Hanlon Niemann Blog | A Freehold, New Jersey Law Firm

By Fredrick P. Niemann, Esq., a Monmouth, Ocean, Middlesex and Mercer County NJ Estate Planning and Administration Attorney

Earlier this year, I spoke about concern over the elimination of federal estate tax for this year.  While that sounds like a good thing, it’s not really because the law also eliminated the capital gains “step up” in basis.  So many estates which never would have been subject to estate tax (or capital gains tax) may now face capital gains tax, unless Congress decides to retroactively reinstate the old law, which it has been unable to do all year.

We are now 9+ months into the year, the first estate tax returns for those who died in 2010 are now due, and still nothing from Washington.  Many estate plans have built in flexibility in terms of placing assets into trusts to take advantage of the tax laws.  The problem is that if we don’t know what tax law is in effect how can anyone know what choices to make?

The latest word is that a reinstatement of the old law is unlikely.  Democrats want the reinstatement of a $3,500,000 exemption.  Republicans want to eliminate the tax entirely.  That would certainly be welcome news to many families.  Neither side has the votes to get what it wants, however, a compromise that is now being floated may be good news for all.

Congress may permit more modest estates to elect to benefit from the step up in basis rules that were in effect in 2009.  This would mean, for example, that if you inherited, at your dad’s death, his house or stocks that he held for many years, the basis for calculating capital gains tax is not what he paid but the value of the assets at the date of his death.  So, if you sell those assets shortly after his death you owe no capital gains tax.  This way, the 2010 law would benefit everyone, not just the wealthy.

While this makes a lot of sense, as we all know, that isn’t going to be enough to carry the day, especially in Washington.  Lawmakers will be taking their traditional summer recess in a few weeks.  It’s not clear whether anything will happen but this all should come to a head soon.  Stay tuned.

For further information and advice on any estate planning or estate administration matter, do not hesitate to contact me at 888-800-7442, or fniemann@hnlawfirm.com.

Fredrick P. Niemann, Esq., a NJ Elder Law Attorney

Medical science has made great strides in the last 30 years.  We are certainly living longer.  Illnesses and injuries that in the past resulted in death, now do not.  However, the recovery period can be a long one, especially for the elderly, whose recuperative abilities are not the same as younger patients.  As a result, patients remain hospitalized longer and bounce back and forth between nursing home and hospital, in so many cases.

That’s where the long-term acute care hospital or LTACH, comes in.  General hospitals are typically paid a standard fee for a diagnosis so they earn more for a quicker patient discharge.  At the same time, the patient may not quite be ready for a sub-acute facility in a nursing home, which focuses primarily on rehabilitation but can’t provide the medical care of a hospital.  The LTACH can bridge that gap.  Patients receive the benefit of physicians on duty around the clock as well as nurses, respiratory therapists, case managers, physical and occupational therapists, dieticians and pharmacists, all on staff.  LTACHs provide more nursing care than on a medical-surgical floor of a hospital but less than is provided in an intensive care unit.

Many LTACH patients use ventilators to breath and are recovering from multiple medical conditions such as heart failure, major surgery, etc.  They may have developed complications such as bed sores.  The specialty hospital can concentrate on weaning the patient off of the ventilator or providing wound care, for example, that can require weeks of care, that the general hospital won’t receive payment for.  For those on Medicare, LTACHs are covered under Part A.  The average stay in an LTACH is 25 days.

There are over 400 LTACHs nationwide and 8 in New Jersey.  Most are housed in general hospitals, however, some are freestanding, such as Select Specialty Hospital in Rochelle Park, New Jersey which is owned by the same company that also owns Kessler Institute, the facility that specializes in the treatment of spinal cord injuries.  The long term acute care hospital is definitely an option families should explore for their critically ill or catastrophically injured loved one.  It may very well improve the recovery process and increase the chance that a loved one can ultimately return home.

For further information and advice in any elder law matter, do not hesitate to contact me at 732-863-9900, or fniemann@hnlawfirm.com.

Fredrick P. Niemann, Esq., a NJ Elder Law Attorney

I recently read of a moving story from a widow who had served as her husband’s primary caregiver for sixteen years.  She spoke with both passion and pain, describing her caregiving as “the loneliest time of my life.”  For this reason, she wanted to speak out and be an encouragement to others who might be on the same road.

