Lack of Coordination: The Potential for Best Laid Plans to Go Awry

By: Martin S. Shenkman and Sandra D. Glazier[1]

This article was originally published in Leimberg Information Services, Inc. (LISI).

In 1786 Robert Burns wrote his insightful poem commonly referred to as “Mousie”. In it he reflects that upon plowing his fields he undoes the foresight of mice who unfortunately built their nest in Burns’ field. He pens the oft used phrase that “the best laid plans of mice and men often go awry”.[2] In the realm of estate planning, a lack of coordination in the designation of agents, assets and/or beneficiaries frequently causes even the best laid plans to go awry. While subsequent changes to designations made by a client may be beyond our control, attention to the potential difficulties arising from conflicting directions and designations of agents may be a discussion worth having. At least the client who is “forewarned is forearmed”.[3]

Generally, clients come to us with some general, or perhaps even specific, ideas of how they wish to dispose of their property upon death. As part of a comprehensive approach to the client’s estate plan, it’s incumbent upon us to ask who they want to be responsible for administering those assets, not only upon death but also in the event of incapacity. Because the issue of asset management and control can fall under the auspices of different fiduciaries, consideration of who they will be and how they might interact and relate can be extremely important. Creating a comprehensive plan for clients often goes beyond simply drafting estate planning documents.

Planning for aging (and incapacity) requires more than just the traditional preparation of a Will, durable power of attorney (“DPOA”) (and perhaps a revocable trust). The multitude of fiduciary and quasi-fiduciary appointments clients make, almost entirely without professional input, can create conflicts and inconsistencies in the administration of the client’s affairs. Practitioners can provide great assistance to their clients when they expand the scope of their inquiry and client discussions to address issues relating to such appointments and the importance of coordination of fiduciaries named under primary legal documents. Doing so can forewarn the client of pitfalls that could undermine the safeguards the planning team is endeavoring to create. As estate planning remains extremely relevant in implementing client desires, it’s important for practitioners to evolve and consider a broader range of practical, non-technical, considerations that can make our services beneficial to all spheres of client echelons.

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Four Myths about Medicaid Eligibility

  • You must sell all your assets to qualify

FALSE: Certain assets are classified as exempt, such as your home, personal and household items, certain funeral contracts, a burial plot, and income producing real estate. Also, countable assets like cash, certificates of deposit, as well as stocks and bonds can also be converted to exempt assets with no penalty. For married individuals, additional exemptions apply.

  • If you have a Medicare Card, you are not eligible for Medicaid.

FALSE: Though both pay for essential health care services, their eligibility requirements, administration and coverage are different. Medicare does not require financial needs test for those 65 and over, US citizens or permanent residents who worked at least 10 years in covered employment. Medicaid, on the other hand, is based in significant part on financial need.

  • If all your assets are transferred to a trust, you can qualify for Medicaid immediately.

FALSE: The State looks back about 5 years at any transfers made to a trust before granting eligibility. These transfers may cause Medicaid eligibility for a period of time. The only exception to this is the Spousal Annuity Trust, which when setup in compliance with the rules, allows a couple to exempt all their excess assets from being counted and lets applicants become eligible nearly overnight.

  • Once Qualified for Medicaid, the State will pay for all nursing home care.

FALSE: Medicaid covers almost all expenses needed while living in a certified nursing home, except for incidentals. Recipients must use part of their monthly income to help pay their nursing home costs. This amount is called “patient pay amount” and is calculated by an established formula used by Medicaid.

To find out more about the firm visit www.lipsonneilson.com

PLANNING AHEAD FOR THE FAMILY BUSINESS

Planning the future of a family business is as important to a family as any other essential event. As such, it is important to plan for the future of the company once its founder is no longer able to run it. Business owners are faced with difficult decisions. Do you pass the company on to your children? If so, do not do it all at once but rather in portions of stock to avoid facing an enormous gift tax. Depending on the circumstances, estate taxes may also become part of the equation.

If the children have no interest or desire to run the company or perhaps lack the skills essential to doing so, it may be beneficial to consider a “buy-sell agreement”. This would dictate how this business is to be sold and what kind of payments you would like to receive. A lump sum? Smaller payments made over an extended period of time? Either way, it is important to start planning now. Experts caution procrastinators that the IRS is likely to question last minute transactions

Steven Malach Administers Multi-Million Dollar Charitable Estate Plan and Trust for Prominent Judge

Steven MalachSteven Malach, Founder and Director of the Center for Estate Planning (CEP), a subsidiary of the Lipson Neilson law firm, has completed the administration of the multi-million dollar estate plan and trust of the Honorable Judge Michael Stacey. This estate plan and trust provided for numerous charitable endeavors including:

  • Increasing care for those suffering the ravages of Alzheimer’a in the metro-Detroit area through the Dorothy and Peter Brown Adult Care program in West Bloomfield Hills, Michigan.
  • Establishing Palliative care as a go between medical and hospice care for individuals via the Jewish Hospice & Chaplaincy Network in West Bloomfield, Michigan.
  • Supporting child cancer research at the St. Jude’s Hospital.
  • Variety: The Children’s Charity
  • Yad Ezra food pantry for impoverished people who rely heavily on government assistance programs, including food stamps.
  • ENSURE: A non-profit charity that specifically supports pediatric surgical research at Children’s Hospital of Michigan.

