 17, 2018
University of Cincinnati College of Law Professor of Practice Emerita Marianna Brown Bettman has a very interesting and well-written Blog report on the Ohio Supreme Court's December 12th decision in Embassy Healthcare v. Bell. The issue is under what circumstances a surviving spouse can be held liable for her deceased husband's nursing home costs under a statutory theory of "necessaries." Lots to unpack here.
December 17, 2018 in Consumer Information, Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Friday, November 16, 2018
We all know that caregiving can be a 24/7/365 job. And many caregivers are working full time and caregiving part-time, while others leave their jobs to caregive. In those situations, it is no less important for caregivers to save for their own retirement, no matter how hard that may seem to be. US News ran a story, Caregivers Should Save for Retirement which focuses on caregiving for someone with special needs. The article highlights the issues
ADVANCES IN MEDICINE and technology are allowing Americans – including those with special needs and disabilities – to enjoy longer, fuller lives. Still, as a caregiver, the emotional, physical and financial toll can be draining and could potentially prevent you from being able to plan for your own future. Research shows 30 percent of caregivers are not saving and investing for their own retirement because of the time and cost required for caring for those with special needs.
The article suggests the following for the caregiver: check out the available programs and benefits, continue savings and don't forget to invest, consider the implications of your financial situation on the individual with special needs who is applying for means-tested assistance, be aware of the impact of well-meaning relatives making a testamentary gift for the individual, and housing options and their various levels of care to name a few. The article also discusses special needs trusts and ends with this:
The key takeaway is that planning for your financial future, while at the same time ensuring continuity of care for a loved one, can be extremely complex, but you don't have to do this alone. Leveraging professional resources and revisiting your plan periodically can help keep you on track as your needs, and the needs of your family, continue to evolve.
Wednesday, October 24, 2018
A notice about an upcoming continuing legal education program struck me as an apt sign of the times in elder law planning. The Pennsylvania Bar Institute explains:
Many clients are members of "modern family" structures. Our experienced faculty — with different legal perspectives — will explore the issues and opportunities available when planning for the long term care needs of clients in blended and non-traditional families. At the intersection of family law and elder law, they will examine various techniques, including long term care planning for clients with children from previous marriages and planning for unmarried partners.
Receive practical guidance on counseling clients
• Representation and conflict issues
• Information gathering tips
Examine issues at the intersection of family law and elder law
• Pre and post nuptial agreements
• Cohabitation agreements
• Gifts to divorced or separated children, alimony & child support issues
Explore long term care planning tools and techniques
• To marry or not to marry for long-term care
• Use of irrevocable trusts
• High assets/income: private pay, life insurance, and long term care insurance
• Spousal refusal
• Transfers by the community spouse after Medicaid eligibility
• To gift or not to gift: single individual vs. community spouse
For more, see Long Term Care Planning for Blended and Non-traditional Families, scheduled for first airing on November 27, 2018.
October 24, 2018 in Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Legal Practice/Practice Management, Programs/CLEs, State Statutes/Regulations | Permalink | Comments (0)
Tuesday, October 23, 2018
In a perfect world, everyone will be able to handle all of their own affairs, right until the day they die. In a perfect world, even if that was not possible (or even desirable), there is always some trustworthy family member or friend to step in to help.
Alas, it isn't a perfect world. For a number of years, when I was supervising an Elder Law Clinic, our clients sometimes needed the assistance of a professional agent or guardian, someone who was experienced in providing fiduciary management services for people of modest means, and who had a track record and references to demonstrate competence. We also wanted to see their certificate of insurance or bonding.
Recently I was looking for a guest speaker for a Nonprofit Organization Law class and I reached out to a company in my address book. I learned it had ceased doing business. In contrast to the dramatic stories from locations such as New Mexico, where nonprofit entities failed to carryout their fiduciary duties, Neighborhood Services, based in Lancaster, Pennsylvania found it necessary to close their doors for 300 vulnerable clients because of gaps in charitable funding.
Some clients had behavioral health needs. Approximately 150 of the clients were incapacitated people living in nursing and personal care homes in a multiple county region. New representatives were needed for all of them. A 2017 news story explained:
Founded in 1964, nonprofit Neighborhood Services fell over $400,000 in debt after losing most of its United Way funding a couple of years ago and failing to secure key federal grants, said Stanley, who joined the agency in October 2015 as its woes were mounting.
