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RECENT
COURT DECISIONS
ANNUAL
ACCOUNTINGS FOR SUPPLEMENTAL NEEDS TRUSTS GOVERNED BY PROVISIONS
OF THE TRUST AGREEMENT
The Second
Department held that annual accountings of a corporate trustee
of a Supplemental Needs Trust are governed by the provisions
of the trust agreement, the SCPA and the EPTL. Where the provisions
of the trust allow the trustee to take its commission and
pay attorney's fees, the trustee may do so without prior court
approval. Matter of Hawwa A. Anonymous, 2004 NY Slip
Op 05789 (July 6, 2004).
POWER
OF ATTORNEY MUST SPECIFICALLY AUTHORIZE GIFT GIVING
Where
a power of attorney does not specifically contain a gift-giving
provision, a gift to the agent "carries with it a presumption
of impropriety and self-dealing." To overcome this presumption,
the recipient of the gift must make "the clearest showing
of intent" on the part of the principal. Marszal v.
Anderson, AD3d (3d Dept. July 15, 2004)
TRUST
PROPERTY IN A 1986 TRIGGER TRUST WHERE GRANTOR RETAINED A
LIMITED POWER OF APPOINTMENT AND HAD NOT EXPRESSLY ELIMINATED
HERSELF AS REMAINDER BENEFICIARY WAS DETERMINED NOT TO BE
AN AVAILABLE RESOURCE
The Grantor
of the subject trust established a trigger trust (prospectively
outlawed by statute in 1992) retaining for herself the right
to change the remainder beneficiaries. The Grantor eliminated
her spouse and others, but did not eliminate herself as a
potential remainder beneficiary. According to the Court of
Appeals, the trust property was not an available resource.
The court reasoned that a remainder comes into existence only
after the death of the Grantor. In this instance, the Grantor
could not be a remainder beneficiary according to both the
law and the intent of the Grantor as expressed in the instrument.
See Matter of Martha Ferrugio, 2004 N.Y. Lexis 2154,
September 2, 2004.
LEGISLATIVE
DEVELOPMENTS
GOVERNOR
PATAKI SIGNS 2004-2005 BUDGET BILL. RESTRICTIVE MEDICAID ELIGIBILITY
PROPOSALS NOT ADOPTED. MANY CHANGES MADE TO LONG-TERM CARE
INSURANCE.
New York's
recently enacted 2004-2005 budget included many changes to
long term care insurance. The following is a summary of key
provisions enacted:
(1) Taxpayers
purchasing qualified long term care insurance policies will
be allowed a credit of 20% of their paid premiums (10% under
prior law). Also, a tax credit which exceeds the tax for the
year may be carried forward;
(2) a
NYS coordinator chosen by the NYS Department of Health will
implement long term care insurance centers to provide education
and outreach for the general public by providing information
in print and audio and visual advertisements, announcements,
conferences, and presentations, a telephone hotline, counseling,
referral services, workshops, and generally to provide assistance
in choosing and obtaining long term care insurance; annual
reports must be filed with the governor, the speaker of the
assembly and the temporary president of the senate;
(3) it
will be possible for people to purchase a long term care Partnership
insurance policy having a duration of fewer than three years
but not shorter than one year (a short-term policy); purchasing
a short-term policy will allow a person to be able to protect
an amount of nonexempt resources equal to the policy benefits
purchased and exhausted; NY is providing the Commissioner
of the Department of Health with authority to enter into reciprocal
arrangements with other states which offer their own brand
of a partnership policy (presumably if effected with, say,
California, former NY residents moving to California would
be able to obtain Medi-Cal in California-thus providing portability;
(4) seniors
purchasing a qualified long term care insurance policy will
be able to designate a third party to receive notices of nonpayment
of premiums due or notices of cancellation for nonpayment
of premiums;
(5) consumer
protection is achieved by providing for a notice provision
where the insurer must give at least 10 days notice for the
insured to change his/her mind and obtain a return of the
premium (30 days if the transaction is effected by mail);
and
(6) the
NYS Dept of Insurance is directed to study and develop investment
product options which might combine aspects of the benefits
which would normally be found in a disability, long term care
and/or life insurance policy and to avoid lapsing on the failure
to pay premiums.
At our
2004 Summer meeting, we discussed proposals that would have
drastically changed Medicaid eligibility rules. The proposed
changes, none of which were adopted in the final budget bill
signed by Governor Pataki, included:
(1) A
proposal to extend the look back period to 60 months on all
transfers of resources;
(2) A
proposal to apply penalty rules to community Medicaid applicants;
(3) A
proposal to eliminate spousal refusal for community medicaid;
and
(4) A
proposal to start the ineligibility period for institutional
care at the time of the filing of a Medicaid application.
In August
2004, the State's budget passed without implementing any of
the foregoing proposals to the Medicaid eligibility rules.
