Fraud Prevention – Part 1
As internet use and online business have increased, so has online financial theft and fraud. Seniors are especially susceptible for a number of reasons. For one thing, criminals go where the money is. Much of the country’s wealth is held by the older population. Secondly, as we age, our cognitive skills are not what they once were, making it harder for us to recognize a scam. Thirdly, many seniors are unfamiliar with and confused by technology. For these reasons, scammers find seniors to be an easy mark. We’ve seen an increase in calls to our office from clients and their family members relating stories of how they were scammed out of tens and in some cases hundreds of thousands of dollars. There are common elements to every scam. The scammer has a story. Why is he or she asking for your information or for your money? Sometimes it’s the promise of a greater reward. “Give me a small amount of money now and I’ll give you a larger sum back later.” In other cases the story is that you owe the scammer money. To establish legitimacy, the scammer makes it look like you are dealing with a known business or entity - except that you’re not. It’s all fake. By the time the victim realizes he has
Recent Trends in Medicaid
I have always said that the desire to quickly file a Medicaid application should be tempered by the ability to provide the documentation that is required for an application to be successful. The State is now scrutinizing every single transaction in and out of every single account that existed in the past 5 years. Often the family member gathering the required documentation has no previous knowledge of the assets. The State, however, thru its asset verification system, using the applicant’s Social Security number, can find these accounts. It will then request the documentation with respect to these accounts but typically only provide 7 to 10 days within which to produce it. Getting these documents from financial institutions is never easy. Our clients are so often told that statements for closed accounts cannot be retrieved. Not true, but you must be persistent and it will probably take more than 7 to 10 days to get them. All this works in favor of the State. Each time an application is denied for lack of verification (meaning a failure to provide the requested documents) you can refile so long as you provide the missing documents. However, you may lose months of eligibility since retroactive eligibility can only go as far back as
Sunset Provision for Social Security and Medicare? – Part 2
In last week’s post I started to discuss clauses found in some laws that are called “sunset provisions”. They are essentially expiration dates for a law. We’ve seen them in estate tax laws. The current federal estate tax exemption is scheduled to “sunset” in 2025, unless Congress votes to extend. The key here is that if the current law expires, the previous estate tax law and exemption go back into effect. What caught my ear was talk about sun setting other programs, such as Social Security and Medicare which I had not heard about previously. Back in March Congressman Rick Scott put forward his “11 Point Plan to Rescue America”. In it he suggested that all federal legislation should sunset every 5 years. As he explained, “if a law is worth keeping, Congress can pass it again.” He didn’t specifically mention Social Security and Medicare, however, they are federal laws so presumably they could be included. In recent years, Washington has become so gridlocked that government shutdowns seem to be an almost annual occurrence. In this climate, the thought of every federal law automatically expiring unless affirmative action is taken by Congress to extend it is a bit unsettling. The chaos it could cause is not hard to envision. Let’s look, for example,
Unintended Consequences – Part 2
In my post last week, I started to tell you about an interesting estate administration case involving an heir who had legally adopted the decedent a number of years before the decedent died. This was an adult adoption in which the adopted parent was only 10 years older than the adopted child. As I stated last week,the primary motivation was to permit the parent to leave his estate to the adopted child and avoid inheritance tax because a child as a Class A beneficiary is exempt from inheritance tax. Except that the child died first. While he chose to leave a portion of his estate to the parent by adoption, he left the rest to his child and his sibling. The adoption had an affect not only on the parent’s heirs but it also affected the adopted child’s heirs. Just as a child is a Class A beneficiary, exempt from inheritance tax, so is a parent. No problem there, however, the adult adoption also changed some of the decedent’s other relationships. The New Jersey statute concerning adult adoption states that the effect of the adult adoption is that the rights, privileges and obligations due from the adopted child to the natural parents and all relations existing between them
Unintended Consequences (Part 1)
In this week’s post I’ll tell you about an interesting issue that came to our office involving an estate administration matter. The decedent left a portion of his estate to his friend. What I also learned is that the friend who was 10 or so years older than the decedent, legally adopted the decedent. While I do not know for certain, a reason for the adult adoption may have been avoidance of inheritance tax. A parent is a Class A beneficiary and anything inherited is free of inheritance tax. The same is the case for a child who also inherits free of the tax. A non related heir, on the other hand, is a Class D beneficiary. The tax paid by Class D heirs is 15% of the first $700,000 received and then 16% of anything received above that amount. By going ahead with the adoption, which must be accomplished by a court order, the inheritance tax can be avoided for both the parent and the child. But, there are also unintended consequences. For one thing, because the friend did not have any children and was older than the decedent, I expect that a primary motivation was probably to avoid inheritance tax when the friend died. Because the friend was older than
The Executor who is Neither a Resident nor a Citizen (Part 2)
My post last week was about a call we received from someone named as executor in a sibling’s will. While the decedent was a New Jersey resident and U.S. citizen, the executor was not. As I explained last week, there is no New Jersey statute or rule requiring it, however, there are very practical reasons for choosing a resident/citizen. First there is a language barrier to consider. Choosing an executor who does not speak English makes the process that much more involved because an interpreter will be necessary for all verbal and written communication written documents. Many US banks are reluctant to deal with non U.S. citizens. Opening an estate account may prove difficult if not impossible. The Executor will need to close out accounts in the decedent’s name and transfer them to an estate account first to pay bills and taxes before disbursing to the heirs. A foreign executor may find it difficult to open an estate account in a local non US bank. The executor will need to hire an accountant and/or an attorney to deal with income tax, estate and/or inheritance taxes and communicate with each one. Many of the documents that the executor will need to complete and sign are required to be notarized. Others require a