Her husband had been diagnosed with Huntington’s Disease, a long-term illness that strikes at an average age of 39.  To paraphrase her words, “My husband had the diagnosis, but the disease took him away from me.  I no longer had a lover, a soul mate, someone who could really share with me.  Our days as a couple were at an end.”  During the time of her husband’s increasing illness, he was not able to hold her, kiss her, or care for her for at least eleven of the sixteen years of his disease.

She shared that during his illness, she had to sacrifice her own feelings for the benefit of her spouse.  An area of greatest hurt was the abandonment of her husband by his own extended family.  Her burden could have been lighter if family and friends had stayed more involved.  She related that when she called her husband’s brothers and reminded them of how important it was to her husband to be able to see them from time to time, they responded with, “I just can’t stand to see him that way.”

“I was a widow with a living husband,” she stated with sadness.

It seems to me that we could all do a much better job in helping others carry the load of long term illness.  We need to be more aware of what family members are going through during what may well be the loneliest and most difficult time of their lives.  We need to come alongside them and provide sympathy and support.

On a more positive note, I learned of another man who has been diagnosed with Huntington’s Disease and whose male buddies have rallied around him.  They have intentionally gone out of their way to work together to take this man out of the house and to sporting events with them.  They have specifically set up time to talk with his wife to make sure they understand his care needs.  They work together to make it possible for him to go on their annual fishing trip.  These men are an extraordinary example of what it means to truly be a friend.

I hope that each one of us would choose to follow this model of true friendship if someone we know and love develops a long term illness.

For further information and advice in any elder law matter, do not hesitate to contact me at 732-863-9900, or fniemann@hnlawfirm.com.

Fredrick P. Niemann, Esq., a NJ Medicaid Attorney

In February, 2006 Congress passed some significant changes to the Medicaid laws that created some very dangerous traps for unprepared families needing long term care. At the time I wrote about a case in which Granddad gifted his money to his Granddaughter who moved in to care for him. When she could no longer provide the care and applied for Medicaid she was told, mistakenly, that he was not eligible because of the gifts. It turned out that the Medicaid ineligibility period had expired.  An application for Medicaid was filed on her behalf and the application was approved. A happy ending, but one which at the time would not end so happily under the new law.

Last week a colleague related a story of a call with an all too common story. Mom had recently died. Dad moved in with Daughter, Jane and the plan was for him to live there the rest of his life. At the same time, Dad gifted $150,000 to Jane and her brother, Joe. “It’s Dad’s money. He can do what he wants with it”, she related.

Well, I think you can guess what happened. Jane was unprepared for the reality of long term care. The stress in her voice as she described the deterioration of Dad’s mental and physical state was telling, from the mood swings and erratic behavior to the declining personal hygiene and the inability to walk without assistance. His care needs were increasing and Jane was unable to handle the increased demands on her time while caring for her own young children.

“I just never expected this”, she exclaimed.”  I can’t do this anymore. I need to get Dad into a nursing home and he has $50,000 left.  What do I do?”.  My colleague explained to her that once his money was spent down he could qualify for Medicaid, but she and Joe would need to return the $150,000. But here was the problem. Jane and Joe had already spent the money and, therefore, couldn’t return it.  When Dad’s remaining $50,000 is spent down he still won’t be Medicaid eligible for another 4 years. That’s because the Medicaid penalty doesn’t start until he has less than $2000 to his name and he needs nursing home care.

“It’s so unfair,” she cried. “The government is forcing me into poverty to pay for Dad’s care.” I had to patiently explain to her that she and her brother did receive a substantial sum from Dad, money that should be spent for his own care before public funds could be tapped.  The sad truth, however, is that had the family consulted with an elder law attorney before the gifts were made, Dad could have transferred some assets but enough would have been preserved to cover the possibility that he would need long term care before Medicaid eligiblity.  Unfortunately, in Jane’s case there is no simple solution to her problem.  She would have to figure out how to care for her Dad or pay out of her own pocket until the Medicaid ineligibility period expired.  A cautionary tale for all.

For further information and advice in any Medicaid eligibility matter, do not hesitate to contact me at 732-863-9900, or fniemann@hnlawfirm.com.

Lauren Bercik, Esq., a NJ Employment Law Attorney

On-call employees are turning into a growing liability risk for employers, as some are claiming that companies are restricting their freedom too much, and not paying them for it.

