Wednesday, November 26, 2008

"Meals on Wheels" Feeding Seniors

At Thanksgiving, we should recognize and support the many local "Meals on Wheels" programs nationwide. Congress recently ignored one opportunity to do so in proposed income tax legislation.

The MoW concept began in England in 1947, and first took root in this country in Philadelphia in 1954. Today, such programs are stressed by fluctuating costs for gas and food, and by a changing workforce of volunteers who labor as a community service largely at their own expense.

Wikipedia provides a generic description of such programs:

Meals on Wheels are programmes that deliver meals to individuals at home who are unable to purchase or prepare their own meals. The name is often used generically to refer to home-delivered meals programmes, not all of which are actually named "Meals on Wheels."

Because they are housebound, many of the recipients are the elderly; not surprisingly, most of the volunteers are also elderly but able-bodied. * * *

Today, Meals on Wheels programmes generally operate at the county level or smaller. Programmes vary widely in their size, service provided, organisation and funding. * * *

The Meals On Wheels Association of America (MOWAA) is a national association for senior nutrition programmes, but each programme is entirely independent. * * *

For a listing of Meals on Wheels programs in Pennsylvania see: Pennsylvania Meals-on-Wheels and Senior Meal Programs, provided online by MealCall.

At this holiday time, many publications run articles celebrating the essential benefits and identifying the needy beneficiaries of local
MoW programs.

These are some articles that appeared about Meals on Wheels services in just the last three days:

Recently, such community-oriented, cost-efficient feeding programs have been threatened by the price of gasoline, and also by a scarcity of volunteers. The two problems are interrelated.

When gas prices spiked in summer, 2008, the effects on such transportation-dependent services were predictable on those organization that supplied vehicles for deliveries -- the increases hit their budgets immediately. But most local services rely upon volunteer drivers, who use their own vehicles and buy their own fuel. So volunteer drivers were affected too, immediately.

In "Meals on Wheels feels pinch by higher gas, food prices" (05/25/08), by Garry Lenton, posted by The Patriot-News (Harrisburg, PA), it was reported that "[b]ecause of the increasing cost of gas, some nationwide Meals on Wheels groups report losing volunteers." See also: "Meals on Wheels running on fumes: Inflated food costs, recent legislation have program that provides meals for seniors living month to month" (11/23/08) by Brittony Lund, posted by The Lufkin Daily News (Texas)

There is a connection between gas prices and volunteers beyond the personal expenditures. There is also an income tax deduction problem, which was highlighted by the Pennsylvania Association of Nonprofit Associations (PANO), a "statewide membership organization serving and advancing the charitable nonprofit sector through leadership, advocacy, education and services in order to improve the quality of life in Pennsylvania."

In its posting about the IRS Charitable Mileage Rate, PANO urged Congress to "Raise the Charitable Mileage Rate" since it has remained unadjusted for the past ten years:

Volunteers who use their own cars for charitable service can only deduct 14 cents per mile from their Federal income taxes.

The IRS standard business mileage rate just increased [on July 1, 2008, to 58.5 cents per mile, to reflect rising fuel costs], but the charitable rate has not increased in ten years.

High gas prices are hurting charities, volunteers and those who rely these services. Programs like
Meals-on-Wheels are facing critical volunteer shortages throughout the country.

H.R.2020 would raise the charitable mileage rate from the current 14 cents per mile to the business rate (currently 58.5 cents) and eliminate the disincentive for charitable volunteerism. * * *
In a note on its webpage dated October 8, 2008, PANO summarized its attempts in Congress, through two of Pennsylvania's elected federal officials, to change the charitable mileage rate:
Over the past 8 months, PANO spearheaded the nationwide effort to raise the rate that volunteers who use their own vehicles for charitable service, can deduct from their personal income taxes. * * *

Many Americans can no longer afford to volunteer due to high gas prices. Volunteers need relief.

The Charitable Mileage Deduction Equity Act, S.3421 by Senator Bob Casey (D-PA) and H.R.2020 by Congressman Todd Platts (R-19-PA) would set the volunteer mileage rate at the business mileage rate. The two rates would be the same: 58.5 cents per mile adjusted by the IRS when necessary. * * *
Unfortunately, other Congressional legislative priorities overwhelmed consideration of those proposed bills. But PANO's efforts laid groundwork for further consideration in the next session of Congress, as described on its website:
The sudden financial crisis on Wall Street, and the $700 billion bailout wiped the volunteer mileage rate and many other worthy bills off the table from consideration in Congress.

In the end, Congress failed to vote on the
Charitable Mileage Deduction Equity Act, the GIVE Act, the revised GIVE Act, or any other form of comprehensive legislation to address the unfair treatment of America’s volunteers. * * *

While we are disappointed that the Congress failed to pass legislation raising the volunteer mileage rate, our efforts [had] significant results. In just 6 short months we brought national attention to this issue, raised its profile in Congress and set the stage for future action.

