Elder Law, Estate Planning, Special Needs Blog Long Island New York

A Word to the Wise on Asset Protection

Sometimes when people get into financial trouble, they look for an easy way out and hope that no one is looking.  Many individuals think that creative approaches for transferring assets to spouses or trusts or other quirky strategies are an easy solution to financial problems.  However, most of these creative approaches – which are deemed fraudulent transfers by the courts - usually end up costing the individual far more than the amount of money they originally sought to protect.  Several recent cases serve to demonstrate this, as in one of Lewis Saret’s recent posts on Forbes (and the much longer list in the Wealth Strategies Journal.)

In re Quaid, (2011 WL 285645, Bkrtcy.M.D.Fla., Jan. 26, 2011,)  a Florida man sought to use a self-settled trust to shield his assets from creditors. According to his account, even though the trust was self-settled (he, the beneficiary of the trust, set it up) the assets were still exempt because of a spendthrift provision. Unfortunately the Orlando Division of the US Bankruptcy court ruled that a spendthrift provision does not apply to a self-settled trust when the beneficiary contributed assets, and that wrecked the plan. The assets amounted to $400,000 and were added to his estate, well within reach of his creditors.  

In the case of Struyk v. Meltzer (2011 WL 1019916, Cal.App. 4 Dist, Unpublished, Mar. 23, 2011) we see the far more common case of inter-spousal transfers deemed to be fraudulent. A California man facing a $500,000 debt, tried to shield assets by transferring them to his spouse, who was debt-free.  He tried to quit-claim his interest in their residence and allow her to claim it as sole property, effectively transferring the asset. But instead of shielding the residence, the jury found that the husband intentionally transferred the property to the wife in order to defraud his creditor, which ultimately led to a jury verdict well in excess of the value of the assets transferred.

The bottom-line:  fraudulent transfers can prove counter-productive at best and disastrous at worst.  When financial challenges arise, the best solution is to find a skilled professional in estate planning and if necessary, bankruptcy law, to avoid making a bad situation worse. 

If you have questions, call me at (516) 307-1236 or send an email at sjs@sjslawpc.com to discuss how proper estate planning is used to protect assets, ensure wealth transfer, and achieve short and long term goals.   You can also see further information on my website, www.sjslawpc.com. 

 

Elder Law and Medicaid Eligibility - Making Up Your Own Rules Doesn't Work

In case you thought that Medicare and Medicaid were overburdened bureaucracies that are too busy to notice any irregularities, here’s a story of what happens when inexperienced consumers try to figure out their own rules. 

In the Matter of Komanoff Ctr. for Geriatric & Rehabilitative Medicine v Daines (N.Y. Sup. Ct., App. Div., 2nd Dept., No. 2010-05776, June 28, 2011)   Bernadette Jordan  entered a nursing home and filed for Medicaid only to find that the State ruled her ineligible for a period of 14.31 months.   Apparently, Mrs. Jordan had transferred funds from a revocable trust to her daughter to repay expenses that her daughter had shouldered in getting her to the nursing home.

States are skeptical of such transfers and examine them carefully. In this case they found that the transfers were made at less than fair market value for purposes of Medicaid eligibility, and so denied Mrs. Jordan Medicaid benefits.

On Mrs. Jordan’s behalf, her nursing home called a hearing and later appealed.   The expenses the daughter paid were documented and done with the assumption that they would be repaid with assets from the trust. The State still denied benefits. The problem was that there was no written document at the time of the expenditure that specified the agreement to repay the daughter’s expenditures. 

The moral of the story is documentation. By documenting your interactions and intentions you can provide hard proof and avoid getting caught on a technicality. In Mrs. Jordan’s case, 14.31 months is a long time to wait for nursing home benefits.

If you are involved in a parent or elderly relative’s care and Medicaid is on the horizon, you can’t rely on what may seem like common sense.  If you have questions, call me at (516) 307-1236 to find out why this is not a Do It Yourself project. 

 

WILL SAME-SEX MARRIAGE CAUSE UNMARRIED COUPLES TO LOSE EMPLOYEE BENEFITS?

The recognition by New York of same-sex marriages may have serious implications for unmarried couples, regardless of whether they are same sex or opposite sex.   A main area of concern is the extension of employee benefits to unmarried couples.

Traditionally, employers were only obligated to extend certain benefits to married couples. As the number of same-sex unions grew, these benefits were extended to cover most same-sex partners. In order to maintain equality, in many instances these changes were also extended to Persons of Opposite Sex Sharing Living Quarters (POSSLQ).

With the legalization of same-sex marriages, the necessity of extending benefits to same-sex unmarried couples becomes moot.  Now, all married couples will treated the same, ending the need to provide benefits to same sex couples. 

But what about unmarried couples, same sex and/or opposite sex,  who have chosen not to marry?

The courts ruled that same sex couples could receive benefits because marriage was not an option.  The law had to cover same sex couples or there would be discrimination based on sexual orientation. All people in the same situation must be treated equally. Now that same-sex marriage is sanctioned, as long as all married couples are treated the same, there is no need to extend the benefits to unmarried couples.

Additionally, opposite sex couples being granted the same benefits as married couples smacks of common law marriage, a concept that is all but dead in the United States.

As time passes, more and more issues will come to the front. How they will be handled remains to be seen.