Employment lawyers say that such claims are popping up in larger wage-and-hour class actions, with on-call employees suing for unpaid overtime, alleging that their freedom has gotten so limited that they may as well be hourly employees.

In Gomez v. Lincare Inc., a California appellate court recently revived an overtime class action brought by on-call workers of an in-home respiratory services provider. The employees allege that they deserve compensation for the time spent on call dealing with customer questions by phone, as well as for time spent on call but not handling customer inquiries.

In Sweat v. Battelle Memorial Institute, a group of lab technicians in Utah is suing Battelle Memorial Institute, a science and technology development company, alleging that the company required them to be on call during their lunch break, mandating they be on company premises, in company provided clothing and available for work. The plaintiffs claim they should be compensated for that time.

In Walsh v. Apple Inc., a former network engineer for Apple claims that the computer giant failed to pay network support staff members for on-call time.

“It’s definitely triggering litigation,” employment attorneys agree. “What employers need to do is take a look at what restrictions they place on on-call time.”

The key for employers is to make sure they’re not overly restricting on-call employees’ freedom. The less freedom an employee has while on call, the higher the risk that the on-call time qualifies as paid time. “With the way wage-and-hour class actions are filed over issues everyday, if you’re not looking at this, a plaintiffs’ attorney will be.”

Employers need to revisit their on-call policies and consider relevant factors, including geographic restrictions — whether employees are required to be near the office, at home or near a land line; how quickly employees should respond to calls; and how many calls an employee actually receives while on call.

The trick is to make sure on-call employees have the flexibility to do what they want to do. “If you’re on call, and you’re free to go to a restaurant or go to a movie, or go play golf or tennis, that’s fine.” “But if you’re told, ‘you have to sit in your house and can’t leave,’ then you have to be paid for that time.”

For further information and advice in any employment law matter, do not hesitate to contact me at 732-863-9900, or lbercik@hnlawfirm.com.

Fredrick P. Niemann, Esq., a NJ Elder Law Attorney

Although the typical Social Security Disability Insurance (SSDI) recipient has worked for a fairly long time before the onset of his disabling condition, an adult who became disabled before turning 22 can also qualify for SSDI if she has a parent who meets certain qualifications.

SSDI is a federal program primarily designed to aid people who have become disabled after having worked for a certain amount of time. Unlike Supplemental Security Income (SSI), SSDI is not a needs-based program, which means that there are no income and asset restrictions. Instead, a beneficiary typically has to have paid into the Social Security system for at least 10 years prior to his disability. An SSDI benefit depends on the beneficiary’s income before he became disabled, the size of his family, and the amount he paid into the Social Security system. Finally, SSDI recipients can receive Medicare two years after qualifying for SSDI.

Most people who have a serious disability before turning 22 are not able to assemble the necessary work record to qualify for SSDI on their own. But people in this situation may instead be able to qualify for SSDI on their parents’ work record, in certain situations.

First, the “adult disabled child” (the Social Security Administration’s (SSA) term for a person with a disability that manifested itself before age 22) must be completely disabled according to the SSA’s adult disability standards. Second, the disability must have occurred before the potential beneficiary turned 22. Third, the potential beneficiary’s parent must have paid into the Social Security system for the required number of quarters. Finally, and most importantly, the potential beneficiary’s parent must be either dead, permanently disabled, or receiving Social Security retirement benefits.

If an adult disabled child and her parent meets all of these qualifications, then the “child” should be able to receive a substantial benefit, often greater than an SSI award. On top of the monetary gain, the child does not have to worry about her own unearned income or assets, since SSDI does not take these into account. However, if a child earns enough income through employment, the SSA may determine that she is no longer disabled and cancel her SSDI benefits. The parent’s own retirement benefits are not affected by their child’s receipt of SSDI, and the child can still qualify for SSI benefits if her SSDI payments, which count as unearned income for SSI purposes, do not disqualify her.

Parents who have not begun to receive their own Social Security income but who think that their child may qualify for SSDI in the future may want to have their child screened by the Social Security system for his disability before he reaches age 22. If this is not possible, it pays to have the child’s physician clearly document all of the information surrounding the child’s disability from as early an age as possible. This way, when the parent does retire, the child has a long record showing the presence of the disabling condition before he turned 22, making the SSDI application easier.