National Council of Nonprofit Associations (NCNA) described it as follows:
“A state association saw this national volunteer crisis brewing and got others involved in the struggle to fix it. Initial leadership on this issue by the Pennsylvania Association of Nonprofit Associations (PANO) persuaded our national organization – the National Council of Nonprofit Associations – to become deeply involved, which in turn led to 40 state associations and hundreds of other nonprofits across America – from AARP and the American Red Cross to Independent Sector and United Way of America – joining forces, all in less than six weeks.

The state association network rallied quickly to support PANO and NCNA, not only speaking out officially by signing onto a joint endorsement letter, but also by rallying hundreds of our members across the nation to join that endorsement letter.”
Our work helped thousands of nonprofits across the country find their voice, and demonstrated the value of our national network of State Associations. * * *
Most recently, on November 24, 2008, the Internal Revenue Service issued Revenue Procedure 2008-72, which will appear in Internal Revenue Bulletin 2008-50 dated Dec. 15, 2008. It updated "annual optional standard mileage rates for employees, self-employed individuals, or other taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes."

In its Section 2, that Rev Proc listed the most recent standard mileage rates:

  • Business -- 55 cents per mile
  • Charitable contribution -- 14 cents per mile
  • Medical and moving -- 24 cents per mile
Further explanation was provided as to the "Determination of standard mileage rates" as follows:
The business and medical and moving standard mileage rates reflected in this revenue procedure are based on an annual study of the fixed and variable costs of operating an automobile conducted on behalf of the Service by an independent contractor.

The charitable contribution standard mileage rate is provided in § 170(i) of the Internal Revenue Code. [Emphasis added]
With the retreat of gas prices to half the level charged just a few months ago, the urgency for Congressional action on such remedial tax legislation may have abated for awhile, but the long-term dual issues of fairness to, and motivation for, volunteers who serve, remain.

Monday, November 24, 2008

"The Electronic Practice" Book for T&E Pros

On November 24, 2008, a message on the ACTEC listserv noted release of a new book by Donald H. Kelley entitled The Electronic Practice (Nov., 2008), published by Penton Media (Trusts & Estates/Wealth Management Press).

Don Kelley previously authored at least two books still in print:

In his new book's Introduction, Don recognizes the book's audience and summarizes the topics he targeted: "The focus of this work is on information of assistance to Trust and Estates professionals" who include attorneys, and also "accountants, financial planners and charitable organization professionals."

Generally, the book addresses these subjects:
  • Discussions, in the Trusts and Estates setting, of basic computer usage
  • Identification of computational or drafting software and web-based facilities
  • Search tools to find information and resources on the Internet
  • Surveys of websites offering value to Trust & Estate practitioners
  • Information and checklists to evaluate software and hardware capabilities
The promotional information about the book notes a special feature of the publication package -- an accompanying CD-ROM (accessed through the included new Adobe Air software) that creates a "Trusts & Estates Desktop" on your computer. Clicking on the icon then opens an "online text equivalent of The Electronic Practice hard copy treatise, with hyperlinks among chapters and subheadings and with live links to Internet websites."

Don tells us that this book will not be static in its electronic counterpart:
It is intended that periodic updates to these materials will be made available for download from the Trusts and Estates website.

You will be given an ID and Password to access the download area of the Trusts and Estates website and you will be notified by email when updates are available. * * *
Don sent me a copy of the book (with CD-ROM) about two weeks ago; and I reviewed its chapters, both in print and on my computer (spontaneously accessing websites through those live Internet links):
Part 1: Electronic Resources – Background

Chapter 1: Basics of Computer Operation for T & E Practitioners
Chapter 2: Tricks and Traps - Computer Operation for Non-Techies
Chapter 3: Technical Resources On Law Office Technology
Chapter 4: Web-Based Services
Chapter 5: The Limits of Technology -- The ”Black Box” Effect
Chapter 6: The Mac Alternative
Chapter 7: The Internet as Part of Your Desktop

Part 2: Electronic Facilities for the Trusts and Estates Practice

Chapter 8: Software Selection and Lists and Reviews of Trusts & Estates Software
Chapter 9: Client Data Gathering and Organization and Case Management Systems
Chapter 10: Comprehensive and Basic Estate Planning Programs
Chapter 11: Standalone Handtool Programs and Spreadsheets
Chapter 12: State Estate and Inheritance Tax Calculations
Chapter 13: Life Insurance Calculations, Planning and Resources
Chapter 14: Charitable Giving Software & Calculation Tables – Commercial & Free
Chapter 15: Business Entity Planning Software and Resources
Chapter 16: Pension, Retirement and Financial Planning and Collectibles
Chapter 17: Programs & Web-Based Calculators for Miscellaneous Calculations

Part 3: Client Communication – Client and Group Presentations

Chapter 18: Presentation of Client Reports, Flow Charts and Aids to Decision Making
Chapter 19: Adobe Acrobat and PDF File Creation and Application
Chapter 20: PowerPoint Opportunities for Communication

Part 4: Drafting and Document Assembly

Chapter 21: Will and Trust Drafting Programs and Their Evaluation

Part 5: Tax Return Preparation and Valuation Resources

Chapter 22: Valuation of Securities and Other Property
Chapter 23: Estate and Gift Tax Return Preparation and Utilities
Chapter 24: Fiduciary Accounting and Income Tax Return Preparation

Part 6: Trusts and Estates Resources on the Web

Chapter 25: Legal Forms Available on the Web
Chapter 26: Planned Giving Resources on the Web
Chapter 27: Organization and Operation of the Family Office
Chapter 28: Primary Sources for Federal & state Tax Materials and Federal Agencies

Part 7: Trusts and Estates Legal Research on the Web

Chapter 29: Resources for Tax, Trusts and Estates Research
Chapter 30: Using Generic Search Engines for Tax and Other T & E Research
As to breadth, depth, and currency of references within his topics, I have not seen a match for Don's new book and its "Trusts & Estates Desktop" resource. In addition, the entire electronic text is searchable by word and phrase -- that's far better than a book index!