The agency, which never prioritized fund-raising, has lost several staff members in recent months and currently employs five.
Neighborhood Services’ most visible role has been serving as the representative payee for more than 150 clients with intellectual disabilities, mental illness or addiction issues. The agency received the clients’ monthly disability checks and prioritized the payment of their rent and other basic needs.
"I'll miss all the staff," said Nathan Wilson, 57, who relied on Neighborhood Services to manage his finances. "Whenever I need extra, they always get it for me."
This history is a reminder that more than good intentions are needed to run a successful nonprofit organization.
October 23, 2018 in Consumer Information, Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Thursday, October 4, 2018
I teach contract law and I teach elder law, and often those silos overlap. But recently someone asked me whether a "power of attorney" was a contract. Somehow I had not not considered this topic before. My first reaction was "no, not usually," although certainly POAs have contract-like implications once the agent takes action using the POA as authority. I tend to think of POAs and similar appointments of an agent as bound by rather distinct "fiduciary law" obligations, as well as the limitations of the language in the POA itself and any statutory law, rather than traditional contract law principles. But perhaps my first instinct is wrong. One significance of categorization is when determining what statutes of limitation applies to any violation. It turns out the issue usually arises in the context of liability for allegations of misuse of authority.
What do you think? At least one court believes POAs are contracts, at least for purposes of applying principles of interpretation. A Court of Appeals opinion notes, when deciding whether family-member agents had authority to "self-deal" when handling real estate transactions in the name of the principal, that "Because a power of attorney is a contract, we interpret its provision pursuant to the rules of contract interpretation. . . . " See Noel v. Noel, 225 So. 3d 1114, 1117(Louisiana Ct. of Appeals, 2017).
For additional perspectives see the discussion of the Alabama Supreme Court, including the dissent, in Smith v. Wachovia Bank, 33 So. 3d 1191, 1202 (Ala. 2009).
October 4, 2018 in Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (3)
Thursday, September 27, 2018
First the bad -- or at least frustrating -- news. On Thursday, September 27, we received word that Senate Bill 884, the long-awaited legislation providing key reforms of guardianship laws in Pennsylvania, was now "dead" in the water and will not move forward this year. Apparently one legislator raised strong objections to proposed amendments to SB 884, amendments influenced by recent high-profile reports of abuse by a so-called professional guardian who had been appointed by courts in multiple cases in eastern Pennsylvania.
The objections reportedly focused on one portion of the bill that would have required both law guardians (typically family members) and professional guardians to undergo a criminal background check before being appointed to serve. The amendment did not condition appointment on the absence of a criminal record, except where proposed "professional guardians" had been convicted of specific crimes. For other crimes or for lay guardians, the record information was deemed important to permit all interested parties and the court to make informed decisions about who best to appoint.
What is next? Pennsylvanians will look to new leadership in the 2019-20 session in the hope for a new bill that resolves differences and that can make it through both houses. In the meantime, the courts are already moving forward with procedural reforms, adopted in 2018 at the direction of the Pennsylvania Supreme Court.
And that leads us to a more positive note about guardianship reform in Pennsylvania. Pennsylvania Common Pleas Judge Lois Murphy testified this week during a Senate Judiciary Committee meeting about the Pennsylvania Courts' new Guardianship Tracking System (GTS). It is now operational in 19 counties (out of 67 total counties) in Pennsylvania, including coming online in the major urban counties for Philadelphia and Pittsburgh. Judge Murphy reported that GTS is "already paying dividends," and she gave the example of a case in which the reporting system triggered a red flag for an estate worth more than $1 million, much higher than originally predicted, making appointment of different guardian more appropriate.
Judge Murphy predicts that as the tracking system becomes operational statewide, it should generate valuable answers, such as how many persons are subject to guardianships at any point in time, how much in assets are under management, what percentages of the pointed guardians are family members (as opposed to professionals), and what percentages of those served are over or under age 60. The hope is that GTS will also permit coordination of information about appointed guardians in state courts with information in the federal system on those appointed as Social Security representative payees, thus, again, providing more comprehensive information about trustworthiness of such fiduciaries.
You can see Judge Murphy's testimony, and hear her reasons for criminal background checks and appointment of counsel to represent alleged incapacitated persons, along with the views of retiring Senator Greenleaf and Senator Art Haywood, in the recording of the September 24 hearing recording below.