LEGISLATURE
ENACTS A NEW ASSISTED LIVING FACILITY LAW
In October
of 2001, several members of the Elder Law Section met with
staff members of the New York State Department of Health (DOH)
in Albany to discuss Governor Pataki's then current proposal
regarding assisted living legislation and the Section's proposed
revisions to it.
On August
12, 2004, the New York State legislature enacted a new Article
46-A to the Public Health Law which does, by and large, incorporate
the suggestions made by our Section to the DOH staff. The
newly enacted Article 46-A provides a comprehensive and intelligent
definition of assisted living, which now encompasses the so-called
"assistive living facilities" or "look-alikes"
in addition to the formerly covered assisted living facilities.
The legislation
requires every facility that purports to offer housing with
on-site monitoring and personal care services in a home-like
setting to be licensed and overseen by DOH. Each resident
is ensured an individualized services plan (ISP) which must
include input by the resident or the resident's representative
and the resident's physician, among others. The legislation
also provides standards for "enhanced assisted living"
care and services to residents who require a higher level
of care but who can be maintained safely at the assisted living
facility. It also provides standards for any residence serving
individuals with special needs such as dementia or cognitive
impairment. Contracts for admission must contain certain minimum
information. In addition, the statute addresses the issues
of dispute resolution and quality assurance, including the
minimum rights and responsibilities of residents.
AMENDMENTS
TO ARTICLE 81 OF THE MENTAL HYGIENE LAW
Mental
Hygiene Law Article 81 has been amended by Chapter 438 of
the Laws of 2004 (approved September 14, 2004; effective December
13, 2004). The amendment enacts several substantive changes
in the law, while also making many technical corrections.
Here are
some highlights of the substantive changes:
•
definition of life sustaining treatment in a new subdivision
(j) of § 81.03
• commencement of a proceeding
by the filing of a petition, with the 28 day period for hearing
to begin with the signing of the order to show cause, §
81.07 (a), (b)(1)
• specific prohibition in §
81.07 (b)(3) against any court requirement for the attachment
of medical information to the order to show cause as supporting
papers
• changes in the notice and service
provisions of § 81.07
• court evaluator appointments
are mandated to be made from the OCA list, § 81.09 (b)(1)
• clarification of §81.10
(a) to ensure an AIP's right to choose and engage counsel,
but also to require appointed counsel to remain of record
until the court determines that the engagement of counsel
was free and independent
• the only temporary relief under
§ 81.23 that will require the appointment of counsel
is that of temporary guardian, § 81.10 (c)(5)
• MHLS may be appointed court evaluator
or counsel for AIPs in the community, § 81.09 (b)(1);
81.10 (e)
• the AIP is the only party who
may demand a jury trial on the issue of incapacity, §
81.11 (f)
• courts only have 7 days to render
decisions after hearing, § 81.13, and a judgment must
be entered and served within 10 days of signature, §
81.16 (e) [timing for the commission is still confusing, see,
§ 81.13]
• more detail has been included
in the powers of property management guardian, § 81.21
• major medical/dental treatment
consent expressly limited by the exception for life sustaining
treatment in § 81.29 (e), § 81.22 (a)(8)
• the purpose of a TRO or preliminary
injunction is extended to include the health and safety of
an AIP, § 81.23 (b)(1), (2)
• changes in bonding requirements
and provision for depositing assets into court and including
trustees for bonding, § 81.25
• reference to SCPA 2309 deleted
from the compensation provisions of § 81.28 (a)
• court's power to vacate POA and
HCP extended to permit the exercise of that power for breach
of fiduciary power in addition to invalidity ab initio, §
81.29 (d)
• upon application for modification
of powers, a court may dispense with the need for a hearing
for good cause, § 81.36 (c)
ELDER LAW POTPOURRI
NASSAU
COUNTY DEPARTMENT OF SOCIAL SERVICES COMMENCES
LAWSUITS AGAINST REFUSING SPOUSES
Nassau
County DSS has commenced several actions seeking to recover
excess resources from community spouses. The amount of the
excess resources has been as little as $383,000 to as much
as $700,000. DSS does not appear to be willing to negotiate.
We will keep you updated as to the status of these cases.
If anyone has a similar case in Nassau or any other county,
please let us know so we may keep our members informed.
FAIR
HEARING DECISION ALLOWS INCREASE IN CSRA
An increased
CSRA was permitted where the community spouse had $468,779.13
of resources and $736.88 of monthly income, which left the
community spouse with a monthly income shortfall of $1,582.12.
The interest generated on the $468,779.13 principal, at the
rate of 3.2% per annum, yielded $14,898.00 per annum or $1,241.15
monthly, short of the $1,582.12 shortfall. Thus the CS was
able to keep all of the $468,779.13 principal without an obligation
to contribute, and without a risk of being sued to turn over
excess resources. Matter of Trapanese, FH# 4150239M,
September 17, 2004.
This case
was handled by Elder Law Section member Michael Amoruso, Esq.
