Elder Law and Special Needs Planning

DigitalCommons@NYLS

Books Faculty Scholarship

12-2019

Bernard A. Krooks

Elizabeth Valentin

Follow this and additional works at: https://digitalcommons.nyls.edu/fac_books

Part of the Elder Law Commons New York Lawyers’ Practical Skills Series Elder Law and Special Needs Planning Bernard A. Krooks, Esq. Elizabeth Valentin, Esq. Will Drafting Jessica R. Amelar, Esq.

2019–2020

NEW YORK STATE BAR ASSOCIATION New York State Bar Association publications are intended to provide current and accurate information to help attorneys maintain their professional competence. Publications are distributed with the understanding that NYSBA does not render any legal, accounting or other professional service. Attor- neys using publications or orally conveyed information in dealing with a specific client’s or their own legal matters should also research original sources of authority.

We consider the publication of any NYSBA practice book as the beginning of a dialogue with our readers. Periodic updates to this book will give us the opportunity to incorporate your suggestions regarding additions or corrections. Please send your comments to: Publications Director, New York State Bar Association, One Elk Street, Albany, NY 12207.

PART ONE: ELDER LAW AND SPECIAL NEEDS PLANNING Bernard A. Krooks, Esq. Elizabeth Valentin, Esq.

I. Introduction ...... 1 A. Multidisciplinary Nature of Elder Law ...... 1 B. Interviewing the Client ...... 1 C. “Action Plan” Memorandum ...... 2 D. Engagement Letters (Also Known as Retainer Agreements) ...... 2 E. Ethical Concerns in Elder Law ...... 3 1. Conflicts of Interest and Who the Client Is ...... 3 2. Determining Capacity to Retain an Elder Law and Special Needs Planning Attorney ...... 4 a. Cultural Effects on Capacity Determinations ...... 4 II. Health Care Proxies and Living Wills ...... 4 A. Introduction ...... 4 B. Health Care Proxy ...... 5 1. Definition ...... 5 2. Capacity to Appoint an Agent ...... 5 3. Execution of the Health Care Proxy Form ...... 5 4. When the Agent’s Authority Commences ...... 6 5. Rights and Duties of Agent ...... 7 6. Obligations of Medical Provider ...... 7 7. Organ and Tissue Donation ...... 8 8. Revocation of Proxy ...... 8 9. Immunity and Liability for Health Care Costs ...... 8 10. Proxies Executed in Other States ...... 8 11. Completing the Health Care Proxy Form ...... 8 C. Living Will ...... 9 D. Medical Order for Life-Sustaining Treatment (MOLST) ...... 10 E. The Family Health Care Decisions Act ...... 10 III. Power of Attorney ...... 12 A. Introduction ...... 12 B. Capacity to Execute a Power of Attorney ...... 13 C. Statutory Gifts Rider ...... 13 D. HIPAA Privacy Rule ...... 13 E. Agent ...... 14 F. Execution of the Power of Attorney ...... 14 G. Appointment of a Monitor ...... 14 H. NYSBA Proposed Changes to the Power of Attorney ...... 15 IV. Guardianships ...... 15 A. Article 81 of the Mental Hygiene Law ...... 15 1. Pleadings ...... 15 2. Court Evaluator ...... 15

iii 3. Court-Appointed Counsel ...... 16 4. Hearing ...... 16 B. Article 17-A of the Surrogate’s Court Procedure Act ...... 17 1. Pleadings ...... 17 2. Notice Requirements ...... 17 3. The Hearing ...... 18 4. The Decree ...... 18 5. Special Requirements for the Property Guardian ...... 18 C. Uniform Adult Guardianship Protective Proceedings Jurisdiction Act (codified under Article 83 of the Mental Hygiene Law and Referenced Under Article 17-A of the Surrogate’s Court Procedure Act) ...... 19 V. Medicare ...... 20 A. Introduction ...... 20 B. Enrollment ...... 20 C. Medicare Programs ...... 21 1. Part A: Hospital Insurance ...... 21 2. Part B: Medical Insurance ...... 21 3. Part C: Medicare Advantage ...... 21 4. Part D: Prescription Drug Coverage ...... 22 a. Four Phases of Part D ...... 22 D. Medigap: Supplemental Insurance ...... 22 1. Introduction ...... 22 2. Assignment and the Limiting Charge ...... 22 E. Notice of Medicare Benefits and the Appeals Process ...... 23 F. Rehabilitation Services ...... 24 VI. Medicaid ...... 24 A. Introduction to Medicaid Programs ...... 24 B. Medicaid Eligibility Standards ...... 25 1. Introduction ...... 25 2. MAGI Eligibility ...... 25 3. Non-MAGI Eligibility ...... 26 4. New York State Residency ...... 26 5. U.S. Citizenship ...... 26 6. Age Requirements ...... 27 7. Income Standards ...... 27 8. Resource Standards ...... 29 9. Spending Down Excess Resources ...... 30 10. Legally Responsible Relatives and Spousal Refusal ...... 31 C. Community Medicaid Program ...... 31 1. Monthly Income ...... 33 2. Reimbursement ...... 33 D. Medicaid Transfer Rules ...... 34 1. Introduction ...... 34 2. Assets ...... 34 3. Transfer Penalty and Look-Back Periods ...... 35

