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Attorney At Law

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Normally, one person is appointed as an agent on a health care proxy.

By Nancy Burner, ESQ.

QUESTION: I recently signed a health care proxy naming my daughter to make health care decisions for me. Is she able to access my medical records and speak to Medicare and my supplemental health insurance company?

ANSWER: It depends on the information your health care agent is attempting to gather. A health care proxy is a document in which you designate an agent to make health care decisions for you in the event you are unable to make these decisions for yourself.

The health care proxy often contains language allowing your health care agent to hire and fire physicians and health care professionals. Federal regulations, specifically HIPAA, or the Health Insurance Portability and Accountability Act, make it difficult for anyone, even a spouse, to obtain any medical information on your behalf absent a properly executed health care proxy.

You must read the health care proxy carefully and make sure the document gives your agent the ability to do exactly what you would like them to do, for example, have access to your medical records. It is also important to note that signing a new health care proxy will revoke the previous health care proxy you may have signed in the past. This is important when you take the time to establish a comprehensive health care proxy and then go to the hospital and sign a very basic health care proxy with the staff at the hospital, which will revoke the comprehensive one you signed previously.

In addition to the health care proxy, you can sign a HIPAA release form, which would allow the individuals listed in your health care proxy access to your medical records. The health care proxy itself may give the same authority; however, the HIPAA release form is a very simple form that is easily recognizable by most hospitals and doctors offices. This can simplify the process to get medical records instead of using the health care proxy.

In order for your agent to deal with Medicare or another health insurance company, even a properly drafted health care proxy is typically not enough. In many circumstances, a durable power of attorney is required in order for a third party to speak with these companies on your behalf. A validly executed power of attorney will allow you, the principal, to designate an agent to act on your behalf and virtually step into your shoes with respect to all of your matters. The HIPAA can facilitate the exchange of information between your health care providers and health insurance companies with your agent.

If you want to ensure that your designated agent has the ability to communicate on your behalf, there are a few steps that you can take now in conjunction with getting your estate planning documents in order. If you are enrolled in Medicare, there is a simple way of getting your agent on file. If you visit https://www.medicare.gov/MedicareOnlineForms/AuthorizationForm/OnlineFormStep.asp, you will be able to fill out an electronic form in order to make sure Medicare will speak to your agent in the event of your incapacity. Additionally, if you have other insurance or supplemental insurance, call the individual company and find out how to get your agent on file.

When a loved one is sick or incapacitated, the family is usually under a lot of stress and needs to deal with multiple agencies. If the authority is already established, it may help to alleviate some of the complications loved ones face. If you have any questions regarding your estate planning documents, you should visit your local elder law attorney.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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By Nancy Burner, ESQ.

Nancy Burner, Esq.

Being hyperfocused on avoiding probate can be an estate planning disaster. First, what exactly is “probate”? Probate is the legal process whereby a last will and testament is determined by the court to be authentic and valid. The court will then “admit” the will to probate and issue “letters testamentary” to the executor so that the executor can carry out the decedent’s intentions in accordance with the last will and testament.

That usually involves paying all funeral bills, administrative expenses, debts, settling all claims, paying any specific bequests and paying out the balance to the named beneficiary or beneficiaries. Avoiding probate can be accomplished by creating a trust to hold your assets during your lifetime and then distributing the assets at your death in the same manner and sequence as an executor would if your assets passed through probate.

Typically, this would be accomplished by creating a revocable trust and transferring all nonretirement assets to the trust during your lifetime, thereby avoiding probate at your death. Retirement assets like 403Bs, IRAs and nonqualified annuities are not transferred to revocable trusts as they have their own rules and should transfer after death by virtue of a beneficiary designation.

Retirement assets should not be subject to probate. The designation of a beneficiary is vital to avoid costly income taxes if retirement assets name the estate or default to the estate. The takeaway here is that you should make sure that you have named primary and contingent beneficiaries on your retirement assets.