2005
MEDICARE PREMIUMS, DEDUCTIBLES, AND CO-PAYS ANNOUNCED
CMS has
announced the 2005 Medicare deductibles, premiums, and co-pay
amounts:
Medicare
Hospital Insurance (Part A)
Deductible
— $912 per Benefit Period ($876 in 2004)
Coinsurance
—$228 a day for the 61st through the 90th day ($219
in 2004), per Benefit Period; $456 a day for each "nonrenewable,
lifetime reserve day" ($438 in 2004)
Skilled
Nursing Facility Coinsurance
$114
a day for the 21st through the 100th day per Benefit Period
($109.50 in 2004)
Hospital
Insurance Premium
$375
($343 in 2004)
Reduced
Hospital Insurance Premium
$206
($189 in 2004)
Medicare
Medical Insurance (Part B)
Deductible
— $110 per year ($100 in 2004)
Monthly
Premium — $78.20 ($66.60 in 2004)
Source:
U. S. Department of Health and Human Services (3 Sep 2004)
www.hhs.gov/news/press/2004pres/20040903a.html
CMS
ALLOWS STATES TO REQUIRE EARLY REDEMPTION OF SAVINGS BONDS
In a memorandum
dated February 2, 2004, from CMS to its Region I Administrator
in Boston, CMS stated that states may require Medicaid applicants
who own U.S. Savings bonds to request a waiver from the Department
of the Treasury allowing them to cash out the bonds early,
thus making their value an available resource. However, until
the time the Treasury Department allows for early redemption,
the bonds are not considered as a resource.
REVENUE
RULING CLARIFIES GIFT AND ESTATE TAX ISSUES RELATING TO IRREVOCABLE
GRANTOR TRUSTS
The Internal
Revenue Service has ruled that a grantor can pay the annual
income taxes owed by the trust without the payment being treated
as an additional taxable gift to the beneficiaries of the
trust. The Ruling also provides suggested wording for the
trust. Rev. Rul. 2004-64 (July 6, 2004).
IRS
PUBLISHES FINAL REGULATIONS FOR REDUCED MAXIMUM EXCLUSION
FOR HOME SALES
Where
a taxpayer has not been able to meet the two out of five year
holding period for a principal residence, or has sold a principal
residence in the most recent two years, a reduced exclusion
is available to taxpayers who do not meet the conditions if
the failure is "by reason of" a change in the place
of employment, health, or unforseen circumstances. If none
of these provisions apply, if the taxpayer is able to show
that based on facts and circumstances the primary reason is
related to a change in employment, health, or unforseen circumstances,
the taxpayer may yet be entitled to the reduced maximum exclusion.
See 69 FR 50302, TD 9152, August 16, 2004.
DEVELOPMENTS IN OTHER STATES
NJ
ALLOWS MEDICAID PLANNING BY A GUARDIAN
After
two lower courts refused to allow a guardian to sell a mother's
residence and then gift a portion of the proceeds to children,
the highest court in NJ reversed following the NY Court of
Appeals rationale of Shah. The court stated that if
a person with capacity could engage in Medicaid planning,
then a person without capacity, acting through a guardian,
should be able to do so as well. The Court went on to say
that there is a presumption that a person would want the government
to pay for care instead of relatives. In order for an application
to be granted, petitioner must satisfy the court of the following:
(1)
the incapacitated person will not regain competency;
(2) the assets remaining after the gifting is completed
will be sufficient to take care of the needs of the incompetent
person prior to becoming eligible for the Medicaid program;
(3) the donees of the gifts are the natural objects of the
donor's bounty;
(4) the gifts will benefit the estate of the person by making
assets available to beneficiaries that might otherwise be
consumed by the cost of care; and
(5) there is no substantial evidence that if the person
were competent the person would not have made the gifts.
See www.judiciary.state.nj.us/opinions/supreme/a-70-02.pdf
UPCOMING
EVENTS
The Elder
Law Section Fall Meeting and Advanced Institute will be held
on October 21-23, 2004 at the Hyatt Regency Hotel in Rochester,
NY. In addition to reviewing the new long-term care insurance
provisions of the 2004-2005 budget bill, the new Assisted
Living Facility legislation, and the recently enacted Amendments
to Article 81 of the Mental Hygiene Law, the meeting will
include an Elder Law Update, a discussion of New York's experience
regarding Medicaid Reform Proposals, Pooled Trusts, Fraud
and Abuse issues, Estate and Spousal Recovery issues, Article
81 issues and pain treatment. 9.5 MCLE credit hours have been
approved for this program.
The Advanced
Institute will feature five roundtable sessions on Estate
Planning and Tax Issues, Fair Hearings, Guardianship, Medicaid,
Practice Management, Real Estate, Retirement Plans, Spousal
Issues and Supplemental Needs Trusts. 5.5 MCLE credit hours
have been approved for this segment . To view the brochure
and registration information, go to www.nysba.org/ELSFall2004Meeting |
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