Judge Murphy testifies from approximately the 35 minute mark to the 43 minute mark, and again from 1 hour 33, to one hour 44.
Bottom line for the week -- and perhaps the session? You can certainly grow old just waiting for guardianship reform in Pennsylvania.
September 27, 2018 in Consumer Information, Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Property Management, Social Security | Permalink | Comments (0)
Recommended reading! The Rhode Island Providence Tribute published a series of in August and September 2018 that flow from a student journalism project at Brown University in Rhode Island. The team of students conducted an investigation over the course of a year, looking for the outcome of elder abuse allegations in the state. What they found were plenty of arrests but very few successful prosecutions.
Over two semesters, four student reporters pulled hundreds of court files and police reports of people charged with elder abuse to explore the scope of the problem and the way law enforcement and prosecutors handle such cases. In addition, the reporters used computer data purchased from the Rhode Island judiciary to track every elder-abuse case prosecuted in Rhode Island’s District and Superior courts over the last 17 years.
The student project, sponsored by a new journalism nonprofit, The Community Tribune, was overseen by Tracy Breton, a Brown University journalism professor and Pulitzer Prize winner who worked for 40 years as an investigative and courts reporter for The Providence Journal.
As part of the year-long investigation, the students analyzed state court data to evaluate how effective Rhode Island has been at prosecuting individuals charged with elder abuse. This had never been done before — not even the state tracks the outcomes of its elder-abuse cases. The data, based on arrests made statewide by local and state police, was sorted and analyzed by a Brown University graduate who majored in computer science.
The investigation found that 87 percent of those charged with elder-abuse offenses in Rhode Island over the 17-year period did not go to prison for those crimes. Moreover, fewer than half of those charged were convicted of elder abuse. This left victims in danger and allowed their abusers to strike again and again.
The above excerpt is from the first article documenting the students' amazing investigation. I definitely recommend reading the following articles. Caution: there is a paywall that appears after you open some number of articles on the Providence Tribune website, so if you aren't in the position of being able to pay for all the articles, you may want to prioritize the order in which you "open" the individual parts.
Part 6 is somewhat different, as it tracks the "successful" prosecution of a court-appointed guardian who pled "no contest" in 2015 to charges of embezzling money from an 80-year old elderly client. The embezzlement scheme allegedly involved false claims for services and double-billing. According to other news sources, the guardian, an attorney who was eventually disbarred in connection with her plea, was required to pay more than $130k in restitution and serve 30 months of home confinement in lieu of a "suspended" sentence of seven years in prison.
September 27, 2018 in Consumer Information, Crimes, Current Affairs, Dementia/Alzheimer’s, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Legal Practice/Practice Management, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Wednesday, September 26, 2018
Latest News on Pennsylvania's Adult Guardianship Reform Legislation - SB 884 is still lingering in the Senate
I was hoping to be able to report by today, the last of a three-day working session for the Pennsylvania Senate, that Senate Bill 884 on adult guardianship law reforms had passed the state's Senate, allowing the bill to move on to the House of Representatives. But no vote yet on the floor of the Senate. The next opportunity for movement is Monday, October 1.
For more on the history of the bill presenting several key items of reform for Pennsylvania's Adult Guardianship Laws and process, see our posts from last week, here, here, and here, or a memo I prepared earlier last week, here.
Will the Pennsylvania Legislature take action before the November elections? Stay tuned!
September 26, 2018 in Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, State Statutes/Regulations | Permalink | Comments (0)
Monday, September 24, 2018
From The New York Times, a well-told tale from siblings who recently "joined the ranks of the 15 million or so unpaid and untrained family caregivers for older adults in this country," calling them the nation's invisible work force. As one son admits:
The work takes its toll. These sons, daughters, husbands and wives are at increased risk of developing depression, as well as physical and financial difficulties, including loss of job productivity. Being sick and elderly in this country can be terrifying. Having a sick and elderly loved one is often a full-time job.
As the workload increased, we hired help, as much for ourselves as for our parents. But after some items were stolen, we realized we had to be more careful about whom we allowed into our parents’ home. Older adults in this country lose almost $3 billion a year to theft and financial fraud. Nearly every week my father instructed us to donate money to someone who had sent him a generic email appeal. It fell on us to keep our parents from being exploited.