I am convinced that if, as a trust & estate professional, you want to get from where you are now in your practice or on a particular case, to where helpful resources are, a great start would be Don's published book & software package,
The Electronic Practice.

In publishing this book and by updating its electronic counterpart routinely, Don Kelley has created a GPS for the trust & estate professional.

Friday, November 21, 2008

PBI's 2008 "Estate Law Institute"

On December 9 & 10 (Tue & Wed), 2008, the Pennsylvania Bar Institute will present the fifteenth annual "Estate Law Institute" in Philadelphia, PA.

Every year, more than 400 of Pennsylvania’s finest estate and trust lawyers who attend the Estate Law Institute find it is the best way to remain informed in the changing world of estates and trust practice.

As we move into our 15th year of the Estate Law Institute, join your colleagues at our "custom" program with sophisticated tracks discussing issues that affect you and your practice.

Institute provides sophisticated sessions as well as overviews of both planning and administration, allowing you to tailor the program to your particular practice level. A wide range of updates ensure that you will stay up-to-the-minute on all the latest issues and strategies. * * *

These are some of the topics scheduled for presentation at the upcoming Estate Law Institute:

  • ABCs of GSTs
  • Qualified Personal Residence Trusts and Grantor Retained Annuity Trusts
  • IRS Appeals: How to Use Them for Your Client’s Benefit
  • Section 529 Plans
  • Disclaimers for Post-Mortem Tax Planning
  • GST Special Issues
  • Coordinating Retirement Assets with the Estate Plan
  • Exit Strategies for Trusts
  • Preparer Penalties under the New Tax Preparer Rules
  • Trusts as Beneficiaries of Retirement Plan Assets
  • Contested Claims and Creditor Claims Against Decedent’s Estate
  • Update on Uniform Trust Act
  • Orphans’ Court Litigation & POAs
  • Structuring Trusts in Divorce
  • Latest Developments in FLPs & Valuation Discount Planning
  • Planning for Incapacity
  • Recent Trends in Orphans’ Court Litigation
  • Basics of POAs
  • International Estate Planning
  • Estate Planning for Parents with Minor Children
  • Health Care Directives After Act 169
  • Total Return Trusts
  • Estate Planning: An Overview of Objectives, Documents & Techniques
A plenary, "keynote" presentation will begin the program on each of the Institute's two days:
  • Tuesday, December 9, 2008: Recent Developments in Estate Law: Analysis of Federal, State Statutory & Case Law Issues -- Panelists: J. Brooke Aker, John A. Terrill, II, and Edward M. Watters, III
  • Wednesday, December 10, 2008: Keeping It All in the Family: Asset Protection Planning -- Speaker: Gideon Rothschild, Esq.,
This year's faculty includes the following trust & estates experts:
R. Michael Daniel, Esq., Cohen & Grigsby, PC, Pittsburgh
James L. Hollinger, Esq., Smith Aker Grossman and Hollinger, LLP, Norristown
Terrance A. Kline, Esq., Law Office of Terrance Kline, Media
Pam H. Schneider, Esq., Gadsen Schneider & Woodward LLP, King of Prussia
Martha A. Zatezalo, Esq., PNC Bank, Pittsburgh
J. Brooke Aker, Esq., Smith, Aker, Grossman & Hollinger, LLP, Norristown
Jerald David August, Esq., Fox Rothschild LLP, West Palm Beach, FL
Charles Bender, Esq., Fox Rothschild LLP, Warrington
Steven G. Blum, Esq., Steven G. Blum & Associates, Swarthmore
Dana M. Breslin, Esq., CELA, Pappano & Breslin, Brookhaven
Timothy F. Burke, Jr., Esq., Tener VanKirk Wolf & Moore, PC, Pittsburgh
Jerry B. Chariton, Esq., Chariton & Schwager, Wilkes-Barre
John A.G. Darazsdi, Esq., Internal Revenue Service, Scranton
J. Paul Dibert, Division Chief, Inheritance Tax Division, PA Dept. of Revenue, Harrisburg
Jonathan H. Ellis, Esq., Plotnick & Ellis, PC, Jenkintown
Linda Rhone Enion, Esq., Lovett Bookman Harmon Marks LLP, Pittsburgh
David M. Frees, Esq., Unruh, Turner, Burke and Frees, Phoenixville
Eugene H. Gillin, Esq., Harkins and Harkins, Philadelphia
Kenneth J. Hagreen, Esq., Lawyers Concerned for Lawyers of Pennsylvania, Inc., Camp Hill
Paul C. Heintz, Esq., Obermayer Rebmann Maxwell & Hippel LLP, Philadelphia
Amy E. Heller, Esq., Weil, Gotshal & Manges, LLP, New York, NY
Glenn A. Henkel, Esq., Kulzer & DiPadova, PA, Haddonfield, NJ
Paula M. Jones, Esq., McCarter & English, LLP, Philadelphia
Kenneth E. Lewis, Esq., Fox Rothschild LLP, Pittsburgh
Prof. Kathy C. Mandelbaum, Esq., Director of the Graduate Tax Program & Assoc. Professor of Law, Temple University Beasley School of Law, Philadelphia
James F. Mannion, Esq., Mannion Prior LLP, King of Prussia
Sara A. Mercer, Esq., Thorp Reed & Armstrong, LLP, Pittsburgh
A. James Millar, Esq., PA Department of Revenue, Harrisburg
Hon. Stanley R. Ott, Montgomery County Court of Common Pleas, Norristown
Edward L. Perkins, Esq., Gibson & Perkins, PC, Media
Karl L. Prior, Esq., Mannion Prior, LLP, King of Prussia
G. Bradley Rainer, Esq., Reger Rizzo & Darnall LLP, Philadelphia
Jennifer L. Rawson, Esq., Eckert Seamans Cherin & Mellott LLC
Dennis C. Reardon, Esq., Reardon & Associates, LLC, Wayne
Michael F. Rogers, Esq., Salvo Landau Gruen & Rogers, Blue Bell
Gideon Rothschild, J.D, CPA, Moses & Singer LLP, New York, NY
Margaret E.W. Sager, Esq., Heckscher Teillon Terrill & Sager, PC, West Conshohocken
Mario Santilli, Jr., Esq., Cohen & Grigsby, P.C., Pittsburgh
Lisa A. Shearman, Esq., Plotnick & Ellis, PC, Jenkintown
Karen M. Stockmal, Esq., KMS Law Offices, Philadelphia
Howard W. Switkay, Esq., Internal Revenue Service, Philadelphia
John A. Terrill, II, Esq., Heckscher, Teillon, Terrill & Sager, PC, West Conshohocken
Kirby G. Upright, Esq., King Spry Herman Freund & Faul LLC, Bethlehem
Edward M. Watters, III, Esq., Pepper Hamilton LLP, Berwyn
Robert I. Whitelaw, Esq., Obermayer Rebmann Maxwell & Hippel LLP, Philadelphia
Robert B. Wolf, Esq., Tener, Van Kirk, Wolf & Moore, PC, Pittsburgh
Edward P. Wojnaroski, Jr., Esq., Williams, Coulson, Johnson, Lloyd, Parker and Tedesco, LLC, Pittsburgh
C. Thomas Work, Esq., Stevens & Lee, P.C., Reading
The Estate Law Institute will be held at the Pennsylvania Convention Center, 12th and Arch Streets, Philadelphia, PA.

