New York Estate Planning & Elder Law Blog

A recent study by the UCLA Fielding School of Public Health suggests the number of Americans suffering from Alzheimer’s or other cognitive impairments could more than double by 2060. Currently, an estimated 6 million Americans suffer from the disease and if the study holds to be true, that number could increase to a staggering 15 million over the next few decades.

Published in The Journal of the Alzheimer’s Association, the study examined some of the largest reviews on the rates and progression of Alzheimer’s disease and dementia and applied a computer model that took into account the aging U.S. population. Of the 15 million Americans expected to suffer from cognitive impairments, 5.7 million are expected to have a mild condition while the remainder will likely be diagnosed with dementia due to Alzheimer’s, with 4 million requiring nursing home care.

In a statement to the UCLA Newsroom, the author of the study Ron Brookmeyer said, “There are about 47 million people in the U.S. today who have some evidence of preclinical Alzheimer’s, which means they have either a build-up of protein fragments called beta-amyloid or neurodegeneration of the brain but don’t yet have symptoms.”

With so many different options available when it comes to creating a comprehensive estate plan, it can be difficult to choose the ones that are right for you. More and more often, individuals choose to utilize trusts as a way to preserve assets and ensure that as many assets as possible can be passed on to heirs. Trusts have a lot of advantages that can be very attractive to individuals of both modest and wealthy means. One of the most well-known advantages of a trust is that it will avoid the probate process after a person dies. That means less of the assets will risk being eaten up by costs associated with the probate process, and assets in the trust are often available to heirs much quicker than were those heirs to have to wait for those assets to pass through probate. However, it is a misconception that all trusts avoid probate, and it is important to remember that when choosing the right type of trust for you.

Trusts and Probate

There are two basic types of trusts that most people utilize: revocable and irrevocable. A revocable trust is more common as it can offer an individual more flexibility with the structure of the trust as well as the assets placed in the trust. As the name suggests, it can also be revoked. On the other hand, irrevocable trusts can rarely be revoked or modified after they have been created. Assets put into them are typically permanently in the control of that trust. The more rigid structure of irrevocable trusts makes them less common, but there are many situations where such a rigid structure can actually be beneficial to you. Both of these types of trusts are created by an individual during his or her lifetime, so they may be referred to as a living trust or inter vivos trust.

According to a recent report by CNBC, over half of the revenue generated by the nation’s top five-insurance companies comes from federal government funds provided by Medicare and Medicaid., more than doubling since the Affordable Care Act (ACA) came into effect. Those insurers generated a combined $92.5 billion in revenue from CMS programs in 2010 compared to $213.1 billion in 2016.

Citing analysis from the journal Health Affairs, the article suggests lawmakers could improve the outlook for ACA healthcare exchanges by requiring companies that draw federal funds to offer plans through the ACA marketplace. Such a move could have promising outcomes, given the face that many insurance companies have pulled out of the ACA healthcare markets over increased operating costs.

UnitedHealthcare, Aetna, Anthem, Cigna and Humana reportedly draw 59 percent of their revenue from CMS programs while adding an estimated 23 million individuals to their plans over the same period. The same Health Affairs report also purports those five-major insurance companies have a combined 125 million members across the country and have been quite profitable since all Americans have been forced into buying health insurance coverage.

Estate planning can be a confusing topic, especially when considering it along with financial planning. It can be even more confusing given the current debate over tax cuts and how they will impact the economy if they are enacted. A recent article from MarketWatch.com paints a rather bleak picture of the cost of tax cuts for middle class families, especially when it comes to estate planning in the future. However, understanding how these tax cuts could impact your estate plan is an important first step in navigating the complexities they may bring with them.

Impact of Public Deficits

According to the article, the Congressional Budget Office is projecting increased deficits if we remain on our current course. If we factor in proposed tax cuts, those deficits are predicted to increase even more. When combined with the ever-increasing cost of health care, especially long-term health care at an advanced age, these deficits may make it harder for younger individuals to save for retirement. This is especially true if important social programs, like social security and Medicare, start to experience cuts or even begin to run dry. The increase in public deficits that many analysts predict will accompany the proposed tax cuts are likely to put increased pressure on these important supplemental income programs and the programs in turn are likely to experience significant cuts in addition to already predicted shortfalls

A U.S. District Court judge recently ruled that medical malpractice victimss receiving benefits from Medicare must pay back the federal government for medical care in cases where plaintiffs make a successful recovery in their claims. The victim’s wife brought the claim against the Center for Medicare and Medicaid Studies (CMS) in an attempt to block the agency’s action to collect on $171,537.04 in medical coverage paid out from the time of the victim’s diagnosis until his passing.