With millions of elderly adults requiring assistance with daily living, physicians should make it routine practice to ask family members whether they can provide the requisite care. Many of these potential caregivers, ill or stressed themselves, simply cannot.
For the full article, read When Family Members Care for Aging Parents.
My thanks to colleague Laurel Terry at Dickinson Law for sending the link to this article!
Friday, September 21, 2018
This is the third of three postings about adult guardianship reform, with an eye on legislation in Pennsylvania under consideration in the waning days of the 2017-18 Session.
Senate Bill 884, as proposed in Printer's No. 1147, makes basic improvements in several aspects of the law governing guardianships as I describe here. A key amendment is now under consideration, in the form of AO9253. These amendments:
- Require counsel to be appointed for all allegedly incapacitated persons;
- Require all guardians to undergo a criminal background check;
- Require professional guardians to be certified;
- Require court approval for all settlements and attorney fees that a guardian pays through an estate (reflecting recommendations of the Joint State Government Commission's Decedents’ Estates Advisory Committee).
Most of these amendments respond directly to the concerns identified in the alleged "bad apple" appointment cases in eastern Pennsylvania, where no counsel represented the alleged incapacitated person, where there was no criminal background check for the proposed guardian, and where the guardian was handling many -- too many -- guardianship estates.
A key proponent of the additional safeguarding language of AO 9253, Pennsylvania Senator Art Haywood, has been working with the key sponsor for SB 884, retiring Senator Steward Greenleaf. His office recently offered an explanation of the subtle issues connected to mandating a criminal background check:
The PA State Police needed to fix some technical issues for us regarding national criminal history record checks only to make sure that when we send the legislation to the FBI for approval, they won’t have anything with which to take issue. The FBI requires an authorized agency to receive these national background checks; DHS is an authorized agency, but the 67 Orphans’ Courts in PA are not. Further, the FBI prohibits us from requiring recipients of national background checks to turn them over to a third party for this purpose, so we can’t require DHS or receiving individuals to send the national background check to the court.
As such, we had to develop a procedure that would still get courts information about whether someone under this bill has a criminal background from another state that would otherwise prohibit them from serving as a guardian. We switched the language around a bit to require DHS to send a statement to the individual that verifies one of 3 things, either: (1) no criminal record; (2) a criminal record that would not prohibit the individual from serving as guardian; or (3) a criminal record that would prohibit the individual from serving as guardian. The individual would then have to bring this statement from DHS to the court when seeking to become a guardian. As in previous versions, the individual has an opportunity to respond to the court if there is a criminal record that would prohibit the individual from serving, and the response should assist the court in determining whether that person nevertheless is appropriate (for example, a person can voluntarily provide their own copy of their national background check – or other types of evidence – for the court to review).
The devil is in the details for any legislative reforms. It is often an "all hands on deck" effort to secure passage, especially in an election year.
Will the Pennsylvania Legislature pass Senate Bill 884 to make changes appropriate for safeguarding of vulnerable adults?
September 21, 2018 in Cognitive Impairment, Consumer Information, Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Thursday, September 20, 2018
Continuing with the analysis from yesterday for why many jurisdictions are finally confronting the need to make changes in their adult guardianship policies and laws, here is my take on additional reasons. Will Pennsylvania enact Senate Bill 884 this session to get the ball rolling on reform?
Troubled histories have emerged across the nation. Public concern has grown around the need for more careful consideration of the roles played by guardians. For example, events in recent years have highlighted the following problems:
- In Las Vegas, Nevada, uncritical reliance on a few individuals to serve as appointed “professional” guardians was linked to manipulation and abuse of the incapacitated wards and misuse of the wards’ financial resources. Concerned family members alleged corruption and their advocacy drove a reluctant system to examine the history of appointments, leading to the indictment and arrests of a frequently appointed guardian, members of her staff and a police officer in February 2018.
- In New Mexico, two nonprofit agencies used for guardianship services were investigated; principals were indicted by the U.S. Attorney for thousands of dollars in theft from the estates of incapacitated individuals. This in turn triggered a massive call for emergency reform of New Mexico guardianship law, with the new laws coming into effect in July 2018.