The program is co-sponsored by the
Real Property, Probate & Trust Law Section, of the Pennsylvania Bar Association.
Registration can be made online.

Thursday, November 20, 2008

Coach Broyles' "Alzheimer's Playbook"

In recognition of November, 2008 as National Caregivers Month, a number of new books were issued on the topic of caregiving, that join books regularly revised & updated, some posted online for free.

The foundational, classic book on the subject of personal caregiving is The 36-Hour Day (4th Ed., 2006), subtitled A Family Guide to Caring for Persons with Alzheimer Disease, Related Dementing Illnesses, and Memory Loss in Later Life, by Nancy L. Mace, M.A., Peter V. Rabins, M.D., & Paul R. McHugh.

Revised in 2006 for its twenty-fifth anniversary, this best-selling book is the "bible" for families caring for people with Alzheimer disease, offering comfort and support to millions worldwide.

In addition to the practical and compassionate guidance that have made The 36-Hour Day invaluable to caregivers, the fourth edition is the only edition currently available that includes new information on medical research and the delivery of care.

The new edition includes:
  • new information on diagnostic evaluation
  • resources for families and adult children who care for people with dementia
  • updated legal and financial information
  • the latest information on nursing homes and other communal living arrangements
  • new information on research, medications, and the biological causes and effects of dementia. * * *
See also: Review: The 36-Hour Day, by Sarah C. Murphy; and The 36-Hour Day, posted on The Alzheimer's Disease Bookstore, which lists it among the many books written on the Alzheimer's-related topics of:
For another popular book on family caregiving, see: Always On Call: When Illness Turns Families Into Caregivers (2nd Edition, November, 2004) by Carol Levine, who was interviewed by National Public Radio on July 21, 2008 in a broadcast segment entitled "Carol Levine, Championing The Caregiver's Cause."

So, what's new among books about caregiving in 2008? Just about one new book per month:

Caregiving was the subject of a handbook and a video produced by WGBH-TV (Boston, MA) in conjunction with AARP, entitled Caring for Your Parents. The broadcast aired in 2008 on the Public Broadcasting System.

