RJG Legal

What States are Most Concerned with End-of-Life Issues?

“While roughly 90% of Americans agree that discussing end-of-life care with their loved ones is important, only 27% actually follow through with conversations focused on planning, according to research from public engagement initiative The Conversation Project.”

Although many have ramped up community outreach efforts, the dread of thinking about death has been a roadblock for hospice providers in some parts of the country, says the Home Health Care News in the recent article, “These States Are Most Concerned About End-of-Life Issues.”

A new study identified several states where end-of-life is on people’s minds. It found that overall, Wisconsin is the state most concerned about end-of-life issues, with New York as a close second. New Hampshire, South Dakota, and Ohio make up the rest of the top five. And the states least concerned about end-of-life issues: Nevada, California, Wyoming, Utah and Alaska.

As a state with a large senior citizen population, California’s spot in the latter group was somewhat surprising to the researchers. They found that population size has little to no bearing on concern or awareness toward end-of-life issues. They assumed that states like California or Florida, two states that have some of the highest senior citizen populations in the country, would rank at the top of our list for end-of-life issues. However, it turned out that states in the Midwest, like Wisconsin, South Dakota, and Ohio are more concerned about these issues.

To determine which states are thinking the most about end-of-life issues, the study evaluated the prevalence of certain targeted online search terms, like “palliative care,” “estate planning,” “end-of-life care,” “home care,” “caregiver” and “assisted living.” The term “home care” ranked the highest in northeastern states like New York, Pennsylvania, and Connecticut. New York’s interest in home care could, perhaps, be explained by the fact that home health aides and personal care aides are among the state’s largest occupational group, the researchers contend.

Nationally, home care employment is anticipated to increase by more than 40% between 2016 to 2026, according to the U.S. Bureau of Labor Statistics. They found that a state’s interest in a given end-of-life topic was based on a health care-related issue unique to that area.

Although Alaska was toward the bottom of the study, it was first in hospice admissions growth from the second quarter of 2017 to the same period in 2018. In fact, the state’s hospice admissions increased by more than 17%, far outpacing Wisconsin 6.5% growth, according to the latest data.

Alaska, Delaware, and South Dakota all experienced double-digit hospice admissions growth from Q2 2017 to Q2 2018. In contrast, Maine, North Dakota, Nebraska, Hawaii, New York, and Rhode Island all experienced negative growth.

Reference: Home Health Care News (January 6, 2019) “These States Are Most Concerned About End-of-Life Issues”

How Do I Include Retirement Accounts in Estate Planning?

“While most estate planning focuses on physical property, like your home, and liquid assets, such as investment accounts, retirement plans can actually make up a large portion of one’s estate. Due to the specific tax rules governing these assets at death, you must plan carefully to ensure these funds are integrated properly into your estate distribution plans and tax savings strategies.”

You probably made beneficiary designations for your retirement accounts, when you opened them. Remember: who you designated can affect your overall estate planning objectives. Because of this, when including your retirement assets in your estate, ask yourself if anything has changed in your life since then that would affect their status as your beneficiaries, as well as how they’d receive the retirement assets.

Investopedia’s recent article, “Include Your Retirement Accounts in Your Estate,” gives us some things to consider in the New Year.

Beneficiary Designations. Review your beneficiary designations after major life changes. If you fail to make these designations, the funds will most likely go into your estate—a horrible outcome from a tax and planning perspective. If your estate is named a beneficiary, your heirs must wait until probate is finished to access your retirement accounts. It is usually better to name an individual or a trust as your beneficiary.

Protecting Retirement Funds With a Trust. Another option is to include a trust in your estate planning, instead of giving your retirement funds directly to named individuals. This allows you more control over the distribution, while protecting your heirs from additional paperwork and taxes. Trust distributions keep a beneficiary from accessing and spending their inheritance all at once. It’s also a good idea if your beneficiaries include minor children who shouldn’t have direct access to the money until they are adults. Be sure to consult with an estate planning attorney, because there are tax and other complexities associated with designating a trust as beneficiary.

Required Minimum Distributions (RMDs). Your retirement plans have rules about when you are required to start taking distributions. For 401(k) accounts, you are required to start taking RMDs at age 70½. However, if you die and leave retirement plans and accounts to your heirs, these rules apply to them instead. A spousal beneficiary can roll over your retirement funds tax-free into their retirement plan and make their own distribution choices. However, other beneficiaries don’t have the same option. Tax treatment and distribution options vary, depending on who is receiving your retirement assets.