The case began in April 2007 when doctors diagnosed the victim with prostate cancer after initially failing to to so in a timely manner. From the time of the victim’s diagnosis until his passing in January 2012, Medicare conditionally paid the victim’s medical bills, which totaled $253,546.73.

In 2009, the victim and his wife filed a medical malpractice lawsuit in Cook County Circuit Court in Illinois against the victim’s primary care physician and urologist, arguing the defendant’s failed to make a timely diagnosis. After the victim’s passing, his wife became the administrator of his estate and continued the lawsuit on his behalf to recover for their damages under the Illinois Survival Act.

Estate planning is sometimes thought of as something older, more established individuals engage in when they have kids to worry about and significant assets to protect. While it is never too early to start thinking about comprehensive estate planning, it is also important to be aware of and avoid some very common financial mistakes that can occur at any age and end up significantly impacting your estate plan and the assets you are able to leave behind to your heirs. Recently, The Huffington Post ran an article discussing some of these common financial missteps. Some of them are included below, and being aware of them can help make sure you understand their significance and can take steps to avoid them. This is not an exhaustive list, but an experienced estate planning attorney can work with you in making sure that your finances are moving in the right direction in order to support the estate planning objectives you have set for yourself.

Breaking Your Budget

Vacations and treating yourself are fine ways to enjoy your hard-earned money. However, it is important to make sure you incorporate these things are part of a well-balanced budget so that you don’t completely drain your savings and find yourself in need of resources that are no longer there. Creating a safety net for emergencies is a good way to make sure you can handle unexpected expenses that could appear out of the blue. You may be hit with medical bills, a family emergency, car repairs, or even loss of a job. Planning ahead will help you navigate these obstacles much more successfully.

For both practical and philanthropic reasons, charitable giving can be an important part of your estate planning strategy. However, it is important to approach charitable giving in estate planning in a responsible manner to make sure that you are getting the most out of it while being sure your objectives for charitable giving are being met.

Keep Tax Consequences in Mind

Tax consequences can play a significant role in our decisions to give to charity on a yearly basis, so it is no surprised that they play a significant role in our decision as to how to distribute assets to charity on death. Donations to qualified charities are tax deductible up to 50 percent of your adjusted gross income, which means that giving a little extra to charity could help you and your family save on taxes when it comes to inheritances.

A recent article by Time Magazine covered the financial struggles millions of aging Americans face trying to figure out how to pay for the long term in the future. Unfortunately, our nation’s health care system does not seem to have an effective way for our elders to pay for long-term health care, including residency in a nursing home or hiring an in-home health aid worker.

Although we all expect to live long, happy, and healthy lives, the truth is that most of us will eventually end up needing specialized long term health care that neither private insurance nor Medicare will cover. The average cost of a year’s stay in a nursing home can be upwards of $80,000, a figure that leaves only the very wealthy and the very poor (thanks to Medicaid) able to afford.

All tolled, an estimated 47% of men and 58% of women who are retirement age or older will experience a need for long-term care in the future, according to a February 2016 study by the Department of Health and Human Services. As if the financial burden of paying for necessary medical care was not enough, the county’s healthcare system is simply not equipped to handle the coming wave of tens of millions of Baby Boomers approaching old age.

A recent report by CNN revealed the lengths to which one California drug maker may be going to push sales of Nuedexta, a little red pill developed to treat certain behavioral problems but has been increasingly used in nursing homes to control residents. The story by CNN was so compelling that the City Attorney for Los Angeles even opened an investigation into the drug maker’s targeting of nursing home residents.

The Food and Drug Administration (FDA) approved Nuedexta to treat a disorder marked by sudden and uncontrollable laughing or crying, known as pseudobulbar affect (PBA). According to maker Avanir Pharmaceuticals’ own data, less than 1 percent of American’s suffer from the condition and is most commonly associated with patients suffering from multiple sclerosis (MS) or ALS (Lou Gehrig’s disease).

Unfortunately, Avanir appears to paying doctors to push the medication onto nursing home workers as a way to control the behavior of unruly residents, something the drug is not approved for nor studied enough to warrant such applications. CNN reports suggest some doctors even took in tens of thousands of dollars in exchange for speaking engagements and other talks on the benefits of using the drug for “off label” applications.