Derived from the book and the video was the
fantastic, free, online AARP Caregiving Tool Kit, "filled with interactive features, such as expert videos, calculators, and worksheets" targeted towards personal caregivers.

Such tools could reduce the stress felt by caregivers.
See: PA EE&F Law Blog posting "Dear Abby" Answers Alzheimer's Caregiver (11/18/08).

But my favorite resource was written by a coach -- Coach Frank Broyles, presently the Razorback Athletic Director at the University of Arkansas.

A Press Release issued November 1, 2007, entitled "Alzheimer's Association Unveils Football Coach Frank Broyles' Playbook for Alzheimer's Caregivers" (PDF, 2 pages), announced the free availability of Coach Broyles’ Playbook for Alzheimer’s Caregivers:
The Playbook is a football-themed, practical guide that addresses “Pre-Game Planning,” “Coaches and Special Teams,” “Playing Offense,” “Playing Defense” and the “Training Table” for each stage of the disease.

“When my wife was diagnosed with Alzheimer’s disease I was at a loss,” said Broyles, athletic director and former coach of the Arkansas Razorbacks.

“My family and I collaborated with many great partners like the Alzheimer's Association along her journey and we want to share our collective insight to help ease the caregiving of those still facing this immense challenge.” * * *
The Broyles' Playbook now has its own website, where the book is displayed in a multimedia format, where it can be downloaded in PDF format (Updated 09/16/08; PDF, 110 pages, in English & Spanish), and where each of its eighteen chapters can be heard as a playable or downloadable audio book.

Broyles' Playbook still remains available on the website of the Alzheimer's Association.

A newer companion book, Broyles' Playbook: Tips & Strategies (Updated 09/16/08; PDF, 12 pages), is also available on the Broyles' Playbook website.

“I gathered my team, and together, with the help and support of many Arkansan people and companies, we were able to generate the funding needed to make this Playbook available nationwide, free of charge, to anyone wanting information on how to care for a loved one with Alzheimer’s disease.

It is our gift to you, in hope that you can benefit from my experience.”

-- Coach Frank Broyles

Tuesday, November 18, 2008

"Dear Abby" Answers Alzheimer's Caregiver

On November 9, 2008, the personal advice column "Dear Abby" highlighted a question from a caregiver for a parent afflicted with progressive Alzheimer's Disease, which ended with the plea: "I can’t keep my head above water. Please tell me what to do."

November, 2008 is National Caregivers Month, according to the
White House Proclamation for National Family Caregivers Month, 2008, issued October, 2008.

During National Family Caregivers Month we recognize and celebrate the many individuals throughout our country who work each day to ensure a better quality of life for their family members.

Through their selfless action, these caregivers provide their loved ones support and comfort as they age, combat illness, or suffer from disability. * * *
The National Family Caregivers Association, which initiated and continues to organize recognitions during this commemorative NFC Month, posted explanations and resource links on its website.
NFC Month is organized each year by the National Family Caregivers Association and is designated as a time every year to thank, support, educate and empower family caregivers.

"This year we are encouraging people to speak up during National Family Caregivers Month." said Suzanne Mintz, NFCA president and co-founder.

"One of the most important attributes on being an advocate for your loved one is the willingness and the ability to speak up and keep your eye on the ultimate goal, protecting not only the health and safety of your loved ones but for yourself as well." * * *
". . . for yourself as well" is the focus of advice in the recent syndicated Dear Abby column entitled "Mom’s Alzheimer’s consumes daughter’s life" published (among other newspapers) in The Kansas City Star that began with the caregiver's inquiry:
My beautiful, loving mother is now in the middle stages of Alzheimer’s disease. This cruel disease has robbed her of her memories as well as the ability to reason and function.

I want to support her the way she has always supported me. But caring for Mama is becoming more and more difficult as she drifts further and further away. Not only am I caring for my mother, but I also have a career and three children. * * *
The advice is supportive and helpful (although perhaps a bit presumptuous based upon the facts in the inquiry):
Although you feel alone and overwhelmed right now, the truth is you are not. * * *

Some signs to be aware of:
  • feeling you have to “do it all yourself”;
  • withdrawing from friends and activities that you used to enjoy;
  • worrying that the person you care for is safe;
  • feeling anxious about money and health-care decisions;
  • denying the impact of the disease and its effect on your family;
  • feeling grief or sadness that your relationship with the person isn’t what it used to be;
  • becoming frustrated and angry when the person continually repeats things and doesn’t seem to listen; and
  • having health problems. [Formatting applied.]
The column then provides a referral:
If any of these apply to you, talk to your doctor and contact the Alzheimer’s Association, because it offers a full range of services.

The toll-free number is 800-272-3900 or visit and take the Caregiver Stress Check interactive quiz. You will find with it a list of helpful referrals there.
In conducting that Caregiver Stress Check, twenty educational & support resources -- each keyed under one of the eight topic questions -- are offered to assist the caregiver of an Alzheimer's Disease patient. At its conclusion, all twenty online resources are listed.

At least two new books about caregiving were timed for release at
National Family Caregivers Month; and a valuable third book, written in a sports theme for caregivers, was released last year. I'll note these publications in my next posting.