- In Florida, complaints by family members and others presented to the Florida Legislature over several years, resulted in three successive years of reforms to Florida guardianship law. One dramatic example was a particular court’s uncritical reliance on “friends” of the court to be appointed as guardians and paid out of the wards’ estates. In some instances the court rejected appointment of available family members. In 2017, a jury awarded a verdict of $16.4 million against lawyers for breaching their fiduciary duties and charging unnecessary and excessive fees.
The New Yorker magazine published a feature article in October 2017 on the Las Vegas history, criticizing the state’s reluctance to investigate and make timely changes in its systems for appointment and monitoring of so-called professional guardians. The title of the article is eye catching: How the Elderly Lose Their Rights, by Rachael Aviv.
While location-specific news stories of scandals come and go, the persistence of guardianship problems points to systemic weaknesses that require modern, uniform standards. Thirty years ago, the Associated Press published a six-part national investigative series entitled Guardians of the Elderly: An Ailing System. The series revealed frequent failures to appoint counsel to represent an alleged incapacitated person and the lack of clear standards for guardians who serve as fiduciaries.
September 20, 2018 in Cognitive Impairment, Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Wednesday, September 19, 2018
Will Pennsylvania Pass Long-Awaited Adult-Guardianship Law Reforms Before End of 2017-18 Session? (Part 1)
For the last few years, I've been quietly observing draft bills addressing needed reforms of Pennsylvania's adult guardianship system as they circulate in the Pennsylvania legislature. Over the next few days, drawing upon a detailed update memorandum I prepared recently for interested parties, I will post reasons why the legislature can and, many would argue, should move forward in 2018.
Today, let's begin with background. First, here is the status of pending legislation and the timetable that could lead to passage:
Pennsylvania Senate Bill 884 (Printer’s No. 1147) presents an important opportunity to enact key reforms of Pennsylvania’s Guardianship Laws. The bill is based on long-standing recommendations from the Pennsylvania Joint State Government Commission. The Senate unanimously passed an earlier identical measure, S.B. 568, during the last legislative session (2015-16). The current bill was approved and voted out of Senate committee in June 2018, but then tabled. Although the schedule is tight, there is still time for action by both house before the end of the session in November. If not fully passed and signed this year, a new bill must be introduced in the next legislative session.
The Pennsylvania Senate has scheduled session days before the November election on September 24, 25, and 26 and October 1, 2, 3, 15, 16, and 17. The Pennsylvania House of Representatives also has scheduled session days for September 24, 25 and 25, and October 9, 10, 15, 16 and 17. If S.B. 884 is passed by the Senate in September, it appears there may be adequate opportunity for the House to move the legislation through the House Judiciary Committee and to the floor for final passage.
Second, let's review the steps taken most recently towards reform of existing Pennsylvania law:
In 2013-14, the Pennsylvania Supreme Court formed an Elder Law Task Force to study law-related matters relevant to the growing population of older persons in Pennsylvania. The team included members of all levels of courts in the Commonwealth, plus private attorneys, criminal law specialists, and perhaps most importantly, members of organizations who work directly with vulnerable adults, including but not limited to seniors. Guardianship reform quickly became a major focus of the study. I was a member of that Task Force.
Statistics available to the Task Force in 2014 show that some 3,000 new guardianship petitions are filed with the Pennsylvania Courts each year, of which approximately 65% are for alleged incapacitated persons over the age of 60. The number of new petitions can be expected to increase in the very near future. During the last six years, the cohort of Pennsylvania’s population between the ages 64 and 70 grew by a record 31.9%. Soon, that aging cohort will reach the years of greatest vulnerability with the increased potential for age-related cognitive impairments or physical frailty. Appointment of a guardian is usually a choice of last resort, sometimes necessary because of an emergency illness or because individuals have delayed using other means, such as execution of a power of attorney or trust, to designate personally-chosen surrogate decision-makers.
When a determination is made that an individual is incapacitated (as defined by statute) and in need of certain assistance (again, as defined by law), courts have the duty and power to appoint a person or an entity as the “guardian.” Once appointed by a court, guardians can be given significant powers, such as the power to determine all health care treatment, to decide where the individual lives, and to allocate how money can be spent. While Pennsylvania law states a preference for “limited guardianships,” in reality, especially if no legal counsel is appointed to represent the individual to advocate for limited authority, it is more typical to see a guardian be given extensive powers over both the “person” and the “estate.”