If you name a trust for an individual, you must discuss that with a competent professional that can advise you if the trust can accept retirement assets without causing adverse income tax consequences. Not all trusts are the same.

Avoiding probate can be a disaster if it is not done as part of a comprehensive plan, even for the smallest estate. For example, consider this case: Decedent dies with two bank accounts, each naming her grandchildren on the account. This is called a Totten trust account. Those accounts each have $25,000. She has a small IRA of $50,000 that also names the grandchildren as beneficiaries. She owns no real estate. Sounds simple, right?

The problem is that the grandchildren are not 18 years of age. The parents cannot collect the money for the children because they are not guardians of the property for their minor children. Before the money can be collected, the parents must commence a proceeding in Surrogates Court to be appointed guardians of the property for each child. After time, money and expenses, and assuming the parents are appointed, they can collect the money as guardian and open a bank account for each child, to be turned over to them at age 18. The IRA would have to be liquidated, it could not remain an IRA and the income taxes will have to be paid on the distribution.

I do not know of a worse scenario for most 18-year-old children to inherit $50,000 when they may be applying for college and seeking financial aid, or worse, when deciding not to go to college and are free to squander it however they want.

If the grandparent had created an estate plan that created trusts for the benefit of the grandchild, then the trusts could have been named as the beneficiaries of the accounts and the entire debacle could have been avoided. The point is that while there are cases where naming individuals as beneficiaries is entirely appropriate, there are also times that naming a trust as beneficiary is the less costly option, and neither should be done without a plan in mind.

When clients have a large amount of assets and large retirement plans, the result can be even more disastrous. Consider the case where a $500,000 IRA names a child as a direct beneficiary. If a properly drawn trust for the benefit of the child was named as beneficiary, there would be no guardianship proceeding and the entire IRA could be preserved and payments spread out over the child’s life expectancy, amounting to millions of dollars in benefits to that child over their lifetime. If payable directly to the child, there will be guardianship fees and the $500,000 will likely be cashed in, income taxes paid and the balance put in a bank account accruing little interest and payable on the 18th birthday of the beneficiary.

The concern is that individuals are encouraged to avoid probate by merely naming beneficiaries but with no understanding of the consequences. At a time when the largest growing segment of the population is over 90, it does not take long to figure out that the likely beneficiaries will be in their 60s, 70s or older when they inherit an asset.

Thought must be given to protecting those beneficiaries from creditors, divorcing spouses (one out of two marriages end in divorce) and the catastrophic costs of long-term care. Whether the estate is large or small, most decedents want to protect their heirs. A well-drafted beneficiary trust can accomplish that goal.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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By Nancy Burner, ESQ.

Nancy Burner, Esq.

As you may know, Medicare will pay for a patient to receive rehabilitation in a facility if they have a qualifying stay in a hospital: being admitted to the hospital for two nights. The first 20 days of rehabilitation are completely covered by Medicare. The 21st through the 100th day will have a co-payment of $161 per day. This co-payment may be covered by a Medicare supplemental plan.

However, it is important to note that while there is a potential to receive 100 days of rehabilitation, it may be determined that rehabilitation is no longer needed and the discharge will be set up.

The facility is required to give written notice that they believe Medicare will no longer cover the patient. This comes as a “Notice of Medicare Non-Coverage.” This notice gives the patient the right to appeal the decision. In order to make an effective appeal, it is important to know the appropriate standard that the law requires the facility use in making a determination.

That standard was inconsistent with Medicare regulations. The true standard is whether the patient needs the rehabilitation to maintain activities of daily living.

In 2011, a federal court case was decided on this issue. In that case, Medicare skilled nursing service recipients challenged the failure to improve the standard. The settlement agreement by the parties rejected the failure to improve the standard and stipulates that the standard for terminating services is not whether the patient’s condition is likely to improve but rather whether the condition will worsen if services are terminated.

