Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Wednesday, April 27, 2011

California School Helps Special Needs Students

SpecialNeeds_812739119 Sierra Works, a workability program in Sacramento’s Sierra School, helps special needs students develop skills needed after graduation. Each student earns minimum wage and must submit an application to become a part of the program. Along with teaching students to become self-sufficient, the program also helps build a student’s self-confidence and self-esteem.

One student of the program, junior Nick Perez, says, "We probably wouldn't be here, possibly even in school without those teachers. For me, I know I'd be probably seriously injured or I'd be in jail right now if it wasn't for this school. I'm just trying to be a great person in society."

Maneeza Iqbal, School Teaches Life Skills to Special Needs Students, News 10, Mar. 30, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

April 27, 2011 in Disability Planning - Health Care, Teaching | Permalink | Comments (0) | TrackBack (0)

Article on Awarding Attorney's Fees in Contested Guardianship Proceedings

Mark-caldwell Mark R. Caldwell (Attorney at Law, Phoenix, AZ) recently published his article entitled A Good Deed Repaid: Awarding Attorney’s Fees in Contested Guardianship Proceedings, 51 S. Tex. L. Rev. 439 (2009). The introduction is below:

Guardianships are often required to protect and care for incapacitated persons who have not executed advanced estate planning documents, such as medical or durable powers of attorney. As the aging population in Texas continues to grow, experts predict that the number of guardianships will increase dramatically. A guardianship is essentially a legal proceeding designed to supervise and protect individuals who are unable to care for themselves or manage their financial affairs. When contested, these proceedings can be expensive. An “interested person” may contest the creation of a guardianship or the appointment of a particular applicant as guardian. Typically, family and friends bear the initial costs of establishing or contesting a guardianship.

Texas Probate Code section 665B (§ 665B) provides that when a court creates a guardianship or management trust, the court may award attorney's fees out of the ward's estate to the attorney who represented the applicant at the application hearing if the applicant “acted in good faith and for just cause” in filing and prosecuting the application. This article explores § 665B and case law interpreting various issues affecting the section's requirements. As is the case with many Texas Probate Code sections, the case law interpreting § 665B is sparse. Analogies are therefore made to similar estate administration code sections in order to examine and uncover similar definitions and policy considerations surrounding awarding attorney's fees based on the aforementioned “good faith and for just cause” requirement. Allowing applicants who act in “good faith and for just cause” to recover attorney's fees from the proposed ward's estate encourages capable applicants to seek and establish guardianships and also protects the proposed ward's estate from unwarranted depletion.

Part II of this article discusses the legislative history of § 665B. Part III examines whether the typical methods of recovering attorney's fees in guardianship proceedings are applicable to contested guardianship proceedings. Part IV focuses on Texas cases dealing with attempts to recover attorney's fees under a “good faith and for just cause” standard after the original proceeding. Part V explores how various sources have defined “good faith and for just cause” and discusses the standard in the context of a guardianship proceeding. Part VI analyzes the relationship of standing and disqualification to the “good faith and for just cause” analysis. Finally, Part VII addresses potential litigation strategies to prove, oppose, and settle attorney fee issues.

April 27, 2011 in Articles, Elder Law, Estate Planning - Generally, Guardianship | Permalink | Comments (0) | TrackBack (0)

100 Nursing Homes Sue New York

Money and gavel The Reimbursement Reform Act of 2006 requires New York's Department of Health to base Medicaid reimbursement rates on recent and relevant nursing home costs. Rebasing is the process by which a state updates its calculation of nursing home costs to reflect actual current costs.

In 2007 and 2008, New York began its rebasing processing using transitional rates, but in December 2008 the state reverted to rates from 1983. The state then, with federal approval, delayed the implementation of the new rates until April 2009.

Though these rates were to take effect in 2009, the state still has not updated reimbursement rates for Medicaid residents. As a result, approximately 100 nursing homes have joined a law suit asking for the immediate implementation of the 2006 Act.

See Patti Singer, 100 Nursing Homes Sue State Over Medicaid Reimbursement, Democrat and Chronicle, Mar. 25, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

April 27, 2011 in Disability Planning - Health Care, Elder Law | Permalink | Comments (0) | TrackBack (0)

Budget Proposal Cuts Reverse Mortgage Counseling

Reverse mortgage Reverse mortgages allow individuals 62 and over to receive money from a bank in return for their home upon their death. Counseling for reverse mortgages is mandatory due to their complexity and the possibility that these individuals may destroy their nest eggs if something goes awry with the loan. The Department of Housing and Urban Development allocates $9 million of its yearly budget to provide reverse mortgage counseling programs that assist borrowers in understanding the costs, risks, and benefits of such loans. Advocates for the elderly, however, have been lobbying hard for broader and better reverse mortgage counseling.

These advocates will be disappointed if the latest federal budget proposal for the current fiscal year is approved in Congress. This proposal cuts $88 million from HUD’s budget for loan counseling, which includes the money reserved for reverse mortgage counseling. Borrowers will have to pay for the counseling themselves, so those who can’t afford the counseling should seek it before the new fiscal year begins on October 1, 2011.

See Ann Carrns, Budget Deal Cuts Reverse Mortgage Counseling, N.Y. Times, Apr. 26, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

April 27, 2011 in Elder Law, New Legislation | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 26, 2011

Federal Judge Continues to Hear Cases at 103

Wesley Brown, Judge At 103 years old, U.S. District Judge Wesley Brown is the oldest working federal judge in the nation. Of President Kennedy’s appointees, he is only one of four still on the bench. Though Judge Brown has “senior status” which allows him to have a reduced case load, he continues to hear cases from 8:30 a.m. to 3:00 p.m. every day. Four years ago he moved into assisted living, but Judge Brown does not plan to leave his post unless it is “feet first.”