The Task Force began its work by undertaking a candid self-assessment of existing guardianship processes. Based on its review of the history of guardianships in Pennsylvania, the Task Force issued detailed findings as part of its final Report released in November 2014, including the following:
- Guardianship monitoring is weak, if it occurs at all.
- Training is not mandated for professional or non-professional guardians.
- Non-professional guardians are not adequately advised as to the duties and responsibilities of managing the affairs of an IP [incapacitated person].
- The quality of guardianship services varies widely, placing our most vulnerable citizens at great risk.
The Pennsylvania Supreme Court identified a need for better information about the actions of appointed guardians; such information would be central to all recommended reforms. The Task Force recommended a new system enabling statewide accountability and consistent oversight.
Following the Task Force Report and Recommendations, and under the leadership of the Supreme Court, the Administrative Office of the Pennsylvania Courts began working on procedural reforms, beginning with creation of an Office of Elder Justice in the Courts. The Courts developed a new, online Guardianship Tracking System, and in June 2018 the Supreme Court adopted new Orphans Court rules (14.1 through 14.14) that establish certain procedural safeguards for guardianships and require use of uniform, state-wide forms and reporting standards for all guardians. These rules are scheduled to become fully effective by July 2019.
Pursuant to a Judicial Administration Rule adopted August 31, 2018, the Supreme Court mandated a phased implementation of the tracking system, with workshops offering training for guardians on how to use the system to file inventory and annual reports. See Guardianship Tracking System Workshop.
Not all recommended reforms, however, can be accomplished by the Courts adopting procedural rules. Key substantive reforms require legislative action. Senator Stewart Greenleaf, the chair of the Senate’s Judiciary Committee and a frequent sponsor of child and adult protective measures, introduced Senate Bill 884 (and its predecessor). After many years of service and leadership in the Capitol, Senator Greenleaf is retiring this year; therefore, any necessary renewal of the legislation must attract new leadership.
September 19, 2018 in Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Cases, State Statutes/Regulations, Statistics | Permalink | Comments (1)
Tuesday, September 18, 2018
Do you read Robert Fleming's elder law newsletter? Tim Takacs' blog? I wanted to point out two recent blog posts I thought very useful. First is Tim's blog post, What To Do With Your Estate Planning Documents.Tim, in his blog post, discusses with whom to share your documents, discuss your plans with those affected by them, review joint ownerships and beneficiary designations, review your papers organize them and make sure they are current. Then comes Robert Fleming's newsletter where he writes in inspired response, What NOT to do With Your Estate Planning Documents..Here Robert offers these not to dos, such as: client, do not hide your documents, or write on them, or sign other documents, fail to take the documents to your next attorney, or fail to recall what you've done. I'd also like to suggest don't use your estate planning documents as a coaster or a napkin-in other words, keep them secure and in a safe place.
Monday, September 17, 2018
Jack Cumming, a California CCRC resident, frequently comments on Elder Law Prof Blog posts, bringing to bear his deep expertise in financial planning matters and his equally engaged commitment to historical accuracy in a wide variety of issues. Jack is a Fellow of the Society of Actuaries, and a Certified Aging Services Professional by Examination. During what I might call Jack’s “official career” as a professional actuary, he served as an independent consulting actuary for life and health insurance operations, and before that as a corporate officer and chief actuary for insurance companies.
I first came to know Jack during what I’ll call his “second” career. Jack helped many, including me, understand concerns about actuarial soundness issues in Continuing Care Retirement Communities. He came to his specialized expertise in CCRCs in a unique way, by moving to a California CCRC with his wife and discovering issues that can benefit from actuarial analysis. Over the last 12 years, Jack has advised CCRC residents and providers, as well as their organizations across the nation.
Jack recently commented on an item I posted on September 12, that described a particular history of poor actuarial decisions contributing to failure of a large Pennsylvania long-term care insurance company. In that post, I also reported on a new hybrid type of long-term care product, announced by New York Life Insurance Company. Jack’s response was, as usual, so insightful that, with Jack’s permission, I am posting his commentary here, elaborated by him, as a blog post in its own right.