Tax Considerations. The biggest worry you need to address when designating retirement accounts as part of your estate plan, is how they’ll be taxed. Consider how to withdraw from these accounts while you’re alive and how to minimize tax consequences after you’ve passed.

Work with an estate planning attorney who has a strong understanding of retirement accounts and the tax and legal requirements of estate planning. That way you can be certain your retirement assets are distributed to the proper beneficiaries with the least tax liability.

Reference: Investopedia (August 27, 2018) “Include Your Retirement Accounts in Your Estate”

How Does the Medicaid Look-Back Work?

“Medicaid will look back five years, to see if there should be a penalty period.”

Say that an investment house in New Jersey worth $300,000 is passed from mother to daughter for sale of $1 today. Just two years later, the mother applies for Medicaid. There’s a look-back penalty period that will apply, says nj.com in the recent article, “If mom sells her house for $1, what Medicaid penalty will apply?” The article explains that when someone applies for Medicaid, gifts create periods of Medicaid ineligibility.

A Medicaid applicant is required by the government to document all of her financial transactions during the "look-back period." That period is five years immediately prior to the date of application.

If the applicant’s financial records show a transfer of assets within that period, the Medicaid administrators will presume that the assets were transferred to promote eligibility for Medicaid benefits. This could be a check or withdrawal, for which there is no explanation other than a gift.

The value of the transfer will be divided by the statewide daily nursing home rate to get the number of months of the ineligibility, also known as the penalty period. In New Jersey, that rate is currently $343.85, or $10,459 per month.

The five-year year look-back period commences when the transfer is made. However, the penalty period of ineligibility starts on the date the applicant is otherwise eligible for medical assistance under the State plan, but for the application of the penalty period.

So, in our $1 house example, if the New Jersey Medicaid applicant transferred $300,000, the monthly penalty period of ineligibility for this transfer would be calculated by dividing $300,000 by $10,459, which equals 28.68 months of ineligibility. There is no rounding down, by the way.

The penalty period would start when the applicant medically needs an institutional level of care, has countable resources below $2,000 and has filed a Medicaid application to establish that she would have been otherwise eligible but for the asset transfer. Note: there’s no limit on the length of the penalty period.

Thus, assuming the applicant otherwise would have qualified for Medicaid but for the asset transfer, the applicant wouldn’t be eligible for Medicaid for an additional 28.68 months.

However, if the application was made more than 60 months after the transfer date, then the transfer would be outside of the 60-month lookback period and, if no other transfers were made, then no penalty period would be imposed, and the applicant would be eligible 61 months after the transfer date.

Contact an elder law attorney in your state to learn how the rules would apply under local law. There are a number of strategic asset protection tools available, but they must be completed in a timely fashion.

Reference: nj.com (December 25, 2018) “If mom sells her house for $1, what Medicaid penalty will apply?”

What Type of Things Can’t a Nursing Home Do?

“People who reside in nursing homes are in a vulnerable position, since they are in need of near-constant assistance–not just with medical and health problems, but also, often, for daily living activities. Federal and state laws exist to safeguard nursing home residents’ care. However, your ability to protect yourself or your loved one during a short- or long-term nursing home stay, depends in part on knowing what these facilities are not allowed to do and what action to take if a violation occurs.”

 Investopedia’s recent article, “Things Nursing Homes Are Not Allowed to Do” cautions that the discussion points in its article apply specifically to skilled nursing facilities, that are defined by Medicare as a special facility or part of a hospital that provides medically necessary professional services from nurses, physical and occupational therapists, speech pathologists and audiologists. They don’t apply to assisted living facilities or retirement homes.

Discrimination. Federal law prohibits skilled nursing facilities from making a decision about whether someone can live there based on race, color, religion, age, sex or any other protected characteristic.

Services Provided. A skilled nursing facility must state in writing the types of services it will provide and fees before a patient moves in. Some types of retirement facilities, like continuing care communities, also require a large buy-in fee up front that guarantees residents access to various levels of care as their needs change, but skilled nursing facilities can’t charge those fees.

Health Assessment. When a patient first enters a nursing home, he is given a health assessment. These assessments continue daily for the length of his stay. The medical staff will evaluate the patient’s physical and mental health, medications, ability to take basic care of himself and ability to speak and make decisions. The assessments are used to plan treatment, evaluate progress and determine ongoing eligibility for Medicare coverage. Residents can participate in their care plan, and if they’re not able to do so, an adult child can participate on their behalf.