Judge Michael Stacey graduated from Wayne State University Law School and was admitted into the State Bar of Michigan in 1951. Before becoming a judge, he was in private practice and ran one of the first mediation panels in Michigan. Judge Stacey was appointed by Michigan Governor William Milliken to the Wayne County Circuit Court in January, 1974. He retired from the bench in 1994 and continued in private practice as a pre-eminent Mediator and Arbitrator.

An attorney for more than 30 years, who has handled cases in every county in Michigan, Mr. Malach heads Lipson, Neilson, Cole, Seltzer, & Garin, P.C.’s estate planning practice group and is the founder of the Center For Estate Planning (CEP). With offices in Michigan and Arizona, the CEP specializes in all aspects of estate planning, from estate administration to lifetime counsel and probate administration work. CEP attorneys work with individuals, closely-held businesses and charitable organizations. Mr. Malach’s practice specializes in elder law, estate planning, probate, wills, trusts and trusts administration.

Contact: Steven Malach
Phone: 248-593-5000
Email: SMalach@lipsonneilson.com

Steven Malach Participates in 2017 NAELA Annual Conference

Steven MalachSteven Malach, who heads up the Probate, Trust and Estate Planning section of Lipson Neilson, recently attended the 2017 Annual NAELA (National Association of Elder Law Attorneys) Conference in Boston, Mass. Mr. Malach participated with attendees from across the country in various sessions led by experts in their respective fields including the following topics:

  • The future of aging.
  • Fiduciary access to digital assets.
  • 50 Shades of Gray Hair; Romance in the Nursing Home.
  • Updates on Litigation to ensure a client’s wishes are upheld.

The above meetings were held against the backdrop of the historical local background in pursuing life, liberty and the pursuit of happiness.

Mr. Malach is a twenty year active member of NAELA which is active legislatively at the local, State and Federal levels.

Steve Malach Participates in Casey Kasem’s Seminar

Steven Malach, who heads up the Probate, Trust and Estate Planning section of Lipson Neilson, recently attended a webinar narrated by Casey Kasem’s daughter, discussing the unfortunate circumstances involving the late Casey Kasem’s affairs. Mr. Kasem passed away on Father’s Day of 2015. He was an iconic disc jockey of national renown and known for the Casey Kasem top 100 song countdown.

In addition to suffering the ravages of dementia, his children were isolated and told they were not allowed to see their father by his second wife. This is an unfortunate textbook example of what can go wrong with or without an estate plan that can lead to very dramatic and dynamic probate related litigation during a person’s lifetime or even after they passed away.

MEDICARE STARTER KIT

8 Does and Don’t of signing up for Medicare:

  1. Do give yourself time to learn about Medicare:
  2. Don’t expect to be notified when it’s time to sign up:
  3. Do enroll when you’re supposed to:
  4. Don’t despair if you haven’t worked long enough to qualify:
  5. Don’t worry that poor health will affect your coverage:
  6. Do remember that Medicare is not free:
  7. Don’t assume that Medicare covers everything:
  8. Don’t expect Medicare to cover your dependents:

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Claim it or Lose it

An estimated 1 million tax payers are owed more than $1 billion in unclaimed federal income tax refunds for 2013 according to the Internal Revenue Service. In Michigan alone, the IRS estimates that 33,600 people are owed nearly $34 million in unclaimed federal income tax refunds for 2013.

Of course, taxpayers have plenty of reasons for not filing tax returns like debt, child support or other obligations. Your federal return must be filed within three years to claim your refund or the money becomes property of the U.S. Treasury.

Penalties and interest will not be applied if you are owed a refund, however the IRS will hold your refund checks if you have not filed tax returns for 2014 and 2015.

Keep in mind you must file your 2013 tax return no later than Tuesday April 18, if you don’t file it you cannot get the refund.

TAX SCAMS IDENTITY THEFT

As we head into another tax season we should all be vigilant of the ever expanding con artists using the tax system to prey on the unsuspecting. We all probably know someone who has had their identity stolen. The recent well publicized data security breaches at major retailers and Sony has put consumers at risk as we become ever more connected.

TAX RETURN FILING: Part of the new problem is identity thieves know the IRS waits until the March deadline to review EIN’s and Social Security Numbers so these thieves file very early. In that period of time, the thief collects the tax refund and then after the IRS review, the business owner or individual receives communications from the IRS demanding a return of the tax refund.

Quick action is critical. First call the IRS Identity Protection Specialization Unit (800-908-1490). You need to establish a record. Next complete IRS form 14039-Identity Theft Affidavit and submit the form to the IRS. We recommend filing your “correct original” tax return by certified mail or overnight mail with a letter of explanation. You should also contact the Social Security Administration as the improper tax return can affect your credits. It is not a bad idea to pull your credit report as well.

TELEPHONE SCAMS: Often time’s businesses or clients receive a telephone call from someone claiming to be from the IRS. Please note these calls are frauds. The IRS does not call you over the telephone out of the clear blue. You can also call the Treasury Inspector General if this occurs (800-366-4484) to report the incident.

BUSINESS IDENTITY THEFT: The typical and simple mode of thieves is to select an established business identity and then establish a fraudulent office. That business name will then be used to establish either a new line of credit or a new bank account to purchase goods and services until the credit line or other resources are exhausted, then the thief just moves on.

DORMANT, SHELL AND AGELESS BUSINESSES: Another new method is for thieves to access and online business registries for ones that were previously dissolved or dormant. These businesses are particularly vulnerable to this type of crime because their owners are less likely to be monitoring the situation. The wrongdoer merely takes advantage of a well established history and credit rating to commit the fraud.