A number of thoughts come to mind when reading the recent Elder Law Prof Blog post on long term care insurance (LTCi). The Elder Law post lists a perfect storm of what turned out to be foolhardy expectations. Morbidity was underestimated, so were contract lapse rates and mortality. Anticipated investment returns turned out to be overstated, medical and care costs escalated, and efforts to raise premiums without triggering shock lapses proved insufficient. The result for the industry has been devastating, as anyone who has been close to LTCi, is well aware. Fortunately, LTCi was a small part of the business of many insurers offering the product, so losses were absorbed. Penn Treaty, an LTCi specialist company, was not so lucky.
Now, with the benefit of hindsight, it thus appears that there were significant and material optimistic misjudgments made in bringing LTCi to the market. First, the data used for the initial pricing were not sufficiently vetted. Pricing actuaries used what data they could find but, for the most part, they failed to take into account the fact that the very existence of such insurance, then being introduced for the first time, would make it more likely that people would use the benefits.
Moreover, the opportunity for LTC providers to receive payments promoted the growth of the provider industry to deliver services that the insurance would cover. Thus, historical data from the time before there was insurance was misleading. Since the products lacked incentives for policyholders, or those offering services to them, to restrain their use, it was predictable that people would seek to make the most of their coverage. And they did and continue to do so.
Long Term Care Insurance developed originally to give the sales agents of the large life insurance companies a product that they could sell as part of a product portfolio centered on the sale of life insurance. Such a portfolio, in addition to life and long term care insurance, often included disability income and health insurance. Most of the pricing actuaries who were involved in the early development of LTCi products were life insurance specialists influenced by life insurance concepts. There’s little discretion or volunteerism about dying, so mortality data used in setting life insurance premiums tend to be relatively stable and predictable. The consequence is that underwriting and claims in large life insurance companies are principally administrative, e.g. for claims, confirm the death and send a check. More subjective risks, such as disability income (DI) insurance and LTCi, require active management over the duration of a claim by highly skilled executives experienced and specialized in those particular undertakings.
September 17, 2018 in Consumer Information, Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Statutes/Regulations, Statistics | Permalink | Comments (0)
Wednesday, September 12, 2018
Last week, students in my Elder Law class at Dickinson Law had the benefit of a fascinating, detailed presentation by Pennsylvania's Deputy Commissioner of Insurance Joseph DiMemo about the history of insolvency for Penn Treaty American Network and American Independent Insurance Company as sellers of long-term care insurance policies. In 2009, the State took the reins as the receiver for the two companies' administration of more than 126,000 policies sold nationwide.
From the history, I would summarize reasons for failure of long term care insurance in its "traditional" form as including the following:
- Selling products with a promise or at least a strong expectation of level premiums, especially in the early years of the industry. While contract language permitted companies to seek rate increases, the companies often delayed asking for increases or were frustrated by states that refused to grant requested increases;
- Assumptions made about "lapse" rates for policyholders that proved to be inaccurate;
- Assumptions made about "interest" rates for invested premiums that proved to be inaccurate, even before the 2008-10 financial crisis;
- Assumptions made about lower morbidity and higher mortality that proved not to be accurate for policyholders overall;
- The continued use of invalid assumptions about future premium rate increases.
In light of this tour through history, I was interested to read about New York LIfe Insurance Company's description of its "new and innovative long-term care insurance product" in its press release dated September 5, 2018:
A new long-term care solution announced today by New York Life, NYL My Care, promises to make the purchase of long-term care insurance simpler and more affordable. The innovative product features design concepts familiar to purchasers of other types of insurance, including a deductible and co-insurance, and offers the benefit of a dividend, which can help offset future premiums. NYL My Care clients will also benefit from the peace of mind that comes from working with a mutual life insurance company with the highest available financial strength ratings.
“New York Life is committed to helping people plan for the future, which includes protecting themselves and their loved ones from the financial burden of an extended health care event,” said Aaron Ball, vice president, New York Life Long-Term Care. “NYL My Care’s simpler, first-of-its-kind product design will help more people understand, access and afford the protection they need against the potential cost of long-term care.”
NYL My Care covers a wide range of long-term care needs, including home care, community-based care and facility care, and offers four pre-designed plan levels ... bronze, silver, gold and platinum.
For more on so-called "hybrid" or "asset" based products that couple long-term care benefits to annuities or life insurance polices, read New Life Insurance Brings New Innovations to Long-Term Care Insurance Market from Forbes.
September 12, 2018 in Consumer Information, Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Legal Practice/Practice Management, Retirement, State Cases, State Statutes/Regulations | Permalink | Comments (1)