iv 4. Exempt Asset Transfers ...... 35 a. Exempt Transfer of the Homestead ...... 35 b. Exempt Transfer of Assets Other Than the Homestead ...... 35 c. Exceptions to the Transfer Penalty Rule ...... 36 5. Calculating the Transfer Penalty ...... 36 6. Transfers by Nonapplicant Spouse ...... 37 7. Spousal Impoverishment Rules ...... 37 a. Community Spouse Income Allowance ...... 38 b. Community Spouse Resource Allowance ...... 38 E. Emergency Medicaid ...... 38 F. Medicaid Application Process ...... 39 1. Application Form ...... 39 2. Document Review ...... 39 3. When Coverage Begins ...... 40 4. Mandatory Enrollment in a Managed Long-Term Care Plan ...... 40 G. Medicaid Fair Hearings ...... 40 1. Fair Hearing Process ...... 40 2. Notice of Right to Fair Hearing ...... 41 3. How to Request a Fair Hearing ...... 41 4. Requesting “Aid Continuing” ...... 42 5. The Hearing ...... 42 6. The Decision ...... 43 7. Court Review ...... 43 H. Estate Claims and Liens ...... 43 1. Estate Claims ...... 43 2. Personal Injury and Medical Malpractice Recoveries ...... 44 3. Homestead Liens ...... 45 ViI. Estate and Gift Tax Overview ...... 46 A. Federal Gift Tax ...... 46 1. What Is a Gift? ...... 46 2. Deductions and Exclusions ...... 47 a. Annual Exclusion ...... 47 b. Education and Medical Expenses ...... 47 c. Marital Deduction ...... 47 d. Charitable Deduction ...... 47 3. Computation of Gift Tax ...... 47 4. Filing Requirements ...... 48 B. Federal Estate Tax ...... 48 1. Gross Estate ...... 48 2. Valuation of Assets ...... 49 3. Taxable Estate ...... 49 4. Changes to and Computation of Estate Tax ...... 49 5. New York Estate Tax, Generally ...... 50 6. Filing Requirements ...... 50 C. How Estate and Gift Taxes Affect Medicaid Planning ...... 50 VIII. Trusts and the Elder Law Plan ...... 51 A. Introduction ...... 51

v B. Estates, Powers and Trusts Law Provisions ...... 51 1. Trustee of a Revocable Living Trust ...... 51 2. Creation of a Lifetime Trust ...... 51 3. Amendment, Revocation and Funding ...... 52 C. Medicaid Rules ...... 52 1. Introduction ...... 52 2. OBRA 1993 Medicaid Qualifying Trust Rules ...... 52 3. Look-Back Period for Trusts ...... 53 4. OBRA 1993 Exempt Trusts ...... 53 a. Introduction ...... 53 b. Supplemental Needs Trusts ...... 53 c. Qualified Income Trust ...... 54 d. Pooled Trust ...... 55 5. Trigger Trust Rules ...... 55 D. Revocable Trust ...... 56 E. Irrevocable Trust ...... 56 IX. Long-Term Care Insurance ...... 57 A. Introduction to Long-Term Care Insurance ...... 57 B. Partnership Policies ...... 57 x. Protecting the Family Home ...... 58 A. Introduction ...... 58 B. Medicaid Rules Applicable to Family Home ...... 58 C. Outright Transfer of Homestead ...... 59 D. Transfer Subject to a Reserved Life Estate ...... 59 E. Transfer to Irrevocable Income-Only Trust ...... 60 Appendix A Initial Client Interview Checklist...... 63 Appendix B 22 N.Y.C.R.R. 1215.1 and Sample—Written Letters of Engagement...... 67 Appendix C Year 2019 Medicaid Income and Resource Standards ...... 71 Appendix D 2019 Regional Nursing Home Transfer Rates ...... 73 Appendix E Administrative Directives: 96 ADM-8 and 06 OMM/ADM-5...... 75 Appendix F Sample Notices for Managed Long Term Care Actions...... 141 Appendix G State Directive to Plans and Sample Notices, March 2015...... 157 Elder Law and Special Needs Planning Forms Index...... 185

PART TWO: WILL DRAFTING Jessica R. Amelar, Esq.