In a profession where advanced age isn't unusual -- and, indeed, is valued as a source of judicial wisdom -- Brown has left legal colleagues awestruck by his stamina and devotion to work. His service also epitomizes how the federal court system keeps working even as litigation steadily increases, new judgeships remain rare, and judicial openings go unfilled for months or years.

Roxana Hegeman, Federal Judge, 103, Still Hearing Cases in Kansas, Associated Press, Apr. 10, 2011.

Special Thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

April 26, 2011 in Elder Law | Permalink | Comments (0) | TrackBack (0)

Seniors Live Longer by Shopping Daily

Old people shopping A recent study from Taiwan reports that elderly people who shop frequently will likely live longer than their non-shopping counterparts. The nine year study included 1,850 elderly people over the age of sixty-four.

The results showed that the elderly people who shopped every day had a 27% lower risk of death than those who shopped the least frequently. When the researchers divided the frequent shoppers by sex, women had a 23% lower risk of death, and men had a 28% lower risk.

See Catharine Paddock, Seniors Who Shop Frequently Live Longer, Medical News Today, Apr. 11, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

April 26, 2011 in Elder Law, Science | Permalink | Comments (1) | TrackBack (0)

Social Security Administration Bans "Do-Over" Strategy

Social_security_card Some financial advisers used to suggest that retirees could boost their monthly Social Security checks by repaying all the benefits they had already received and then reapplying for the higher benefits given to those who waited to claim their benefits until they were older. In December 2010, the Social Security Administration banned this “do-over” strategy with the publication of new rules.

Recipients now have twelve months to withdraw their initial decision to receive Social Security checks. A recipient may only withdraw their decision once, and they may not receive delayed retirement credits for the months in which benefits were actually received. Benefit repayments continue to be interest-free.

The Social Security Administration allows beneficiaries who may need to withdraw an application for benefits due to unforeseen changes in circumstances to still do so. These new rules have no effect on disability or survivor benefits.

See Jane Novack, Social Security Administration Kills “Do-Over” To Boost Benefits, Forbes, Dec. 8, 2010.

April 26, 2011 in Elder Law, Estate Planning - Generally | Permalink | Comments (1) | TrackBack (0)

Avoiding Taxes on Insurance Benefits

Insurance Life insurance proceeds are generally received by beneficiaries free of any income taxes, but avoiding the federal estate tax requires some planning. If someone possesses “incidents of ownership” in a life insurance policy (e.g., you retain the power to cancel the policy, change coverage amounts, or change beneficiaries), the proceeds will be included in his or her taxable estate. One solution is to set up an irrevocable life insurance trust to own the policy. The trust pays the premiums, and the trust’s beneficiaries receive the death benefits. Such a strategy is very complex, however, so be sure to hire an experienced estate planner to get it done right.

Long-term disability insurance is another type of insurance that you want to plan for properly. Such policies usually limit benefits to 60-70% of earnings before income taxes. If you don’t plan properly and are required to pay income taxes on the benefits, this will cut your benefit amount down to 36-49% of pre-tax earnings. Benefits are typically taxable if your employer pays the premiums rather than yourself, or if you pay the premiums with pre-tax dollars. To avoid such a tax hit, pay the premiums yourself with after-tax dollars or purchase a supplemental long-term disability policy to cover the income taxes on the company-provided insurance benefits.

See Bill Bischoff, How to Avoid Taxes on Life Insurance, Smart Money, Apr. 20, 2011.

April 26, 2011 in Estate Tax, Income Tax | Permalink | Comments (0) | TrackBack (0)

Monday, April 25, 2011

Strategy to Reduce Tax Costs of Roth Conversions

Polskygreggd Gregg D. Polsky (Willie Person Mangum Professor of Law, UNC School of Law) recently published his paper entitled High Volatility, Negative Correlation, Roth IRA Conversions, and the Codified Economic Substance Doctrine, UNC Legal Studies Research Paper No. 1717019, Nov. 30, 2011. The abstract available on SSRN is below:

This paper describes and analyzes an investment strategy that, when combined with simple Roth IRA conversion planning, can substantially reduce the tax costs of Roth conversions. The strategy leverages, through the combination of volatily and negative correlation, the put option feature inherent in Roth IRA recharacterizations. The only significant risk to taxpayers who execute the strategy is that the IRS might assert that the recently codified economic substance doctrine (and its strict liability penalty) applies to disallow the tax benefit. However, the doctrine appears not to be relevant in this context, where Congress has given taxpayers an explicit election to recharacterize Roth IRA conversions. Even if the doctrine were to apply, it would not likely increase current year tax liability.

April 25, 2011 in Articles, Elder Law, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0) | TrackBack (0)

Wilmington Urges That Clients Will Not Witness Disturbances During Transfer to the M&T Name

WilmingtonM&T As I previously blogged, Delaware’s Wilmington Trust Company sold itself to New York’s M&T Bank last year. Wilmington’s shareholders were enraged at the time of the sale, and many smaller investors and pension funds have sued Wilmington alleging the company concealed the truth about the impact of its deteriorating commercial loan portfolio.

In an effort to appease its existing high-net-worth clients, M&T will not retire the Wilmington brand in either its private trust or corporate branches. When the deal closes, however, Wilmington’s retail branches will switch to the M&T name. Wilmington maintains that its clients will not witness disturbances in their business relationships either during or after the transition.

See Scott Martin, Wilmington’s Wealthy Clients Rattled as Loan Loss Scandal Unfolds, Forbes, Dec. 8, 2010.

April 25, 2011 in Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)