September, 2014, Friedman Law

Archive for September, 2014

Special Needs Trusts to protect a loved one with Disabilities

Posted on: September 29th, 2014 by Mark R. Friedman

If you are unable to work due to a long-term disability, then you may be eligible for subsidized healthcare (Medicaid), cash assistance (SSI), and other benefits. (For people with developmental disabilities, Medicaid is especially important, as New Jersey’s Division of Developmental Disabilities (DDD) now requires folks to be on Medicaid to receive adult services.)

However, these programs have very strict financial limits, and applicants must have minimal assets to qualify. If you have nearly any money at all in your possession, Medicaid will quickly show you the door.

It is a difficult dilemma. On the one hand, at a maximum rate of $740 dollars per month, SSI benefits do not pay enough to live on. But on the other hand, foregoing benefits is usually not an option. People who are unable to work due to a disability often have complex special needs, and even with savings in your name, without Medicaid and other benefits the money will run out.

Fortunately the government recognized this dilemma and created a way to set aside private funds to help a person with disabilities, without affecting the person’s eligibility for benefits – the special needs trust.

A special needs trust is a legal arrangement in which money is set aside under the control of a trustee, who uses it to buy things that benefit a person with disabilities. Because the person with disabilities doesn’t own the money, the person is still eligible for benefits like Medicaid and SSI, even though the money can only be used to help the person with disabilities.

We usually help clients establish a special needs trust in two scenarios. First, if a parent has a child with a disability (or sibling, spouse, etc.), then the parent’s will should include a special needs trust, so that any inheritance will be protected. Second, if a person with disabilities recovers money in a lawsuit (often for medical malpractice), then the money should be set aside in a special needs trust in order to maximize its value.

If you or a loved one is unable to work due to a long-term disability, we are happy to help you create a special needs trust. Please see our Q&A’s and Articles, or call us today at (908) 704-1900 to make an appointment.

Power of Attorney, Capacity and Dementia

Posted on: September 22nd, 2014 by Mark R. Friedman

After watching the film Amour, about an elderly gentleman who becomes caretaker to his wife after a stroke, I feel compelled to share some information on powers of attorney.

A power of attorney is a legal document in which you give someone power to manage your financial affairs. The person you appoint is called your attorney-in-fact. You can give your attorney-in-fact broad or limited powers, over all your assets or just a portion, and starting immediately or only after a certain condition (such as a stroke).

Together with an advance directive for healthcare, a power of attorney is how you appoint a loved one to manage your affairs if you become disabled. The trouble is, you can only create a power of attorney or healthcare directive if you still have mental capacity to understand serious decisions. If a person has suffered a stroke or is in later stages of Alzheimer’s or dementia, it is often too late to make a power of attorney.

Without a power of attorney and healthcare directive, then the only way anyone can manage your affairs is to apply for guardianship, a process that is often expensive and emotionally painful.

In addition, with a power of attorney and healthcare directive, you appoint an agent to act on your behalf. You can give or withhold from your agent whatever powers you want, and provide advance instructions to your agent on how you want your affairs managed. A guardian’s powers, on the other hand, are set by the court, with far less control by you. With an agent you appoint by power of attorney or healthcare directive, you have power over your agent. But a guardian has power over you.

With diseases like dementia and Alzheimer’s, mental capacity often seeps away over time. That is why it’s important to put these documents into place while you are healthy. In addition, if you may need long term care in the future (e.g., in a nursing home), then it is important to include provisions in your power of attorney related to Medicaid planning. At FriedmanLaw, we will work with you to create a thorough power of attorney. Call us today at (908) 704-1900 to make an appointment.

End-of-Life Care in America

Posted on: September 17th, 2014 by Mark R. Friedman

A committee appointed by the National Academy of Sciences found that the U.S. healthcare system is poorly designed to meet the needs of patients near the end of life, the New York Times reported.

For people at the end of their life, our healthcare system provides incentives for doctors to perform complex, invasive, expensive procedures in the hospital, when what most dying people really want is pain relief and care at home, the committee reportedly found.