Money Management. A nursing home may offer to manage a resident’s personal funds as part of its services, but it can’t require a resident to let it manage their money, and it cannot do so without the resident’s written consent. When approved, the nursing home must provide quarterly financial statements and cannot prevent residents from accessing their bank accounts, cash or financial documents. If a resident deposits more than $50 into a managed account, that account must pay interest.

Dignity and Respect. Federal law states that nursing home residents have the right to be treated with dignity and respect. This includes making decisions on the time they want to go to bed and when they get up; what time to eat; and what to do during the day, provided their decisions don’t conflict with the care plan. Residents cannot be verbally or physically abused, medicated with drugs that aren’t in their treatment plan, restrained physically (unless they pose a danger to themselves or others), involuntarily isolated or to have their property used or taken by anyone else at the facility. Patients have the right to privacy and to personal property—this means being allowed to open their own mail and to have private phone conversations.

Visitation. Patients can have visitors during reasonable times of day. They’re also allowed to refuse visitors they don’t want to see. Family members must be allowed to have access to the patient at any time (unless the patient says otherwise).

Physical Condition. Even though a patient is in poor physical or mental health, she has the right to be told her physical condition; her diagnoses; and the types of medications she’s been prescribed. She also has a right to see her medical records. Patients can continue to see their own doctors, meaning they don’t have to accept the services of practitioners provided by the nursing home. Patients also have the same right to refuse treatments and medications that outpatients do. If a patient needs mental, legal, or financial counseling concerning her treatment, the nursing home must provide these services.

Medicare Benefits. Nursing homes don’t have to keep track of the Medicare benefits being used to pay for a patient's care. When it comes to facilities, Medicare coverage can be complicated because it covers a stay completely for a certain number of days but then pays a set amount for an additional period and all this only under certain conditions. After that, patients are responsible for the whole bill, unless they have long-term care insurance or some other form of coverage.

The nursing home doesn’t have to notify a resident that the benefit days are ending, and it can continue to charge them for their care. The one exception is if Original Medicare benefits stop earlier than expected, because the care is deemed no longer “medically reasonable and necessary.” In that case, the nursing home must notify the patient that coverage is ending, when it’s ending and why. The nursing home must also tell such patients that they’ll be responsible for further costs and how much it estimates those costs will be. But a facility usually can’t require another family member to pay for a resident’s care.

Discharge Planning. Nursing homes must help with discharge planning, and they generally can’t discharge a patient or transfer him to another facility without his consent, unless:

1. the patient’s health has declined to the stage, where the facility can no longer meet his needs;
2. the patient has improved to the point, where he no longer requires the facility’s services; or
3. the patient poses a threat to his own welfare or that of other residents.

In addition, a resident can be discharged for not paying the facility’s bills (but not when the delinquency is caused by waiting for Medicaid payments from the government).

Complaints. Residents and their advocates have a right to complain about any issue they have in a nursing home, and nursing homes can’t punish someone for doing so.

Ability to Sue. A 2016 regulation gave nursing home residents and their families the ability to sue any nursing home that receives federal funding. Before this, nursing homes could try to force people into arbitration, and any quality of care and safety issues could be kept private. However, a preliminary injunction granted in Mississippi in late in 2016 put this regulation on hold for now.

New Rules. There are new rules that give nursing home residents more rights. Residents will be allowed to receive any visitor, not just relatives, at any hour of the day, provided visitors don’t disturb fellow residents. Residents who want to live together will be permitted to do so, and nursing homes will have greater responsibility for ensuring that residents’ personal belongings aren’t lost or taken. In addition, nursing homes will be required to provide meals and snacks when residents want them, rather than only at set times. Staff will get more training in caring for dementia patients and preventing elder abuse, and nursing homes won’t be able to easily discharge residents with dementia, by sending them to a hospital and then refusing to readmit them.

In effect, a person’s rights as a nursing home resident should be the same as the rights she had outside the facility.

Reference: Investopedia (September 30, 2018) “Things Nursing Homes Are Not Allowed to Do”

What is My Retirement Plan Missing?

“How can you possibly know how much money you will need for retirement, if you don't know what you will be doing?”