For further information and advice in any elder law matter, do not hesitate to contact me at 732-863-9900 Ext. 101 or 105, or fniemann@hnlawfirm.com.

Fredrick P. Niemann, Esq., NJ Elder Law Attorney
 
Often times when I meet with new clients, the first appointment is not with the parent(s) but with the children.  Commonly, they come to us after or during a crisis, such as a parent’s hospital or nursing home stay.  Just as often they have little or no information about what is going on with the parent, medically and financially, and cannot provide much of the information we need to assist them.

Communication between parent and child before a crisis is so important and can provide peace of mind and reduce stress for both.  The following are some of the questions that families should discuss, which will often begin a dialogue about the type of preplanning parents can do before a crisis occurs.

1. Children should know roughly how much and where their parents’ assets are.  Do they have enough to sustain the healthy spouse should one spouse become ill and need extended hospitalization and/or nursing home care?

2. What does the income picture look like?  If one spouse dies, how much income will the surviving spouse be left with?  Will there be a significant drop in income?  Often time’s steps can be taken before that spouse passes to help boost the surviving spouse’s income.

3. Is financial support anticipated?  People are living longer than ever.  Many people are at risk of outliving their money.   Answering this question means not simply looking at current expenses vs. income but looking at the next step in the elder care journey and the next step after that and asking “Do I have enough to pay for long term care and if so, for how long?  And if not, what is my plan then?

4. What types of insurance are there (ie., health, long term care, life)?  Is coverage adequate? If not, can coverage be increased?  You certainly want to do that before you become uninsurable.

5. Are there a power of attorney and a health care directive and where are they?  Are they up to date or stale?  If these documents are not in place then the only alternative is a costly and time-consuming process called guardianship.  The court will be involved in your family’s affairs and you may not get the result you want.

6. Is there an up to date will?  A clear, thought out estate plan can avoid family squabbles after the parent passes away. Even people with small estates should have a will.  Also, make sure the original will can be located. Probating a copy is difficult and expensive.

For further information and advice in any elder law or estate planning matter, do not hesitate to contact me at 732-863-9900 Ext. 101 or 105, toll-free at 888-800-7442, or fniemann@hnlawfirm.com.

Fredrick P. Niemann, Esq., NJ Wills, Trusts & Estate Attorney

Very often, when I prepare wills, powers of attorney and health care directives (living wills) for clients, some react with surprise when they see the length of my documents.  “Why”, they say, “is the will you are preparing multiple pages when my previous one was only 2?”   “The document is designed to cover as many scenarios as possible”, I explain, “not knowing which scenario may in fact occur”.  It is not good enough to simply address the most likely ones, especially if yours turns out to be one of the uncommon ones.

Narrowly or poorly drafted wills can cause unpleasant and expensive results.  Let’s take the simple task of designating an executor, the person who is appointed the official representative of the estate and is charged with gathering the assets, paying the debts and taxes, if any, and following the instructions set forth in the will and making final distributions to the heirs.  It is a good idea to have one or more backup or alternate executors, in case someone can’t or won’t serve, when the time comes.

Now, most people would think in terms of the executor dying as the reason a back up is necessary, but that is just one possible scenario. Yet, I not infrequently see a will drawn up that states “if my executor dies then I appoint my alternate to serve”.  Let’s say Child A is the executor and Child B is the alternate.  Mom dies and A doesn’t want to serve.  No problem. A will step aside in favor of B, right?.  Except that A is alive and the will only provides that B can serve if A has died.  (Note the key term “died”, not refused to serve).  So, what now?

B can serve as administrator.  Same role and responsibilities but some very important differences. An executor can serve without a bond if the will so provides but an administrator cannot.  And that can be an expensive difference.  The bond acts similar to an insurance policy in that the company issuing the bond will pay out the inheritance if the assets are lost or misappropriated.  The bigger the estate the higher the cost, sometimes tens of thousands of dollars.  While a bond can be very important, many close knit families see it as unnecessary.  Unfortunately, in our case there is no choice.   Had the will stated that the alternate can step in if the executor dies or otherwise can’t or won’t serve, then the bond could have been avoided.  A very expensive mistake and a reason you want to be sure that the attorney drafting your will is experienced in estate planning or elder law.

