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Archive for January, 2014

Massachusetts Supreme Judicial Court Johnson v. Kindred Decision

Posted on: January 24th, 2014 by Debra Rahmin Silberstein

In Johnson v. Kindred Healthcare, Inc., decided on January 13, 2014, the Massachusetts Supreme Judicial Court (the “SJC”) considered whether an agent under a health care proxy could contractually bind the principal to arbitrate all disputes arising out of the principal’s stay at a nursing home.

When Barbara Johnson admitted her husband Dalton to a Massachusetts nursing home, pursuant to her authority under a health care proxy, she also signed a document agreeing, on her husband’s behalf, that any disputes between Mr. Johnson and the nursing home would be settled through arbitration (a private, informal process that often favors companies over individual claimants) rather than in the courts. After Mr. Johnson suffered serious burns, and later died from his injuries, his estate filed a negligence claim against the nursing home, seeking damages under the Commonwealth’s wrongful death statute. The nursing home then sought to move the dispute to arbitration, pursuant to the arbitration agreement signed by Mrs. Johnson.

Although the Superior Court found in the nursing home’s favor, the Johnson estate appealed to the SJC. The Massachusetts Chapter of the National Academy of Elder Law Attorneys (“NAELA”), represented by Attorneys Debra Rahmin Silberstein and Rebecca J. Benson, filed an amicus curiae brief with the Court.

In an important victory for individuals, the Court appeared to agree with the NAELA brief, finding that health care agents do not have the authority to contractually bind the principal on matters unrelated to the direct provision of health care and treatment. Responding to the decision, Attorney Benson stated:

“The court adopted the primary argument in the amicus briefs on legislative intent, and expressly held in both cases that a decision to arbitrate is NOT a health care decision within the meaning of Chapter 201D.

The NAELA briefs could not have been completed without the strong support of the Massachusetts chapter and the firm of Margolis & Bloom, and the efforts of NAELA member Debra Silberstein.”

The SJC’s decision turned on the meaning of the term “health care decisions,” as contained in the Massachusetts health care proxy statute. In determining the legislature’s intent in enacting the statute, the Court found that “health care decisions” were limited to those decisions that directly involve the “provision of medical services, procedures, or treatment of the principal’s physical or mental condition.” An arbitration agreement, the court found, does not fall within this narrow, specific definition.

As a result of the decision, the plaintiff’s negligence claim will be allowed to move forward in the court system, and the scope of a health care agent’s authority is significantly clarified. While a power of attorney has the power to bind the principal contractually (subject to the powers granted in the documents), the health care agent’s authority is strictly limited to decisions concerning the provision of health care. While Mr. Johnson’s estate, in this case, benefited from the agent’s lack of authority, the Court’s clear distinction between the two roles (of power of attorney and of health care agent) serves to strongly underscore the importance of having both documents in place.

Read Attorneys Silberstein and Benson’s amicus brief (prepared with the assistance of law student Lauren Gray) here. The SJC’s full opinion can be found here

Estate Planning Resolutions for 2014

Posted on: January 22nd, 2014 by Debra Rahmin Silberstein

During these first few weeks of the new year, we’re apt to think afresh about our lives, our health, our families, and our goals for the coming year. If you’re engaged in this kind of thinking, take some time to think about your estate plan by taking a look at our five estate planning resolutions for 2014:

  • 1. Check your beneficiary designations

    If you have retirement assets (401(k)s, 403(b)s, IRAs), life insurance, annuities, or any other asset that has a beneficiary designation, check with the applicable financial institution that your accounts name the correct beneficiaries. Think about whether anything has changed since you opened the account that might make you want to modify who will receive these assets. Further, for important income tax reasons, note that retirement assets should not generally name your Trust as a beneficiary. If a Trust is named as beneficiary of your retirement asset, call us or your tax advisor to confirm that this designation should not be changed, and to discuss the income tax implications.

  • 2. Make or update your Health Care Proxy; Have that conversation with your family

    While you’re thinking about your health – perhaps you’re trying to drag yourself to the gym or trying healthy eating – think about what your choices might be for medical treatments and procedures while you’re incapacitated. A Health Care Proxy appoints someone to make those decisions on your behalf if you cannot communicate your wishes to your physician. If you don’t have one in place, consider who you’d name, and call us to put one in place. If you already have one, talk with your named agent about your wishes regarding health care, and consider whether the person you named is still the person you would want to make those decisions for you.