I. Introduction ...... 279 II. Conflicts of Interest and Ethical Considerations ...... 279 A. Representation of Married Couples ...... 279 B. Drafting a Will for a Client in Extremis ...... 279 C. Bequests to Attorney-Drafters ...... 280 III. Ambulatory Nature of Will; “Per Stirpes,” “By Representation” and “Per Capita” Explained ...... 281 IV. Inappropriate Testamentary Provisions ...... 282

vi V. Property Over Which a Will Operates ...... 282 VI. Information to be Obtained From the Client ...... 283 VII. Format of the Will ...... 284 A. Will Provisions—Generally ...... 284 B. Dispositive Provisions ...... 284 1. Generally ...... 284 2. Distinctions Among Dispositive Provisions ...... 285 a. Tax Apportionment ...... 285 b. Order of Abatement ...... 285 c. Passing of Title to Testamentary Assets ...... 286 d. Imposition of Executor’s Commissions ...... 286 e. Income Tax Consequence of Distributing Property to Beneficiaries ..... 286 VIII. Analysis of Sample Will ...... 286 A. Generally ...... 286 B. Exordium ...... 287 C. Dispositive Provisions ...... 287 1. Tangible Personal Property ...... 287 2. Cash Bequests ...... 288 3. Real Property ...... 288 4. Cooperative Apartments ...... 289 5. Residuary Disposition ...... 289 D. Administrative Provisions ...... 290 1. Nomination of Fiduciaries ...... 290 a. Executor ...... 290 (1) Individual Fiduciary ...... 290 (2) Attorney-Fiduciary ...... 290 (3) Bonding Requirements ...... 291 b. Guardian of the Person and Property of a Minor ...... 291 (1) Nomination ...... 291 (2) Bonding Requirement ...... 291 2. Management of Property Vesting in a Minor ...... 291 3. “Powers” Clause ...... 292 4. Tax-Apportionment Clause ...... 292 5. Virtual Representation ...... 293 6. Revocation of Prior Wills ...... 293 E. Testimonium ...... 293 F. Attestation Clause ...... 293 G. Affidavit of Attesting Witnesses ...... 293 IX. Will Execution ...... 294 X. Post-Execution Copy ...... 294 XI. Safekeeping of Executed Will ...... 294 XII. Conclusion ...... 295 Suggested References ...... 296 Appendix A: Form of an Engagement Letter for the Representation of Both Spouses Jointly in Estate Planning Matters ...... 297

vii Dual Representation Letter (Quarles & Brady) ...... 303 Separate Representation Letter (Benjamin) ...... 305 Appendix B: Fact Gathering—Use of Checklists...... 309 Appendix C: Last Will and Testament of John Doe...... 321 Affidavit of Attesting Witnesses...... 325 Appendix D: Will Execution Checklist ...... 327 Table of Authorities ...... 341 About the Authors...... 349 ABOUT THE AUTHORS 349

JESSICA R. AMELAR, ESQ. Jessica R. Amelar is a principal court attorney in the New York County Surrogate’s Court. A member of the Trusts and Estates Law Section of the New York State Bar Association, she has chaired its Continuing Legal Education Committee and served on the Association’s Committee on Continuing Legal Education. She is the 2018 recipient of the Law Secretaries & Law Assistants Collegium, Inc., Distinguished Service Award.

BERNARD A. KROOKS, ESQ. Bernard A. Krooks is a founding partner of the law firm Littman Krooks LLP and Chair of its Elder Law and Special Needs Department. Mr. Krooks is a nationally-recognized expert in all aspects of elder law and special needs planning. He is the immediate Past President of the Board of Directors of the Arc of Westchester, the largest agency in Westchester County serving people with intellectual and developmental disabilities and their families.

Mr. Krooks is a member of the NAEPC Estate Planning Hall of Fame and is the recipient of the Accredited Estate Planner Distinguished designation. Mr. Krooks is past President of the Special Needs Alliance, a national, invitation-only, not-for-profit organization dedicated to assisting families with special needs planning. He is past President of the National Academy of Elder Law Attorneys (NAELA), a Fellow of NAELA, past Chair of the NAELA Tax Section and past Editor-in-Chief of the NAELA News. In addition, he is certified as a Certified Elder Law Attorney® (CELA®) by the National Elder Law Foundation and is an Accredited Estate Planner ®(AEP). He is a founding member and past President of the New York Chapter of NAELA. In 2007, his firm received the NYSARC employer of the year award for employing people with disabilities. In 2008, he received the Chapter’s Outstanding Achievement Award for his lifelong work on behalf of seniors and those with disabilities. In 2011, his firm received the Family Friendly Employment Policy Award from the Westchester Women’s Bar Association. In 2016, he was named Advocate of the Year Award from the Arc of West- chester Children’s School for Early Development.