Update: 11/20/08:

Yes, please read that "next posting" --
Coach Broyles' "Alzheimer's Playbook" (11/20/08).

Monday, November 17, 2008

James Ruling Impacts Annuities in Medicaid Planning

On November 12, 2008, the United States Third Circuit Court of Appeals issued its decision in James v. Richman (PDF, 15 pages), No. 06-5092, 547 F.3d 214 (3rd Cir., Nov 12, 2008), 2008 U.S. App. LEXIS 23530, aff'd, James v. Richman, 465 F.Supp.2d 395 (M.D. Pa., Nov 21, 2006), which upheld the purchase of a long-term annuity by a "community spouse" that converted excess assets of a couple into a stream of protected income in a pre-DRA setting.

Such federal appellate court decisions on a Medicaid issue are rare. This decision relates to a device previously often used to protect remaining assets of a couple when one spouse faced long-term institutionalized care.

In considering the effect of this case, it should be noted that the Deficit Reduction Act of 2005 (DRA) changed the federal Medicaid law rules regarding annuities. For a case that remains pending regarding a post-DRA situation, see: Weatherbee v. Richman, 1:2007-cv-00134 (US DC PA, 05/30/07). [See also: Comments by Jeff Marshall, Esq. below in an Update.]

For background regarding the changes wrought by the DRA, see:
PA EE&F Law Blog postings: "PA DPW's New Policies under DRA" (04/04/07); "DRA to be Effective in PA on Feb 1st ... no ... Mar 1st, 2007" (01/03/07); and "Pre-DRA Annuities in PA" (11/27/06).

Based upon holdings in the James case, the use of annuities in Medicaid planning may find increased flexibility until the annuity matures.

With permission granted by Attorney Jeff Marshall, I repost his article about the ruling and opinion in the James case, edited somewhat by me (including links).

Federal Third Circuit Upholds Use of Annuity
to Protect Community Spouse

Copyright © by Jeffrey A. Marshall, CELA [1]

In a notable decision, the Federal Third Circuit Court of Appeals, in the case of James v. Richman, issued November 12, 2008, upheld the purchase of an annuity by a community spouse that converts excess resources into protected income.

When her husband entered a nursing home in August 2005, Josephine James purchased a $250,000 single premium immediate irrevocable annuity. The actuarially sound annuity included an endorsement that “[t]his Contract may not be surrendered, transferred, collaterally assigned, or returned for a return of the premium paid. This Contract is irrevocable and has no cash surrender value. An Owner may not amend this Contract or change any designation under this Contract.”

The purchase of the annuity, combined with the purchase of an automobile, reduced the couples’ resources to within Medicaid resource eligibility limits. But, when Mr. James subsequently applied for Medicaid his application was denied.

The Pennsylvania Department of Public Welfare (DPW) took the position that Mrs. James $250,000 annuity was an available resource which put the couple over the resource limits. In the Department’s view, the annuity had a value of $185,000. In support of its position, DPW eventually produced a declaration from a finance company which expressed interest in purchasing the payments from Mrs. James’ annuity for $185,000.

The Third Circuit’s opinion was written by Senior Judge Jane Roth and joined by Chief Judge Anthony Scirica.[2] The central issue of the case is whether a state Medicaid agency can treat a non-revocable, non-transferable annuity as an available resource for purposes of calculating Medicaid eligibility. Or, in the alternative, can the state agency treat the steam of payments which the community spouse will ultimately receive from the annuity as an available resource.

Could DPW treat the annuity as a resource?

The Court relied on Medicaid law and SSI (Supplemental Security Income) Program regulations to find that DPW could not treat Mrs. James annuity as an available resource. It held that in determining whether an annuity may be treated as a resource a state cannot use a methodology that is more restrictive than that used by SSI. Under 42 U.S.C. § 1396a(a)(10)(C)(i)(III) “the Department can not treat as available resources any assets that the SSI regulations would not treat as available resources.” [Opinion, page 10].

Judge Roth noted that the SSI regulations provide that “if an individual has the right, authority or power to liquidate the property, or his or her share of the property, it is considered a[n] (available) resource.” 20 C.F.R. § 416.1201(a)(1). The SSI Program Operations Manual System (POMS) makes it clear that the “power to liquidate” referred to by the regulation is not simply the de facto ability to accomplish a change in ownership of an asset, but must also include the power to do so without incurring legal liability. See, POMS SI 01110.115. Since, Mrs. James lacks the legal power to change ownership in her annuity without breaching the annuity contract the annuity cannot be treated as an available resource.

Could DPW treat the payments to be received from the annuity as a resource of the community spouse?

DPW’s somewhat novel argument in James was that Mrs. James right to receive income from the annuity could be sold by her and thus could be treated as an available resource. In rejecting this theory Judge Roth noted that “[t]here is no statutory basis for such a theory and, indeed, adopting it would tend to undermine the MCCA rule that ‘no income of the community spouse shall be deemed available to the institutionalized spouse.’ 42 U.S.C. §1396r-5(b)(1). Under such a theory, there is no clear limit on the hypothetical transaction proceeds that could be treated as assets, whether based on the sale of a future stream of payments tied to a fixed income retirement account, social security, or even a regular paycheck.” [Opinion, pages 11-12].