Therefore, skilled services should be continued so long as skilled therapies are needed to maintain the patient’s ability to perform routine activities of daily living or to prevent deterioration of the patient’s condition. This represents the current legal standard for denying skilled nursing coverage under Medicare.

Even though this issue was settled by the courts years ago, many patients are finding it is not being followed by facilities. It is important for the patient and their advocates to know the proper standard so they can make an appropriate appeal.

On Feb. 2, 2017, a new federal court decision stated that the standard is established but it is not being adhered to by facilities. The decision is forcing an educational campaign to be enacted so professionals at facilities and individual Medicare recipients are aware of the appropriate regulations. The plan will include a Centers for Medicare and Medicaid Services website dedicated to this issue and the explanation of the appropriate standard.

Receiving the maximum amount of rehabilitation days possible is the right of all Medicare recipients.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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By Nancy Burner, Esq.

While discussing an estate plan with a client, she stopped me and said “What is probate.” Sometimes we forget to explain the simplest concepts. Probate is the process by which a last will and testament is given effect. Under New York State Law, a will is admitted to probate after the executor files a Petition for Probate with the decedent’s will attached and gives proper notice to the individuals that would have inherited from the decedent had the decedent died without a will. The proceeding for the probate of a will takes place in the Surrogate’s Court in the county where the decedent resided at the time of his or her death. The probate proceeding gives the interested parties (distributees) the right and opportunity to object to the probate of the will.

Typically, we advise that a client that creates a will consider if there are any circumstances that will make the probate proceeding an expensive one. For instance, is any distributee being disinherited? If so, that disgruntled distributee may come to Surrogates Court and object to the will. The litigation objecting to a will can be long and drawn out — and expensive as well. Are there missing heirs that must be found before the will can be probated? If so, it could be very expensive and time-consuming to find all the individuals that are required to be given notice and an opportunity to object. Is there real property owned by the decedent in different states? If so, then the will would have to be probated in each state. If any of these circumstances exist, you may want to avoid probate altogether.

We also suggest avoiding probate if you are the surviving spouse and your spouse is or has received Medicaid benefits. Medicaid has a lien against the spouse’s estate for any Medicaid benefits paid for the other spouse within 10 years of the death of the surviving spouse.

Another reason to avoid probate is if you have a disabled beneficiary as the Surrogate’s Court may appoint a guardian ad litem to protect that person’s interest. That could be another delay and cost to the estate.

The next question to consider is how do you avoid probate? One way to avoid probate is to name beneficiaries on all your accounts. But I rarely, if ever, suggest that a client resort to this solution without first considering the consequences. First, it may not be possible to name beneficiaries on all your accounts. What if your beneficiaries are minor’s or disabled? If that is the case, the minor or disabled beneficiary would have to have a guardian appointed to collect the bequest. This is also timely.

For minor’s, the guardian would have to put the money in a bank account, earn little or no interest and turn the money over to the beneficiary when he or she turned 18. If the account was a retirement account, the result is even harsher. The IRA or other retirement account would have to be liquidated, all income taxes paid and then put into a custodial account at a bank, earn little interest and then be paid to the beneficiary at age 18.

Most clients, when given the choice, would rather protect their heirs from divorcing spouses, Medicaid liens, creditors and taxes than avoid probate. We can protect beneficiaries by having their assets paid to trusts. This can be done in a will (and probate) or by avoiding probate altogether by using a revocable trust.

The important point here is that it is a mistake to make the avoidance of probate the overriding consideration when embarking upon an estate plan. Not everyone needs a revocable trust, but some people will be well served by using a trust, if the circumstances make probate impractical.

One size does not fit all. A successful estate plan takes all factors into consideration. In a world where people are computer savvy and everything is available on the internet, it is easy to believe that you can just do it yourself. The fact is attorneys are called counselors at law for a reason. The documents are only part of the problem and solution. The fact is, there is no substitute for competent legal advice.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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