Wills, Trusts & Estates Prof Blog

Deficit Reduction Act of 2005 and Healthcare Planning for the Elderly

Alison Barnes (Professor of Law, Marquette University Law School) has recently published her article entitled Long Term Care in the Political Balance, 9 Marq. Elder's Advisor 1 (2007).

Here is an excerpt from her article:

The Deficit Reduction Act of 2005 continued the long history of squeezing off Medicaid eligibility for aged people with disabilities who are not destitute.*** The Medicaid eligibility rules seek to utilize savings to pay for nursing facility care and recover expenditures from the value of assets generally exempt during the Medicaid recipient's lifetime, primarily the home.***

As one student*** inquired***: Do you mean that if I set aside assets to cover five years of nursing facility care (at $5,000 per month on average nationwide, or $300,000) then the government will pay for my nursing home care? That generally is correct[.]***

For the great majority, however, that set-aside is impossible. The question becomes: How much savings is “too much” to reserve from payment for nursing home care, and does society wish to scrutinize why the elderly owner seeks to set it aside from his or her support? ***

Keeping your will terms to yourself – A prudent decision

According to Martha Neil, Attorney’s Advice About Estate Plans: Don’t Tell the Family, abajournal.com, March 27, 2008:

Tempted to tell an ungrateful relative that he or she has been cut out of your will? Don't do it, an attorney advises.

The unnamed legal counsel, writing in response to an earlier column on open estate planning, says it's generally a bad idea to tell relatives too much about what they can expect to inherit under a will, reports the Prairie Star.***

Special thanks to Paul L. Caron (Associate Dean of Faculty, Charles Hartsock Professor of Law, University of Cincinnati College of Law) for bringing this article to my attention.

Having too many investment accounts may not be wise estate planning

The following is from Mickey Meece, As Accounts Pile Up, Less Becomes More, NYTimes.com, March 18, 2008:

The unwieldy task of looking after many financial accounts, the cost of paying for their upkeep and the risk of losing track of money in the process can lead to diminishing returns. In fact, investors who cannot tally their accounts on two hands might want to consolidate, financial advisers say.***

It can be especially overwhelming for people who have inherited a lot of money or sold all or part of a business, said Hannah Shaw Grove, a private wealth specialist.***

This year, investors are expected to move more than $300 billion out of 401(k)’s into I.R.A.’s, according to Cerulli Associates, a research firm specializing in the financial services industry. As people become more serious about managing all their accounts, said Carolyn M. Clancy, executive vice president for personal investment at Fidelity, they want to know that their beneficiaries will be taken care of and that they will have lower fees, lower or no loads on mutual funds and access to investment guidance — all in one place.***

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Offshore Trusts CLE

The National Constitution Center is sponsoring a live audio conference on April 22, 2008 entitled Offshore Trusts: Tax Essentials for International Estate Planning.

Here is a summary of the program:

Increased interest in foreign trusts has dramatically risen over the past few years. Applying the proper tax and transparency requirements is vital in structuring international estate planning. What are the current international and domestic estate planning essentials that you need to be aware of? Join us for this 60-minute audio program where you will discover:

• Tax Disclosure and Transparency: What You Need to Know Now
• Strategies to Secure Foreign vs. U.S. Assets of International Trusts
• Residency Rules & Expatriation: How Will this Affect Your Client?
• Foreign Grantor Trusts: Taxable & Nontaxable Assets

Top SSRN Downloads

Here are the top downloads from January 30, 2008 to March 30, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days

Rank	Downloads	Paper Title
1	268	Deduction Ad Absurdum: CEOs Donating Their Own Stock to Their Own Family Foundations David Yermack, New York University - Stern School of Business, Date posted to database: February 24, 2008 Last Revised: March 29, 2008
2	186	Back to School: The New Parameters of Funding a Grandchild's College Education Richard L. Kaplan, University of Illinois College of Law, Date posted to database: February 13, 2008 Last Revised: February 23, 2008
3	132	Empty Promises: Settlor's Intent, the Uniform Trust Code, and the Future of Trust Investment Law Jeffrey A. Cooper, Quinnipiac University School of Law, Date posted to database: February 6, 2008 Last Revised: March 17, 2008
4	98	The Strict Rules of Charitable Split Interest Gifts Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: January 29, 2008 Last Revised: January 29, 2008
5	81	In Their Own Hand: An Analysis of Holographic Wills and Homemade Willmaking Stephen Clowney, U.S. Court of Appeals for the Third Circuit, Date posted to database: January 15, 2008 Last Revised: February 6, 2008
6	70	The Human and Economic Dimensions of Altruism: The Case of Organ Transplantation Richard A. Epstein, University of Chicago - Law School, Date posted to database: February 3, 2008 Last Revised: February 14, 2008
7	68	Spiritualism and Will(s) in the Age of Contract Christopher J. Buccafusco, University of Chicago - Law School, Date posted to database: February 25, 2008 Last Revised: February 25, 2008
8	64	Bigelow: The Ninth Circuit on FLPs Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: December 17, 2007 Last Revised: December 17, 2007
9	44	Charitable Trusts: A Comparative Study of India, United Kingdom and the United States Tarun Jain, London School of Economics & Political Science (LSE) - London School of Economics, Date posted to database: January 26, 2008 Last Revised: January 26, 2008
10	42	How Do I Love Thee, Let Me Count the Days: Deathbed Marriages in America Terry L. Turnipseed, Syracuse University College of Law, Date posted to database: January 29, 2008 Last Revised: January 29, 2008