It should be noted that the James annuity was purchased prior to the Deficit Reduction Act (DRA).[3] In a post-DRA case, Weatherbee v. Richman, US DC Western District of Pennsylvania, No1:07-cv-00134, DPW has taken the position that a provision in the DRA has given states the authority to effectively void the spousal income protections of 42 U.S.C. §1396r-5(b)(1) as applied to annuities.[4]

This reading of the section seems strained and appears to be at odds with CMS’s interpretation of this section.[5] Given the Court’s opinion in James, it seems increasingly unlikely that DPW will prevail in Weatherbee. In any event, post DRA spousal annuities do have to comply with the DRA transfer and remainder beneficiary rules set out in 42 U.S.C. § 1396p(c)(1)(G) and 42 U.S.C. § 1396p(c)(1)(F).

Judge Roth also rejected DPW’s argument that the court should look to the underlying purpose of Medicaid rather than relying merely on the words of the federal statute. The courts “do not create rules based on our own sense of the ultimate purpose of the law being interpreted, but rather seek to implement the purpose of Congress as expressed in the text of the statutes it passed. [A]n irrevocable, non-alienable annuity does not fit the statutory definition of an available resource.” [Opinion, page 12]


  1. Certified as an Elder Law Attorney by the National Elder Law Foundation. Attorney of the Marshall, Parker & Associates. Jeff practices law in the same firm as Matthew J. Parker, Esq., who represented the community spouse in the case under discussion. Both are principals of Marshall, Parker & Associates, LLC, a Pennsylvania elder law firm with offices in Williamsport, Wilkes-Barre, Scranton, and Jersey Shore.
  2. The third member of the panel, Judge Michael Fisher, would have Court for further fact-finding relevant to the annuity’s marketability.
  3. Deficit Reduction Act of 2005 (DRA) (Pub.L.109-171).
  4. Section 6012(a) of the DRA added a new section 1917(e) to the Social Security Act. Section 1917(e)(1), codified at 42 U.S.C. § 1396p(e)(4), states that ‘[n]othing in this subsection shall be construed as preventing a State from denying eligibility for medical assistance for an individual based on the income or resources derived from an annuity described in paragraph (1).” Paragraph 1 is the DRA section that requires disclosure on an application for Medical Assistance of a description of any interest the individual or community spouse has in an annuity.
  5. Contrary to DPW’s interpretation, CMS appears to interpret § 1396p(e)(4) to mean that the transfer of asset provisions of the DRA do not change the resource and income aspects of an annuity. “The State may take into consideration the income or resources derived from an annuity when determining eligibility for medical assistance or the extent of the State’s obligations for such assistance. This means that even though an annuity is not penalized as a transfer for less than fair market value (see II. Evaluation and Treatment of Purchases of Annuities and Certain Transactions On or After February 8, 2006 below for further information about treating the purchase of an annuity as a transfer of assets), it must still be considered in determining eligibility, including spousal income and resources, and in the post-eligibility calculation, as appropriate. In other words, even if an annuity is not subject to penalty under the provisions of the DRA, this does not mean that it is excluded as income or resource.” CMS State Medicaid Director Letter, SMDL # 06-018, July 27, 2006.

For other information about the decision in the case, see: "James v. Richman -- Decision of Federal Third Circuit Court of Appeals" (11/12/08), posted on the website of Marshall, Parker & Associates, LLC.

Update: 11/17/08 @ 5:30 pm:

After my posting, Jeff Marshall sent me an email message with clarification and further thoughts regarding the effect of the James decision upon the pending Weatherbee case, as follows:
Weatherbee did not find to the contrary. In fact, Weatherbee has not been decided. It is under submission. We think that the Judge for the Weatherbee case has been waiting for the ruling in James to issue his decision.

In my opinion, it is more likely than not that the Court in Weatherbee will rely on James and also find against DPW. DPW basically made the James case arguments in Weatherbee and added a very weak additional argument that a provision in the DRA saying it doesn’t change the income and resource rules therefore gives it the ability to ignore the income and resource rules when an annuity is involved.

It’s hard to imagine that the Weatherbee court will rule in favor of DPW given the very clear ruling in James.
Update: 12/08/08:

The Times-Leader (Scranton, PA) published an article on December 8, 2008, regarding the James decision, entitled "Annuity ruling sets standard" by
Terrie Morgan-Besecker, who noted that the "recent decision reaffirms other rulings that [an] annuity can’t be seen as asset in determining nursing home assistance."

The article notes that the effects of the ruling are viewed differently by those seeking to protect Medicaid benefits, versus those funding such benefits in the state budget.
The ruling by the Third Circuit Court of Appeals is the latest in a series of court cases brought by welfare officials in Pennsylvania and other states. The cases challenge a loophole in the Medicaid law that officials say has allowed affluent couples to use annuities to shelter assets that otherwise would be available to pay for an institutionalized spouse’s care.