In surveys of doctors about their own end-of-life preferences, “a vast majority want to be at home and as free of pain as possible, and yet that’s not what doctors practice,” said Dr. Phillip Pizzo, a committee co-chairman.

The committee made recommendations on aligning the healthcare system closer to end-of-life patients’ goals, including changes to what Medicare and Medicaid pay for. Many of the recommendations involve making palliative care more affordable and accessible. Palliative care is healthcare that seeks to relieve the patient’s pain, rather than cure the patient’s illness.

The committee also stressed the importance of advance healthcare planning, and recommended that Medicare pay doctors to discuss advance planning with patients. At FriedmanLaw, we also believe in the importance of planning, including having an advance directive for healthcare.

Why Everyone should have a Healthcare Directive

Posted on: September 15th, 2014 by Mark R. Friedman

On a warm Florida night in February 1990, Terri Schiavo collapsed in her hallway. The 26-year-old had suffered a cardiac arrest and fallen into a permanent coma. When it became clear she would never recover, her husband sought to terminate life support, while her parents sought to keep her alive artificially. This disagreement sparked a furious legal battle and a national debate on religion, morality, mortality, autonomy and the right to die.

It also showed why everyone should have an advance directive for healthcare (ADH) that makes their own wishes clear.

An ADH is a document that takes effect if you are no longer able to communicate your healthcare wishes. For example, if you were unconscious in a coma, unable to understand decisions due to dementia, or unable to speak or write after a stroke.

An ADH contains an instruction directive and proxy directive. Your instruction directive (a.k.a. living will) sets forth your medical wishes. It should make clear your wishes regarding artificial life support if you were unconscious in a permanent vegetative state, or the final stages of a terminal illness. It should also set forth your wishes on experimental treatments, addictive pain therapies, any religious objections to treatment, etc.

In a proxy directive, you can appoint someone to be your healthcare representative, who can make medical decisions for you when you are unable. You should also grant your healthcare representative access to your protected patient information in the ADH. Otherwise, doctors may refuse to provide any information to your representative, citing HIPAA. If you have any family tension, you may also want to designate someone to manage who can visit you in the hospital.

Medical care is one of the most important and personal issues most people will ever face. With an advance directive, you can ensure your wishes regarding your medical care will be heeded. At FriedmanLaw, we will work with you to craft an advance directive that thoroughly implements your wishes. Call us today at (908) 704-1900 to make an appointment.

New Jersey Supreme Court’s Saccone Opinion Creates Special Needs Trust Opportunities and Pitfalls

Posted on: September 13th, 2014 by Lawrence A. Friedman

To qualify for Supplemental Security Income (SSI) from the Social Security Administration (SSA), Medicaid, and other government disability benefits, an individual’s income must be within program limits. Pensions and most other payments typically throw a disabled person’s income over SSI and Medicaid income caps. However, pensions and other payments don’t count against income caps for SSI, Medicaid, and various other benefits when paid into a special needs trust under 42 U.S.C. 1396p(d)(4)(A), (commonly called d4A special needs trust or d4A SNT). These d4A special needs trusts are further explained in the Practice Area and Q&A pages of www.SpecialNeedsNJ.com.

New Jersey provides survivor pensions to surviving spouse and children of police officers and fire fighters. A retired New Jersey fire fighter sought to ensure that the benefit for his disabled son would be paid into a special needs trust under 42 U.S.C. 1396p(d)(4)(A), commonly called d4A special needs trust or d4A SNT. When pension administrators rejected his request that any survivor benefit for the disabled son be paid into a d4A special needs trust, the retired New Jersey fire fighter appealed.

In Saccone v. Board of Trustees of the Police and Firemen’s Retirement System (__ NJ __, Sept. 11, 2014), the New Jersey Supreme Court ruled that the benefit could be paid into a d4A special needs trust for the disabled child. The New Jersey Supreme Court cited New Jersey’s strong public policy favoring special needs trusts as reflected in New Jersey Statutes 3B:11-36 & 37, which were authored by FriedmanLaw attorney Lawrence A. Friedman on behalf of the New Jersey State Bar Association.