Forbes’ article, “The One Piece Missing From Most Retirement Plans” says there’s just one small piece that many people don't think about when crafting their retirement plan. Any guesses what that is? Well, the missing piece is: THEIR RETIREMENT PLAN!

All the calculations are critical, but they aren’t much good without actually thinking about what you plan to do during retirement. There are two reasons why thinking about the final years of your life are crucial. The first is that you can’t possibly know how much money you’ll need for retirement, if you don't know what you’ll be doing, right? There’s a big difference in the money needed to travel around the world versus sitting on the porch knitting sweaters for grandchildren and playing bingo at church.

Next, when you wake up on your first morning of official retirement, you’ll have no responsibilities or plans. How great! But, be honest: how much can you really tend to your garden or catch up on reading? Retirement can be up to 30 years or more. That's a lot of time left to live. Retirees frequently are bored, lonely, or depressed during retirement, because they don't have the routine, social interaction or purpose that they had at work.

Before you begin your retirement calculations, ask yourself these questions:

• Where will I live?
• Do I want to downsize?
• What are my dreams and goals in retirement?
• Do I want to have the flexibility to move near my children?
• Do I want to help my children with their finances?
• Have I adequately considered the rising cost of healthcare?
• Do I have family to help me?
• Will I need to consider living in a retirement home?
• Do I want to work a part-time job to keep busy?
• Do I want to leave my estate to my children or charity?

If you’ve thought about how much money you have and how much money you'll need in retirement, that’s terrific. However, as you’re planning for retirement, remember to think about exactly what you’ll do when you retire.

Reference: Forbes (November 21, 2018) “The One Piece Missing From Most Retirement Plans”

What Odd Things are Connected to Dementia?

“Dementia is an umbrella term used to describe diseases associated with memory loss, like Alzheimer's disease. There are several things that are commonly known to lead to it, such as high blood pressure or a traumatic brain injury. However, as fairly recent research has found, there are also some pretty unexpected things that are linked to dementia as well.”

The Alzheimer's Association found that 5.7 million Americans are living with the disease. Every 65 seconds, someone in the U.S. develops Alzheimer's or another type of dementia.

Bustle’s recent article, “7 Weird And Surprising Things Linked To Dementia” reports that Dr. Luqman Lawal, MD, remarked "Dementia occurs when once-healthy neurons in the brain stop working, which results in a loss of cognitive functioning. This lack of ability to problem solve and remember things that have happened to them, affects their everyday routine."

In addition to memory loss, those with some form of dementia may experience other symptoms like an inability to focus, an impaired sense of judgment and an inability to problem solve. Others may have issues with communication. There are several different studies that have examined possible causes. Here are some of the most surprising things that have been linked to dementia, according to recent research:

Hearing Loss. A long-term study released in early 2018 found a "strong link" between hearing loss and dementia in seniors. About 33% of participants who experienced hearing loss were found to be more likely to have other major health issues like depression, disability and dementia.

Herpes. A study from Frontiers in Aging Neuroscience found connections between herpes simplex virus type 1 (HSV-1), which often causes mouth sores, and Alzheimer’s disease. Those with the herpes virus were 2.5 times more likely to develop dementia, than those who didn’t. Researchers also discovered that people infected with HSV-1 carry a specific gene associated with Alzheimer’s disease, ApoE4—known to increase the risk for getting the disease.

Constantly Feeling Sleepy During The Day. A 2018 study found links between sleep disturbances and Alzheimer’s disease. Feeling excessively sleepy during the day is a common symptom of several sleep disorders, such as insomnia or sleep apnea. The study said that those who often felt sleepy during the day. were three times more likely to show signs of Alzheimer's disease in the brain.

Taking in Too Much Sugar. A 2018 study published in the journal Diabetologia looked at more than 5,100 adults over 10 years and found that those who had higher blood sugar levels had faster rates of cognitive decline than those with more normal levels.

Air Pollution. A 2017 study from the University of Southern California found connections between air pollution and dementia in older women. Tiny air pollution particles, which mostly come from power plants and cars, can get inside the body via the nose and then travel into the brain. Breathing in toxins can increase inflammation in the body. Research said that if a person had the Alzheimer's gene, excessive exposure over time to those toxic particles can "exacerbate and promote" the disease. The adverse effects were found to be much stronger in older women who had the gene. More research still needs to be performed. However, if it’s confirmed that air pollution causes dementia, it may the cause for over 20% of dementia cases.

