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NOTES and Updates - Spring 2005
"Blossom by blossom, the spring begins."
--Algernon Charles Swinburne
Beginnings are a part of the season, and just as Spring is bringing her delightful innovations to view, the Carney Law Firm is happily bringing to your view a delightful innovation of its own: the announcement of Carney & Sugai, LLP. Yes, Leslie Yarnes Sugai has moved from associate to partner, a beginning which promises to be an excellent one for all concerned. Congratulations, Leslie!
Along with the new name of our firm comes the need for a few changes to our web site. Please be patient as we take steps to bring both the site itself and the various search engines up to date. For the time being, you can still find us at carneylawfirm.com; but when the transition is complete, we will be pleased to welcome you at our new home: www.carneysugai.com.
CLIENT SEMINAR
May 12th, 7:00pm
"Ethical Wills: Leaving a Spiritual Legacy"
Guest Speaker:
Mary G. Anderson
Don't miss our unique and inspiring Spring Seminar, "Ethical Wills: Leaving a Spiritual Legacy," scheduled for May 12, 2005. Mary G. Anderson, Organizational Consultant and Coach, will introduce a new trend in preserving an important legacy for your loved ones: the ethical will. While material possessions we bequeath do hold certain value; our ethics, beliefs, family history, life lessons, hopes, and blessings are beyond price.
Ms. Anderson will offer instruction and encouragement on the art and preparation of ethical wills, so please feel free to invite friends and loved ones.
Federal Law
We are currently waiting for what is perceived to be one of 2005's hot topics: the status of estate taxes. As part of the federal tax reform, the possibility of a permanent estate tax repeal remains. It is unclear if the permanent repeal will have the needed votes or if some type of larger estate tax exemption will be enacted. We will continue to monitor any proposed legislation and notify you of any changes which would impact your estate planning.
Several changes have been made to the code which directly impact the duties and options available to those persons serving as trustees.
One such change allows for Affidavits of Change of Trustee. County recorders, while required to record documents impacting real property where a change of trustee occurred as a result of a death, were not required to record documents documenting a change of trustee in other circumstances (for instance, incapacity or resignation).
The inability to record a change of trustee document in these situations had frequently caused difficulties if the property needed to be sold or refinanced. The new law, a welcome reform, will now require the recording of such documents.
Accounting review time for a trust accounting has been shortened to 180 days. This new section ensures protection from liability (after the 180-day period has run) to a trustee who has made a full disclosure of all material facts. Notice must be given regarding the 180-day period. Trusts providing for a shorter period of time will now use the 180-day period.
Trustees will now have the option of utilizing a Trust Notice of Proposed Action. Similar to the Notice of Proposed Action allowed in probate actions, a trustee may give notice of an action he/she wishes to take in order to obtain consents, thereby gaining some protection for liability for those actions. This is an optional statute and cannot be used to confirm trustee or attorney compensation, settlement of accountings, preliminary or final distributions, and a variety of self-dealing actions.
As the notice period is 45 days, the use of this Notice provision may be
limited; in certain circumstances, however, it can provide some needed assurances
for the trustee.
Trustee Registration
Trustees are required to register with the statewide registry if they serve as trustees for more than six trusts at a time. This legislation has been modified to exempt those trustees who were trustees for a single trust which then split into six sub-trusts.
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It will now be possible to deposit a copy of an Advance
Health Care Directive in a registry with California's Secretary of State,
once that registry is established. The Secretary of State will charge a
fee to maintain the registry and will issue ID cards to those who deposit
their AHCD's.
The registry's purpose is to require certain hospitals and medical professionals to check the registry for the AHCD. (Requests must be honored by the close of business on the next business day.) It is unclear at this point how useful this registry will be; and we have not yet received information on the status of the registry's establishment, but please alert us if you are interested in registering your AHCD. We will provide more information as it becomes available. In general, however, it is best to give your doctor (and all agents named within the document) a copy of your AHCD.
The Department of Health Services (DHS) has issued new emergency Medi-Cal recovery regulations, which have been approved and are now effective.
Specifically targeted in these regulations are reserved life estates in real property. In the past, a common way of protecting a Medi-Cal recipient's estate from recovery for Medi-Cal benefits he/she received had been to transfer the remainder interest in the beneficiary's home to his/her other family members (usually a spouse or children), retaining only a "life estate" for the recipient's lifetime that gave the beneficiary the use and possession rights to the property only for his/her remaining life time.
Once the recipient died, the life estate was extinguished, resulting in no estate for DHS to recover against.
This has changed under the new regulations. When a Medi-Cal recipient dies with a life estate, DHS will make a claim against the value of the life estate, as valued on life estate/remainder interest tables, to recover whatever amount the beneficiary received in Medi-Cal benefits.
