Articles Posted in Elder Law

Creating a living trust is one common way individuals plan their estates and keep valuable assets like homes and other real estate out of the costly and timely probate process. For individuals own their home outright, a living or revocable trust is an easy way to instantly pass on a home but if there a mortgage or another lien on the property there may be a “due on sale” clause that requires the debtor to pay the lender immediately.

Typically, a due on sale clause is understood that the debtor must pay the bank the balance of a mortgage when the home is sold or otherwise transferred. While placing a home into a living trust is technically transferring the home from one owner to another, an important piece of legislation called the Garn-St. Germain Act allows individuals to transfer a personal residence to make “a transfer into an inter vivos (also known as “living”) trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.”

The exemption for due on sale clauses for these transfer rules allows the property to be placed into a revocable living trust so long as the loan is on residential properties containing less than five dwelling units. For New Yorkers, this is important because it can include homes such as a duplex, triplex, fourplex or even a coop and not just single family houses. So long as there is no change in occupancy to the estate, that is the person creating the trust stays in the home, the due on sale clause can not be enforced.

The Centers for Medicare and Medicaid Studies recently announced it has extended its grace period to remove or reduce financial penalties for those late to switching their insurance from plans on the Affordable Care Act (ACA) to Medicare. As a result of moving the deadline, seniors and those on disability now have until September 30, 2018 to switch over from their ACA marketplace insurance plans to Medicare without having to pay increased Medicare premiums or reimburse the federal government for ACA subsidies.

For most Americans, Medicare eligibility begins at age 65 and are automatically signed up if already receiving Social Security benefits but not if the individual is already receiving health insurance through their job or spouse’s employment. If neither of these scenarios apply, individuals need to enroll in  Medicare within six-months (three-months before or after) turning 65-years old.

Failing to enroll in Medicare in a timely manner can lead to very expensive penalties including increases to Medicare Part B premiums as much as 10 percent for each full 12-month period the individual should have been enrolled. The Medicare Rights Center (MRC), a nonprofit consumer service organization that works to ensure access to affordable health care for older adults, estimates that if someone turned 65 in 2010 and delayed signing up for Medicare until 2018, premiums would be $227, which is 70 percent higher than the base Part B premium of $134.

Ranking Democratic member of the House Energy and Commerce Committee Frank Pallone, Jr. of New Jersey recently introduced a new proposal aimed at tackling the rising costs of long term health care insurance to give seniors a better life. Under the current system, Medicare only covers very limited long-term care and support for seniors until a senior eventually qualifies for the Medicaid program after they have depleted all of their financial resources.

If adopted, the The Medicare Long-Term Care Services and Supports Act would enact multiple measures to help seniors get the care they need without depleting their finances. Among other things, The Act would includes incentives for people to seek care at home and give much needed relief to overburdened family caregivers by compensating these individuals for lost income other retirement benefits, and career opportunities if they have to cut back on work hours or leave the workforce.

The Act would establish a standard cash benefit within Medicare for anyone who is eligible for Medicare and those under the age of 65-years old who meet certain disability thresholds and begin after a two-year waiting period that functions as a deductible. The proposed legislation would allow individuals to use their self-directed benefits towards all long-term services and supports, including nursing facility care, adult daycare programs, home health aide services, personal care services, transportation, and assistance provided by a family caregiver.

According to reports, celebrity chef Anthony Bourdain has left the bulk of his $1.2 million estate to his young daughter, which will be placed into a trust that will make two payouts over her lifetime. Bourdain’s estranged wife, on the other hand, was named executor to the estate will receive his personal effects including furniture, cars, books, and even his frequent flier miles which could be quite valuable given the deceased’s career as a professional traveller.

Documents filed with the Manhattan Surrogate’s Court indicate Bourdain’s estate was worth $1.21 million, including $425,000 in savings, $35,000 in brokerage money, $250,000 in personal property and $500,000 in “intangible property” which includes royalties. Media outlets report that Bourdain’s 11-year-old daughter is the primary beneficiary of his trust which will distribute assets when she is 25 and 30, and disperse the remaining balance when she turns 35 years old.

Establishing trusts for minors is a very common practice in estate planning as it is meant to these young persons do not become overwhelmed by receiving an inheritance all at once, which could lead to financial mismanagement. In the meantime, a guardian appointed by the Surrogate Court will safeguard the younger Bourdain’s estate until the final payouts are made. While all this may seem straightforward, experts reviewing Bourdain’s estate situation believe it may be subject to complications, including potential challengers by the spouse.