The New Jersey Supreme Court further held that a d4A SNT is “the equivalent of” the d4A SNT beneficiary– and therein could lie an unintended can of worms. The Supreme Court says New Jersey law now provides that a d4A special needs trust is the equivalent of the beneficiary. Therefore, one has to wonder whether the Social Security Administration and perhaps Medicaid will take the next logical step and claim amounts in a d4A SNT should be considered resources of the trust beneficiary. If so, the d4A SNT would cause the beneficiary’s resources as well as income to exceed SSI and Medicaid limits. While that would seem contrary to the Court’s goal in Saccone, it could be a logical consequence– especially since SSA is not obligated to further goals of the New Jersey Supreme Court.

Finally, since the Supreme Court holds that the firefighter himself can’t designate a beneficiary for his pension survivor benefit, the surviving spouse or child must ask that the spouse or child survivor benefit be paid to a d4A special needs trust or SNT. However, court approval is required to transfer assets of a minor or incapacitated disabled person into a d4A special needs trust. Therefore, court approval should be required to cause a survivor’s benefit to be paid into a d4A SNT where the surviving spouse or child lacks capacity and didn’t give appropriate power of attorney (POA) while the surviving spouse or child had capacity.

While the concerns noted above may never arise, they could wreck havoc with special needs planning if they do. Stay tuned; it should be interesting.

Further information on special needs, estate planning, long term care, and other subjects is available throughout SpecialNeedsNJ.com. To subscribe to our frequent blog updates, click on the “Subscribe to RSS” button at the top left of this page and then click on “subscribe to this feed.”

Miller Trusts to come to New Jersey Medicaid in November

Posted on: September 9th, 2014 by Mark R. Friedman

New details have emerged about New Jersey Medicaid’s shift to Miller trusts.

The state has indicated the Miller trust program will begin on November 1, 2014. People who use Miller trusts will reportedly be eligible for Medicaid in the month after the trust formation. So folks who qualify for Medicaid through a Miller trust created in October would be eligible in November.

The state will reportedly launch a website in October with more information on Miller trusts.

Although New Jersey is expected to end its Medically Needy program for institutional-level applicants, the state indicated it has received approval from the federal government to grandfather in all current Medically Needy beneficiaries. In other words, if you currently receive Medically Needy assistance in a nursing home, you would not need to do anything.

As we covered in previous blog posts, a Miller trust is a legal instrument that allows people with income higher than Medicaid limits (currently $2,163) to qualify for assistance. Currently, these folks can only qualify for the Medically Needy program, which pays for long term care only in a nursing home.

Previously, folks with higher incomes could only receive medical assistance in a nursing home, even if they were capable of living in a less restrictive environment. With Miller trusts, for the first time, New Jersey Medicaid beneficiaries with higher incomes are expected to be able to receive long term care at home or in an assisted living facility.

This is good news for seniors, people with disabilities and other folks who may need long term care. Come November, we expect that FriedmanLaw will have a powerful new tool to help each of our clients receive care in the most appropriate setting.

For more information on Medicaid and long term care, please see our Practice Areas and Q&A pages, or call us at (908) 704-1900.

New Jersey Guardianship for a Vulnerable Adult

Posted on: September 8th, 2014 by Mark R. Friedman

When seniors suffer from Alzheimer’s, dementia or other mental ailments, they can become vulnerable to exploitation.

We have seen folks have their accounts drained by new “friends” and lovers, become the victim of obvious scams, make terrible financial decisions on the advice of self-serving salesmen, and plow through their savings buying needless items from home shopping outlets.

The thing is, usually these are folks who have always been responsible in the past. They don’t recognize that their judgment is now being clouded by illness. They worked hard to make their money, and they won’t have anyone else tell them what to do with it.