For further information and advice in any elder law matter, particularly your will, trust or estate planning documents, do not hesitate to contact me at 732-863-9900, or fniemann@hnlawfirm.com.

Fredrick P. Niemann, Esq., NJ Estate Administration Attorney

If you inherit property, of course you should be grateful and count your blessings. Still, consider the possibility that the gift may come with a big string attached-a debt linked to the prop¬erty, such as is particularly common with real estate or a car. In that event, the question arises as to whether the debt must be satisfied from the particu¬lar asset or from the decedent’s estate more generally. How this question is answered can cause a big swing in the respective gift amounts for beneficiar¬ies of an estate.

Historically, the law presumed that the debt was not to be paid from the property that was connected to it. The reasoning was that a true gift should not come laden with such a burden. Over time, as taking on debt became commonplace, this thinking changed and statutes flipped the conventional assumption. Increasingly, these laws start from the premise that the property left to someone includes the debt on the property, unless the decedent in his or her will clearly indicated a different intent. That is where careful estate planning, with professional guidance, comes in.

It is best to leave no doubt for the ordinary lay reader of a will. A general directive in the will to pay all debts of the testator is too nebulous. Instead, if the intent is not to keep the asset joined to the debt, language something like this should be used in a will: “If [the specific asset] is subject to a mortgage, security interest, or other lien, I direct that my executor pay the debt from other prop¬erty of my estate which is not given to a specific person or entity.”

This scenario was played out re¬cently in a case in which a farmer left to his (favored?) son three different farms, each of which was encumbered by debt. To his other son he left the residue of the estate. When the father died, the executor used part of the es¬tate proceeds to pay off the loans to the farms, so that the first son would re¬ceive them debt-free. Not surprisingly, the second son, whose inheritance was thereby diminished, brought the matter to court.

The second son prevailed, forcing payment of the debts for the farms to come from the farms themselves. The father’s will directed in a general way that debts were to be paid from the estate. However, under the relevant state statute, that was not a sufficiently explicit indication of intent to satisfy the debts on the farms from the residu¬ary estate. In other words, the will had not clearly shown an intent that the first son was to receive the farms debt-free. As a result, the first son got the three farms, but he, not the second son, also got the responsibility for paying off the attached encumbrances, which totaled almost a quarter of a million dollars.

For further information and advice in any estate matter, do not hesitate to contact me at 732-863-9900 Ext. 101 or 105, or fniemann@hnlawfirm.com.

Fredrick P. Niemann, Esq., a Real Estate Attorney

In one of my last posts I explained how Mom’s transferring her home to a child(ren) during her lifetime will result in capital gains tax whereas passing the home after she dies can reduce or even eliminate the tax.  However, Mom considered transferring the house because she wanted to protect it from being consumed completely by the cost of long term care, especially important where other family members live in the home.

Right there is the dilemma.  What to do?  Capital gains tax, at worst, will never consume the entire proceeds of sale.  Long term care, however, could easily exceed the home value if it is needed for several years.  But do I have to really choose between the two?  Well, maybe there is another way.

Putting the home in a trust, if set up properly, can accomplish both goals.  The home is removed from the parent’s name and, if done 5 years or more before needing long term care, will be outside the Medicaid lookback, that time frame within which Medicaid looks to confirm that you have in fact spent all your money and haven’t given it away.  At the same time, the trust can be set up in such a way that the assets it holds will be part of Mom’s estate and she will be able to take advantage of both the capital gains tax exclusion and the step up in basis that I discussed in my last post.

We accomplish the best of both worlds.  The home can be protected and tax advantages will not be lost.  But, there are even more potential benefits.  Since the home is not in the child’s name but in the trust, it is not subject to the child’s creditors, or to being split with the child’s spouse in a divorce.  Additionally, if Mom needs care within 5 years of the transfer, the home can be sold or borrowed against to help pay the cost of care.  In other words, some of the asset can be used for care but not all of it need be consumed.

As you can see, a simple question, or so you thought.  Is home transfer right for you and your family?  Well, that depends on many factors, including the health of the parent, what other assets exist to pay for long term care and what goals the parent and child want to accomplish.  One thing is for sure.  Planning early makes things easier and the outcome so much better than waiting until a crisis hits.

For further information and advice in any real estate matter, do not hesitate to contact me at 888-800-7442, or email fniemann@hnlawfirm.com.