The decision, issued last month in the case of Josephine James, is significant because it reaffirms prior court rulings, said James’s attorney, Matthew Parker of Williamsport. It will affect all residents in the states covered by the Third Circuit – New Jersey, Pennsylvania and Delaware.

But Jason Manne, chief deputy counsel for DPW, said the court’s ruling is fact-specific to the James case. Even though the department lost, Manne contends the legal reasoning the court employed will help DPW challenge the use of annuities in calculating Medicaid benefits.

The ruling is being closely monitored by attorneys on both sides of the issue as the stakes are huge. The average annual cost of nursing home care for one person is $60,000, according to DPW. Last year, Pennsylvania’s Medicaid fund paid out more than $3 billion to nursing homes.

While providing health care coverage to all persons is a laudable goal, DPW says, it has an obligation to ensure that Medicaid is utilized for those who truly need it. * * *
The article also notes that applicable rules may be changed by federal legislation. I think that this is likely, just as the rules were changed in 2006 (as noted in my prior postings).

For a different view as to the key holding of the James case, see "3d Cir.: A favorable Medicaid annuity decision under § 1983" posted by the National Senior Citizens Law Center, which focused more on litigant standing and review rights, rather than upon the substantive issues regarding the effect of an annuity purchase upon eligibility for Medicaid.

Friday, November 14, 2008

Catherine Baker Knoll, Senior Servant

Catherine Baker Knoll, the Lieutenant Governor of Pennsylvania, died on Wednesday evening, November 12, 2008, after a 4-month battle with neuroendocrine cancer, according to news reports, including "Lt. Gov. Catherine Baker Knoll dies" (11/12/08) by Tom Barnes, published by the Pittsburgh Post-Gazette.

Lt. Gov. Catherine Baker Knoll, the first woman ever elected to the state's second-ranking post, has died, the governor's office announced tonight.

Mrs. Knoll, 78, had battled a rare form of cancer. She died at 6 p.m. at the National Rehabilitation Hospital in Washington, D.C., according to Mary Isenhour, executive director of the Democratic State Committee.

Gov. Ed Rendell said he and his wife, Midge, "mourn the passing of one of the strongest, most dedicated public servants in Pennsylvania's history."

Even as she was fighting cancer, he said, "she remained upbeat and dedicated to serving the commonwealth. Catherine was a very passionate and exuberant advocate for many worthy causes." * * *
While serving as Pennsylvania's State Treasurer for two consecutive four-year terms (1989-1997), she started the Pennsylvania TAP program (Tuition Account Program), created the PA Treasury Investment Center, and started a partnership with the Pennsylvania Home Builders Association and Pennsylvania community banks to build affordable housing in Pennsylvania. See also: Knoll's Biography posted on the Lieutenant's Governor's website; and NNDB Mapper for "Catherine Baker Knoll."

Catherine Baker Knoll was sworn in as Pennsylvania's 30th Lieutenant Governor on January 21, 2003, when she was 72 years old (born 09/03/30), as the first woman to hold that office. She was reelected in November, 2006, when she was 76 years old.

She demonstrated that a woman in Pennsylvania (with a Roman Catholic faith)
could rise to a high elective office in later life, even after prior political defeats and public controversies. As a feisty politician, she continued to change the state where she was born, was educated, had worked, and lived all her life. See: Catherine Baker Knoll: Slideshow, posted by the Pittsburgh Post-Gazette.

On the website of the
Office of the Lieutenant Governor of Pennsylvania, a photograph of Knoll's smiling face appears above a press release now announcing the reactions of public officials to her death. Such testaments by her peers to her life's accomplishments are impressive.

But, as this Commonwealth enters a mourning period after her passing, I am likewise impressed about sentiments expressed by non-public people -- common folks -- who knew her also as a peer -- as a person, and a feisty person at that.

On the
SmartTalk radio program broadcast by WITF-FM (Harrisburg, PA) on the morning of Thursday, November 13th on the topic "Remembering the life and career of Lieutenant Governor Catherine Baker Knoll" (MP3, 1 hour), at least two callers told stories about her passionate, proud participation in the annual motorcycle rally from the State Capitol in Harrisburg, to Gettysburg, to raise funds for the Gettysburg Battlefield Preservation Association.

At those events sponsored by
A.B.A.T.E. (Alliance of Bikers Aimed Towards Education) of Pennsylvania, she didn't just make an appearance, or only make a speech; she rode the entire course with those burly bikers as a passenger on a State Police motorcycle driven by a State Trooper, at the head of the column (see photo above, taken on May 25, 2006).

At the 2006 motorcycle rally, she was 75 years old, riding on a road-bike in a windbreaker, smiling.

The Press Release on the Lieutenant Governor's website ended with her words, written near the end of her life in a letter sent to President-elect Obama after his win in the November 4th election.

She still looked forward:

"You inspired millions of Americans by putting your signature on a chapter of history that was waiting to be written. In doing so, you also sent a signal to the world that once again America has a smile on its face, that we intend to be as friendly as we are firm."

"I am proud of our Pennsylvania voters for standing tall when they were needed the most. In the years just ahead, I want our Commonwealth to fulfill your hope --- that we be neither a red state nor a blue state, but rather a state united by our passion for a better America."