Sense of Smell. A 2016 study found a connection between a person's sense of smell and Alzheimer’s disease. Participants who were unable to correctly identify certain odors like menthol, strawberry and lemon, were the people who were at risk for having the disease. Researchers believe that a person’s poor sense of smell can possibly be an early indicator of Alzheimer's disease.

Loneliness. A 2018 study published in the Journal of Gerontology: Psychological Sciences looked at data of over 12,000 people over 10 years. The researchers found that those who reported to having greater feelings of loneliness, were 40% more likely to get dementia. While there's no one clear explanation as to why, researchers believe some people may cope with feelings of loneliness by behaving in ways that can damage the brain, like binge drinking or being sedentary.

Again, these studies show possible links to dementia—it doesn't mean these things can cause it.

Dr. Lawal says, there are several actions you can take to limit your risk. "Don't smoke, protect yourself against concussions when participating in high-impact activities, don't over-consume alcohol, stay active and eat a balanced diet," he says.

Try to live a healthy lifestyle, to the best of your ability.

Be sure to have your estate and elder law planning up to date. If you are recently diagnosed with any form of dementia or cognitive impairment, you should seek legal counsel to avoid making common mistakes and wasting time and money. The experienced attorneys at Gregorek and Associates, PLLC can guide you through this difficult process.

Reference: Bustle (November 5, 2018) “7 Weird And Surprising Things Linked To Dementia”

Why Would I Need to Create a Special Needs Trust?

“You may want to see if any of these five common reasons for establishing a special needs trust apply to your family.”

WTOP’s recent article, “5 reasons to consider a special needs trust,” explains that a special needs trust (also called a supplemental needs trust) is created to hold and protect financial assets for the benefit of a disabled beneficiary.

A trust is a legal structure that’s used to collect and manage assets and can receive contributions, such as assets gifted from family members during their lifetime. A special needs trust can be created to receive assets from a legal settlement, when the recipient is a minor.

Other special needs trusts are part of an estate plan, when family members want to provide assets or life insurance proceeds at their own death as an inheritance for someone with special needs. If you’re not clear about a need for a special needs trust, talk with an elder care or trusts attorney to review your specific situation. In the meantime, here are some common uses:

Reserving assets for support during your life or at your death. Trusts are typically intended to provide a legal way to title and hold assets to be used to help beneficiaries. This trust is used to benefit someone who has physical or mental disabilities. A special needs trust can be used to provide for a variety of needs and the initial trust language specifies the donor’s intended use of the funds.

Designating a trustee. A major benefit of a trust is the ability to appoint a trustee to manage investment decisions and oversee the distribution of the trust assets. With a beneficiary who’s unable to manage finances independently, the trustee can safeguard the assets and administer spending decisions. The trustee must also ensure that the trust assets are used pursuant to the initial intentions.

Maintaining a disabled person’s aid from a government program. It’s not uncommon for a well-meaning family member to err and name the disabled family member as a beneficiary in their will. This could actually disadvantage the individual, by disrupting the aid they receive from the government. Many government programs have income requirements that cannot be exceeded. To protect the beneficiary, grantors can direct the intended inheritance or life insurance benefits to the special needs trust. This won’t jeopardize government income or other services that may be their sole source of support.

Preserving family wealth. This trust structure can create a way to provide assets, while limiting their use. A special needs trust also helps ensure that wealth is allocated properly.

If any of these situations apply to your family, think about creating a special needs trust during your lifetime. You can also wait to change your estate plan to establish the trust upon your death.

Be sure to work with a qualified trust attorney to properly handle the related tax and estate planning consequences and to be certain the trust stands up to legal scrutiny.

The attorneys at Gregorek and Associates, PLLC offer experienced and compassionate legal counsel in the area of disability and incapacity. This is a very complex area of law and you are encouraged to talk with an experienced Estate or Elder Law attorney. There are many ways that Special Needs Trusts can be established. These trusts are also referred to as Safe Harbor Trusts for the benefits they provide.

Reference: WTOP (October 25, 2018) “5 reasons to consider a special needs trust”

How Do I Qualify for Medicaid?

“It is often very difficult to qualify for Medicaid. However, the following steps can help determine if you are eligible and improve your odds of obtaining coverage.”