If any of this sounds familiar with your parent or spouse, then you may wish to apply for guardianship.

A guardianship is a protective arrangement ordered by a court, in which a guardian is appointed to make decisions for a ward. The guardian can take control of the ward’s finances or prohibit certain people from visiting.

To appoint a guardian, the court must find that the ward lacks capacity. “Capacity” means having the mental wherewithal to make serious decisions and understand their consequences. Not having capacity due to an illness is called being “incapacitated.”

If you are seeking guardianship over someone, you will have to prove he is incapacitated. You must submit affidavits from two doctors who have recently examined the person (the court can order an examination if the person refuses). The court will assign the person his own lawyer, who will interview him and advocate for what he wants.

Appointing a guardian is a radical measure that takes away a person’s autonomy, so courts do so only where necessary, and in the least restrictive manner possible. The court can create a limited guardianship – for example, where the guardian only has power over certain financial accounts, or limited amounts. In an emergency situation, the court can also freeze bank accounts and appoint a temporary guardian.

If you are interested in applying for guardianship for a vulnerable adult, we are here to help. Call us today at (908) 704-1900 for more information.

Medicare to Assign Star Ratings to Hospitals

Posted on: September 4th, 2014 by Mark R. Friedman

Medicare will soon begin assigning hospitals star ratings, similar to nursing homes.

Medicare maintains a database with data for most hospitals in the United States, similar to its nursing home compare database. But unlike nursing homes, Medicare does not assign a star rating to hospitals. That is set to change later this year.

Last week, the New York Times published several pieces highly critical of Medicare’s star rating system for nursing homes. The Times criticized the ratings for being too reliant on data submitted by the nursing homes themselves, and for ignoring important information collected by the states, and concluded that the star ratings could mislead consumers. The Times proffers the example of a nursing home in California that was given the highest rating despite numerous problems.

One has to wonder whether the hospital ratings will be plagued by similar problems. Medicare’s hospital database provides more robust information than its nursing home database, probably because hospitals are more closely monitored than nursing homes.

Now, the hospital database provides raw data from which consumers can draw their own conclusions. With star ratings, a conclusion is drawn for consumers. I’m concerned that given the problems with the nursing home ratings, hospital ratings might make things less clear for consumers, not more clear.

New Jersey Guardianships for Children with Developmental Disabilities

Posted on: September 2nd, 2014 by Mark R. Friedman

If you have a child with developmental disabilities, you should consider applying to be his guardian when he reaches age 18. At age 18, a child becomes a legal adult and a parent can no longer make decisions for him, regardless of the child’s disabilities or whether he lives with parents. Without a guardianship, banks, hospitals, schools, government agencies and other institutions will have to follow your adult child’s instructions and not yours.

A guardianship is a protective arrangement ordered by a court, in which a guardian is appointed to make decisions for a ward. The guardian’s judgment is substituted for the ward’s, similar to a parent’s power over a child.

To appoint a guardian, the court must find that the ward lacks capacity. “Capacity” means having the mental ability to make serious decisions and understand their consequences. If a person lacks capacity due to a disability or illness, then the person is “incapacitated.”

Since guardianship involves taking away a person’s fundamental autonomy to make decisions for himself, courts are reluctant to appoint a guardian, and there are safeguards in place. The person who wants to be guardian has to prove that the ward is actually incapacitated. You will have to submit affidavits from two doctors who have recently examined your child. Your child will also be assigned a lawyer, who will interview your child and advocate for what he wants.

If your child is able to make some decisions but not others, the court can create a limited guardianship. For example, the guardian might make serious decisions such as on medical and financial issues, but the ward retains autonomy over everyday decisions. Some guardianships also leave specific powers to the ward, such as the right to vote, marry or make a will. In an emergency situation, the court can appoint an immediate temporary guardian or order a specific transaction or other protective arrangement.

If you are interested in applying for guardianship over your child with developmental disabilities, we are here to help. Call us today at (908) 704-1900 for an appointment.