While our firm stopped using life estates as a planning technique for Medi-Cal clients over three years ago, this technique was widely used before that time; and many recipients have such plans. The new regulations will require recovery against all life estates created after January 1, 1993 (the date Federal regulations were enacted that allow the State to establish these regulations). Therefore, even those life estates we created a number of years ago are in jeopardy.
If you or a family member has used a "life estate"-type plan for Medi-Cal recovery avoidance purposes, please contact us to discuss these new regulations and their impact on your particular situation.
With the advent of so many reproductive technologies, the law has needed to "catch up" to cover children conceived after the death of a biological parent. It is now crucial, for estate planning purposes, that your attorney be aware of any "genetic reproductive material" which has been deposited with a sperm bank or other reproductive facility and which may be used for posthumous conception. We would ask any clients who find themselves in this situation to notify us immediately.
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Elder Alert: Scams & Fraud
Internet Fraud Alert
Isn't it exciting? You are a lucky lottery winner, and the only thing the generous lottery coordinator requires, by return e-mail, is your bank information so the winning check can be deposited to the account of your choice. Sounds too good to be true, doesn't it? And yet many are duped every day by such tricks of the con artist's trade.
Have you been on the receiving end of a supposed e-mail from SunTrust, Washington Mutual, Wells Fargo or some other bank, asking you to follow the so-called "link" to confirm all of your banking information, due to the "increasing number of identity thefts targeting their customers"? Don't even think of complying with such a request! (Unless you would like to become one of their unfortunate victims, that is.)
And what about the wonderful Christian woman or man who is dying any day now and wants to make a substantial bequest to you or your equally devout organization? Surely an e-mail peppered with scriptures and references to deity has to be on the level, right? Think again! Using religion to disarm potential victims is a favorite device of fraud perpetrators. Don't be fooled; be wary.
Indentity Theft Revisited
Several years ago a Laguna Niguel attorney, Mari Frank, was a victim of identity theft. Her previously spotless credit record was all but destroyed, and it took over 500 hours of her time and $10,000 to rectify it. Thanks to Ms. Frank's perseverence, her victimizer was finally prosecuted.
However, because identity theft per se was not a crime at the time, the guilty party was sentenced to work furlough without jail time. Incensed by the injustice of this decision, Ms. Frank set out to change the system, becoming an advocate for those impacted by identity theft.
Fortunately, her advocacy was successful, and more protections exist for consumers. In 1998, California and Federal laws were passed making identity theft a crime, with the individual (and not the organization extending credit) named as the victim. California police must now take crime reports in the victim's community, and any consumer may place a "security freeze" on his credit file.
The public display of social security numbers is illegal in our state, and victims have the right to obtain any fraudulent papers used to get credit. Businesses must also advise consumers of security breaches exposing their personal data.
Elder Law Corner
Insurance Fraud
A consumer protection lawsuit has been filed in San Francisco Superior Court against five companies accused of victimizing seniors by selling annuities under the pretext of providing estate planning services. These organizations are American Equity Investment Life Insurance Company, based in Iowa; American Investment Life Insurance Company, based in Kansas; AmeriEstate Legal Plan, Inc., based in Irvine, California; Estate Preservation, Inc., based in El Segundo, California; and Gentry Group, Inc., based in Texas.
The charges are elder abuse, false advertising, violating California's Unfair Business Practices law by selling annuities with severe tax penalties, exorbitant surrender charges, and long maturation dates to senior citizens.
Jenefer Duane, CEO and Executive Director of Elder Financial Protection Network (EFPN), warns:
"The estate planning seminar you are thinking of attending may be a front for an annuity sales pitch. Never get rushed into a financial decision. Do not sign your savings over to an estate planner without first getting independent advice."
Seniors are often lured to estate planning seminars by newspaper ads promising free advice or presented as community service events. In the past, some of these programs have even been presented at and sponsored by a local church. Exercise caution; do not be fooled by greedy scam artists. Remember, if it sounds too good to be true, it probably is!
Generic Drug Warning
Steve Wilson, an investigative reporter for WXYZ-TV in Detroit, has learned that shopping for generic drugs requires careful price comparison. According to his study, prices can vary widely, with some drug retailers marking up the costs of generic drugs by as much as 3,000% or more!
For example, the generic equivalent of Prozac (which retails for $1.48), varied in price at various drug stores and outlets from $9.69 to $92.94. The message here? Comparison shopping counts, even when it comes to generic drugs!
Long-Term Care Insurance
Some of the lower-priced, quality long-term care insurance coverage in California will soon disappear. Two of the most popular companies, Physicians Mutual and Lincoln Benefit Life, plan to raise their premiums as soon as approval from the California Department of Insurance is received.
This approval could come at any time in the immediate future or several months from now. Coverage alternatives and options vary greatly, so those who would like to take advantage of current rates should look around, read all the fine print, and compare policies carefully.
Coverage alternatives and options vary greatly, so those who would like to take advantage of current rates should look around, read all the fine print, and compare policies carefully.
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