Mr. Krooks is past Chair of the Elder Law and Special Needs Section of the New York State Bar Association (NYSBA) and past Editor-in-Chief of the Elder Law Attorney, the newsletter of the NYSBA Elder Law and Special Needs Section. He also is a member of the Trusts and Estates Law Section and Tax Section of the NYSBA. He is chair of the elder law committee of the editorial advisory board of Trusts & Estates Magazine and serves on the editorial boards of Exceptional Parent Magazine and Leimberg Information Services.

Mr. Krooks, a sought-after expert on elder law, special needs planning and estate planning matters, has been quoted in The Wall Street Journal, The New York Times, Newsweek, Forbes, Investment News, Financial Times, Money Magazine, Smart Money, Worth Magazine, Kiplinger’s, Bloomberg, Consumer Reports, Wealth Manager, CBS Marketwatch.com, Lawyer’s Weekly USA, Reader’s Digest, Bottom Line, The Journal of Financial Planning, The New York Law Journal, The Daily News, New York Post and Newsday, among others.

He has testified before the United States House of Representatives and the New York City Council on long-term care issues. He also has appeared on Good Morning America Now, National Public Radio, Sirius XM Radio, CNN, PBS, NBC, and CBS evening news, as well as numerous other cable television and radio shows. 350 NEW YORK LAWYERS’ PRACTICAL SKILLS SERIES, 2019–2020

Mr. Krooks is past President of the Estate Planning Council of Westchester, a member of the Advi- sory Board of the National Association of Estate Planning Councils Foundation and the Hudson Val- ley Estate Planning Council. He is Liaison to the Commission on Law and Aging, to the Senior Lawyers Division and to the National Guardianship Network. He is the Group Chair of the Elder Law & Special Needs Planning Group of the Real Property, Trust & Estate Law (RPTE) Section of the American Bar Association (ABA) and is also a member of the Tax Section of the American Bar Asso- ciation; a member of the Bar of the Supreme Court of the United States, and a member of the Ameri- can Institute of CPAs. Mr. Krooks is a Fellow of the American College of Trust and Estate Counsel (ACTEC) and is Chair of its Elder Law Committee. He is an Adjunct Professor at NYU Center for Finance, Law & Taxation and is a member of the NYU Institute on Federal Taxation Advisory Board. Mr. Krooks has presented on a variety of elder law and special needs topics at various conferences, including Notre Dame Tax & Estate Planning Institute, World Congress & Expo on Disabilities, and the Heckerling Institute on Estate Planning, the premier estate planning conference in the country.

Mr. Krooks serves on the New York-Presbyterian Hospital Planning Giving Advisory Council and the Wolters Kluwer Financial and Estate Planning Advisory Board. He has also served on the Board of Directors of the Alzheimer’s Association Westchester/Putnam Chapter and the Bioethics Advisory Committee of New York Hospital. He is a member of the Blythedale Children’s Hospital Planned Giving Professional Advisory Board, a member of the legal advisory committee of the Evelyn Frank Legal Resources Program of Selfhelp Community Services, Inc., and a board member of the Care- giver’s Insights Foundation. He is listed in the Best Lawyers in America, New York Super Lawyers, Who’s Who in America, the New York Area’s Best Lawyers, New York Magazine and The New York Times, and the Top 25 Westchester, New York Super Lawyers.

ELIZABETH VALENTIN, ESQ. Elizabeth Valentin is a Visiting Assistant Professor of Law at New York Law School. Prior to join- ing the New York Law School faculty, Ms. Valentin was a partner with the firm of Littman Krooks LLP. During her almost two-decade tenure with the firm, Ms. Valentin's practice focused on elder law, Medicaid planning, special needs planning, guardianships, asset protection planning, trust and estate administration, and estate planning.

Ms. Valentin is a frequent presenter to consumer and professional groups as well as advocacy organizations addressing the legal, financial and other related issues which affect our senior population. She speaks fluent Spanish and often presents to Spanish-speaking seniors in partnership with various advocacy organizations.

Ms. Valentin is certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation. She is a member of the New York State Bar Association (NYSBA), the Elder Law and Special Needs Planning and Trusts & Estates Sections of the NYSBA, the New York County Lawyer's Association, Bronx County Bar Association, and the Dominican Bar Association. Ms. Valentin is currently serving on the Executive Committee of the Elder Law and Special Needs Planning Section of the NYSBA as a District Delegate.

Ms. Valentin received her undergraduate degree from the University of Pennsylvania and her Juris Doctor degree from the City University of New York School of Law.