Estate Planning from Fresh Perspectives

The following is from a slide show posted on NYTimes.com, entitled Inheritance Reconsidered, discussing various estate planning strategies chosen by affluent individuals:

With the largest intergenerational transfer of wealth in American history now under way, Martin Rothenberg and others are reconsidering the meaning of inheritance. ***

Fearing complacency, Dal LaMagna, founder of the Tweezerman company, set up trusts to provide only small incomes for his children. "If you give them more, it's counterproductive to their motivation," he said.***

Frank Butler, a retired chief executive, wanted to give his fortune to charity. His wife, Ruth, however, wanted to subsidize the education of their three grandchildren. So they divided their resources in half, creating an educational trust from Mrs. Butler's side and a charitable foundation from Mr. Butler's[.]***

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Deficit Reduction Act and State Administration of the Medicaid Program

Julia Belian (Visiting Associate Professor of Law, University of Missouri-Kansas City School of Law) has recently published her article entitled State Implementation of the Optional Provisions of the Deficit Reduction Act, 9 Marq. Elder's Advisor 63 (2007).

Here are excerpts from the conclusion to her article:

The Deficit Reduction Act is a complex piece of legislation that modifies an already complex federal law. It offers a myriad of complex options to states that were already operating widely divergent versions of the Medicaid program.***

Increasing health care costs force consumers to face difficult choices, and the government likewise feels the strain of rising costs. Whether Medicaid was “working” before the DRA became law is irrelevant because, regardless of the ability to get health care to those in need, the costs had reached the point of crippling state budgets. Post-DRA Medicaid is not inherently more complex than pre-DRA Medicaid. States can still choose to adopt different approaches to the various problems they face, all in the hopes of improving health care delivery and reducing health care costs. However, the new state options under the DRA do seem to change the landscape in key ways.***

DRA and long-term care for senior Americans with disabilities

Kim Dayton (Professor of Law, William Mitchell College of Law) has recently published her article entitled Reality Check: The DRA's Impact on Seniors with Disabilities and Their Caregivers, 9 Marq. Elder's Advisor 13 (2007).

Here is the conclusion to her article:

There is no question that this nation needs to look closely at the means by which long-term care for elders with disabilities-indeed, all heath care, for everyone-is financed. Many options for restructuring the financing of long-term care for the elderly are available-including adding a long-term care benefit to Medicare or following the leads of Japan and Germany in creating a separate social insurance program to provide long-term care for older Americans. These will require additional taxes and may involve some general cost-shifting back to consumers who use government-financed health care services. But such cost-shifting should impact everyone, not just the elderly and disabled.

The DRA's solution to a crisis (that at the moment is largely manufactured) entailing the shifting of additional burdens onto groups that already bear most of the tremendous economic and emotional burdens that long-term disabilities implicate should not be considered acceptable. Nor should taxpayers be forced to support the long-term care partnerships, which amount to government sponsored discrimination benefiting a small group of wealthy, non-disabled Americans. The asset-transfer and LTCP provisions of the DRA should be repealed while Congress seeks gender- and ability-neutral solutions to the nation's future financing of long-term care for the millions of seniors who will need it in the coming decades.

Disintermediation within the model of market evolution

J.W. Verret has recently published an article entitled Economics Makes Strange Bedfellows: Pensions, Trusts, and Hedge Funds in an Era of Financial Re-intermediation, 10 U. Pa. J. Bus. & Emp. L. 63 (2007).

Here is the introduction to this article:

In Strong Managers, Weak Owners, Professor Mark J. Roe articulates an expansive theory to explain the evolution of the fragmented market structure in the United States. He posits that political choices led to fragmentation in the American financial markets, thus guiding the evolution of the Berle-Means Corporation. His view is sometimes supplemental to, but often in contradiction with, conventional economic efficiency or functionalism arguments that are used to explain that evolution.

This Article examines Professor Roe's theory. It will use the political influences that Roe credits with fragmentation to understand current changes in market structure, including the growth of hedge funds, in general, as well as the advent of activist hedge funds that are re-shaping corporate governance. It will end by exploring some unique problems facing pensions and trusts that invest in hedge funds. The result will be a deeper understanding of the Disintermediation Thesis within the model of recent market evolution. This Article will also offer a policy prescription for government regulators that oversee the fiduciary intermediaries who invest in these new vehicles.

Research reveals rising life expectancy gap among different segments of population

The following is from Robert Pear, Gap in Life Expectancy Widens for the Nation, NYTimes.com, March 23, 2008:

New government research has found “large and growing” disparities in life expectancy for richer and poorer Americans, paralleling the growth of income inequality in the last two decades.***

The gaps have been increasing despite efforts by the federal government to reduce them. One of the top goals of “Healthy People 2010,” an official statement of national health objectives issued in 2000, is to “eliminate health disparities among different segments of the population,” including higher- and lower-income groups and people of different racial and ethnic background.***

While researchers do not agree on an explanation for the widening gap, they have suggested many reasons, including these:

Doctors can detect and treat many forms of cancer and heart disease because of advances in medical science and technology. People who are affluent and better educated are more likely to take advantage of these discoveries.***