If you’re in need of long-term care and can’t afford to pay for either the actual care you need or any insurance or annuity protection, you’ll need to apply for coverage under Medicaid. It’s designed to provide managed care to people who are disabled or age 65 or older and have income and assets that fall below certain federal and state thresholds.

Investopedia’s recent article, “How to Qualify for Medicaid: Tips and Eligibility Requirements,” explains that while Medicaid is federally funded, it’s administered at the state level. Each state also has its own set of rules and regulations for the program. If you’re single, you typically can’t have more than $2,000 worth of cash or other assets outside of your personal residence, vehicle, and other necessary items. If you’re married and your spouse is still able to live independently (known as a “community spouse”), he or she is allowed to keep up to 50% of your joint assets. Your single or joint income usually can’t exceed 133% of the federal poverty level, but several states have thresholds above this.

You’ll also have to prove medically you’re disabled in most cases, although certain exceptions apply. And you must also be either a U.S. citizen or have a green card and prove your residency within the state. However, if your assets or income exceed the state thresholds, you’ll need to reduce your estate. This is known as “spending down.” You might also be able to create a spend-down trust. However, this is non-enforceable by you—and you may lose assets permanently, if the party you gift them to gets into financial trouble.

A frequent reason for people to be denied Medicaid coverage, is incomplete information on the application. Before you start, collect these documents to submit:

• Birth certificate or driver license (to prove your age);
• Proof of citizenship;
• Assets and income documentation;
• Copies of your mortgage, lease, rent payment receipts, utility bills, or other documents that prove where you live;
• Medical records showing your disability; and
• Information about any other health insurance coverage you may have.

You state may require different or additional documentation.

You cannot simply gift your assets or belongings to your children or a reliable friend to use them on your behalf. Before or during the Medicaid application process, consider consulting with attorney who specializes in elder law and thoroughly understands the Medicaid laws in your state. He or she can help you with creating a Medicaid trust or other legal gifting moves that you may be able to make.

Qualifying for Medicaid is not an easy process. Get all of the help you can from a qualified elder law attorney, before you start this process to maximize your chances of acceptance. You should also be ready to drastically decrease the size of your acceptable estate, through a gifting or donation program to meet the eligibility thresholds for your state.

This blog is only a brief overview of Medicaid. Best practices include having an up to date estate or elder law plan in place and working with an Elder Law Attorney to help guide you through this complex area of law. Our recommendation is not to make any gifts prior to talking to an Elder Law Attorney at Gregorek and Associates, PLLC.

Reference: Investopedia (October 6, 2018) “How to Qualify for Medicaid: Tips and Eligibility Requirements”

How Do I Help My Elderly Parent Manage His Money?

“It’s a common issue as investors live longer and hold portfolios amassed over a lifetime.”

Experts say that children need to approach financial discussions with their parents with a soft touch. Everyone slows down as they age, and it can be catastrophic for seniors who choose overly risky holdings, forget to monitor their portfolio or fall victim to schemers.

U.S. News & World Report’s recent article, “How to Help Aging Parents Manage Portfolios,” says that, at some point, adult children may believe it's time to help with responses from the subtle (just a few suggestions) to the intermediate (monitoring accounts) to the extreme (gaining control from their parents). However, how do you know when it's the right time?

These are delicate subjects, and it can be a hard to speak with aging parents about their money and their potential to be the targets of scams. Loneliness and depression raise the odds of financial exploitation. Changes in social circumstances, like the loss of a spouse, can greatly increase risk and vulnerability.

Right after losing the ability to drive, the biggest loss of independence a senior citizen experiences is the ability to handle their own finances. Just a few mistakes, can wreck a portfolio's ability to cover the parents' remaining expenses or provide the bequests they'd hoped to leave to family.

While control issues make many uncomfortable, hurt feelings and hassles are in many cases much worse, if problems are left to fester. The first step is to be aware of signs of mental decline—don’t jump to conclusions each time a senior struggles for a word. It’s not good to have your parent feel like she’s under a microscope and being constantly monitored.

If there are past-due notices all about, or if there’s a lot of charity mail, it might be a sign of a problem handling finances or dealing with day-to-day financial matters.

Start that discussion gently, by talking about your own finances to help put the parent at ease. Make it casual, not a confrontation with a formal sit-down. Do it one-on-one.