  • 3. Consider Whether your Estate Plan Addresses your Digital Assets

    If you have an existing estate plan, you might want to think about your online accounts, from eBay and Amazon businesses to Facebook, Gmail and iTunes accounts. While the law remains unclear as to who owns these assets after your death, there are simple steps that can be taken to ensure your loved ones can access these accounts if something happens to you. Be sure to make lists of usernames and passwords, and keep them in a safe place. We can also assign digital assets to revocable trusts, and grant powers over digital assets to your power of attorney.

  • 4. Update your estate plan to reflect the changing needs of your children and loved ones

    Many people make estate plans when their children are young, when they don’t know what the future will bring. Whether it’s disability, addiction, marriage, or divorce, your estate plan might need to be updated to better serve the needs of your beneficiaries. For example, if your children receive government benefits, leaving him or her even a modest legacy, without further planning, will almost certainly affect his or her eligibility. So think about whether changes in circumstance might warrant an update.

  • 5. Review the growth in your assets to determine whether you might benefit from state or federal estate tax planning

    While the American Taxpayer Relief Act of 2013 largely settled the federal estate tax question for estates of less than $10.6 million, Massachusetts residents may still face a state estate tax if their estate is worth more than $1 million. It’s easier to get to that number than you might think. Life insurance proceeds may very well be included in your estate for estate tax purposes. For a rough calculation of your estate’s worth, add up all your assets – including real estate, retirement accounts, investment accounts, and cash – and add to it the death benefit value of any life insurance policies (term or whole life). If you’re anywhere near the million dollar mark, estate tax planning might make sense for you.

IRS Increases Limits on Long-Term Care Insurance Premium Deductions

Posted on: January 6th, 2014 by Debra Rahmin Silberstein

The Internal Revenue Service (“IRS”) is increasing the limit on the federal deduction for premium payments made on long-term care insurance policies in 2014.

Tax Benefits Depend on Insured’s Age

Taxpayers who itemize their deductions on their annual income tax return were able to take tax deductions for premium payments made on “qualifying” long-term care insurance policies. These premium payments qualify as “medical expenses,” and are deductible to the extent that total amount of taxpayer’s medical expenses exceed 10% (7.5% for taxpayers aged 65 and older through 2016) of the taxpayer’s adjusted gross income. However the deduction may only be taken up to certain limits, based on the taxpayer’s age. The changes for 2014 increase those limits, as shown in the table below:

Insured’s Age 2013 Limit 2014 Limit
40 or below $360 $370
41 – 50 $680 $700
51 – 60 $1,360 $1,400
61 – 70 $3,640 $3,720
71 + $4,550 $4,660

More Significant Benefit for the Self-Employed

For self-employed taxpayers, the advantages are more significant. As long as the self-employed tax payer made a net profit for the year, she can take the amount of the premium – up to the limit for her age – as a deduction, even if the policy premium was less than 10% of her adjusted gross income.

Per Diem Excludability Limits Also Increased

If you’re currently receiving fixed payments payments from per diem or indemnity policies, which pay a predetermined amount each day, the amount of this payment you can exclude from income will also increase. For 2014, taxpayers receiving these benefit payments need only include in income the amount exceeding their total qualified long-term care expenses, or $330, whichever is greater (the 2013 amount was $330).

What is a “qualified” long-term-care insurance policy?

To qualify for tax-advantaged treatment, policies issued on or after January 1, 1997 must meet certain criteria:

  1. Policies must offer the consumer the choice to elect protection from inflation and “nonforfeiture,” although the consumer may choose not to purchase such protection.
  2. The policies must begin to provide coverage when the insured can no longer perform, or needs assistance with, at least two out of the six “activities of daily living.” These include eating, toileting, transferring, bathing, dressing, and continence.
  3. Further, the policy must provide coverage when the insured has been certified to require substantial supervision to protect her from threats to health and safety due to a “cognitive impairment.”
  4. Policies purchased before January 1, 1997 are “grandfathered” and treated as “qualified” as long as they have been approved by the insurance commissioner of the state in which they are sold. Individual policies often require this approval, while many group policies do not.

    Consumers should be aware of these factors when contemplating the purchase of long-term-care insurance, and should seek financial and legal advice to determine whether policies meet state and federal requirements.