If the first steps raise concerns, the child can simply offer some suggestions to make things run more smoothly, like setting up automatic cash transfers from the parent's investment accounts to a bank account, and automatic bill payments from the bank. Assisting with the parent's tax return, can also ease the parent's burdens and allow the child to keep on top of things. In addition, the child can register with the bank to get copies of bank and investment statements, so that he can monitor if there are any suspicious withdrawals or failures to pay monthly expenses.

If the parent is showing distinct signs of weakened abilities, it might be time to go further and ask for access to the parent's accounts. Make this an offer to help, not a takeover. That way the child can monitor financial accounts.

You can also have your parent designate you as their agent in a durable power of attorney, which allows you to transact business on their behalf.

At some point, an elderly person may not be competent to handle financial affairs at all. Poorly-advised investments or susceptibility to scams are a definite sign of vulnerability. The adult child can petition a judge to make the child the parent's conservator or guardian to take charge of finances and other matters involving the parent's welfare. It is an adversarial and complex proceeding with attorneys and medical experts.

Don't wait until something has happened. Being proactive is a better approach for all concerned.

Reference: U.S. News & World Report (October 22, 2018) “How to Help Aging Parents Manage Portfolios”

Transferring LLC Membership Interests Part 2—Voluntary Transfers

An LLC affords its members a certain amount of personal asset protection. Part of this protection hinges on the restricted transferability of LLC membership interests. Restricted transferability protects the non-transferring members from creditors and unwelcome new members, which upholds the integrity and value of the non-transferring members’ membership interests.

Most (but not all) LLCs impose requirements or restrictions on the transfer of a member’s interest.

If the LLC’s operating agreement is silent on the transferability of interests, you must look to state law to be sure there are no default provisions restricting transferability.

This article, part 2 in a 3-part series, focuses on voluntary membership interest transfers done with the intent to grant full membership rights to the recipient.

 Step 1 – Determine the Transfer Process

 The LLC's operating agreement should specify the process for transferring a membership interest. If the LLC has a buy-sell agreement in place, that must also be consulted.

• Find the provisions that detail allowable transfers, the steps to complete them, and the method for calculating the value of the membership interest, if any.
• The membership interests may be freely transferable but are likely subject to restrictions set forth in the operating agreement, the buy-sell agreement, or by state law.
• Some transfers may be permitted without prior approval of the other members, such as transfers to a member’s immediate family or to a trust for the benefit of a member or a member’s immediate family.
• The LLC or the other members may have a right of first refusal before a transfer can be made.

If the operating agreement or buy-sell agreement doesn't specify the process for transferring a membership interest, you will have to look to state law. Once you determine the authority governing the transfer process—the operating agreement and buy-sell agreement or state law—be sure to note all requirements and restrictions.

Step 2 – Determine the Value

Calculate the value of your membership interest. If the operating agreement or a separate buy-sell agreement doesn't address this, you will have to work with the other LLC members to determine and agree upon the value of the membership interest.

 Step 3 – Follow Transfer Process

 Complete the LLC transfer process as determined in Step 1. Make sure you follow all requirements. For example, if the operating agreement requires the unanimous written consent of all LLC members (a common requirement), meet with all of the LLC members to obtain their written consent.

Step 4 – Obtain or Draft the Transfer Document

 If the LLC does not have a standard transfer document, you will need to draft a transfer document.

• Check the operating agreement or state law to determine what the transfer document must include. 
• Typically, it must include the transferor’s name, the LLC’s name, the recipient’s name, and the percentage of the membership interest being transferred.
• If a form is not provided by the LLC, note that the form of the transfer document is usually subject to the LLC’s approval; make sure to obtain this approval if necessary.

Step 5 – Execute the Transfer Document; Other Documents

Sign and date the transfer document. Make a copy for your records, for the recipient, and for the LLC.

• The recipient typically receives the original transfer document.
• The LLC may have additional documents that the recipient must sign in order to be admitted as a member.
• State law may require the operating agreement and certificate of formation to be updated with the new member information.
• The LLC may pass the costs associated with the transfer to the new member.

Conclusion

Making a proper transfer of membership interests requires the transferor to jump through a lot of hoops. The first step in the process is determining which hoops are required. Taking the time to properly transfer membership interests ensures that the recipient obtains full membership rights and protection.

We offer proactive business planning strategies. We help businesses draft thorough operating agreements that provide clear directions to the LLC members—to exercise membership interest transfers and other important member rights. We also assist existing LLC members who want to properly transfer their membership interests in the absence of a thorough operating agreement. Contact us today to learn more about our business services.