Category: Family Law

IRS Announces 2023 Increases to Estate and Gift Tax Exclusions

The Internal Revenue Service recently announced the 2023 cost of living adjustments for the estate and gift tax exclusion amounts.

Gift Tax Exclusion Amount:

The annual gift tax exclusion is the amount (“Gift Tax Exclusion Amount”) an individual may gift to any number of persons without incurring a gift tax or reporting obligation. The Gift Tax Exclusion Amount will increase from $16,000 to $17,000 in 2023 (a combined $34,000 for married couples). The Gift Tax Exclusion Amount renews annually, so an individual who gifted $16,000 to someone in 2022 may gift $17,000 to that same person in 2023, without any reporting obligation. However, for any gift above the $17,000 in 2023, the individual making the gift must report it to the IRS.

Example A: A single person gives her two children $17,000 each in 2023. Each gift falls within the Gift Tax Exclusion Amount so the gifting individual will not have to pay any gift tax or notify the IRS. A married couple could give $34,000 to each child, with the same effect.

Example B: Compare a single person who wants to give her only child $20,000 in 2023. The person who gave the gift must notify the IRS of the $3,000 gift because it exceeds the $17,000 Gift Tax Exclusion Amount.

Estate Tax Exclusion Amount:

The estate tax exclusion is the amount (“Estate Tax Exclusion Amount”) an individual can transfer estate tax-free upon his or her death. The Estate Tax Exclusion Amount will increase from $12,060,000 to $12,920,000 in 2023 (a combined $25,840,000 for married couples).

Example A: A single person with two children passes away in 2023 owning $12,920,000 in assets. The deceased person’s two children will inherit the full $12,920,000 as no estate tax is owed.

Example B:  A single person with two children passes away in 2023 owning $20,000,000 in assets. The decedent’s estate will owe tax on the assets owned that exceeded the $12,920,000 Estate Tax Exclusion Amount ($20,000,000 – $12,920,000 = $7,080,000). The current estate tax rate is approximately 40% which means the decedent’s estate will owe estate taxes in the amount of $2,832,000 ($7,080,000 x 40%).

© 2022 Miller, Canfield, Paddock and Stone PLC
For more Tax Law News, click here to visit the National Law Review.

Feds Announce More Aggressive Enforcement of Poor Performing Nursing Homes

In February of 2022, during his State of the Union Address, President Biden announced an action plan to improve the safety and quality of care in the nation’s nursing homes.[i] On October 21, 2022, Centers for Medicare and Medicaid Services (CMS) announced new requirements to help with oversight of facilities selected to the Special Focus Facilities (SFF) Program.[ii]

The SFF Program was created to help and oversee the poorest performing nursing homes in the country and improve nursing homes that have a history of noncompliance.  The goal is to improve safety and quality of care. The facilities selected for the SFF Program must be inspected no less than once every six months and if severe enforcement is needed, it is at the discretion of the state surveyors. The main objective for the SFF Program is for facilities to show exponential improvement, graduate from the program, and then maintain compliance and better quality of care and safety.

The new CMS requirements, outlined below, are aimed at facilities that continuously fail to improve and remain in the SFF Program for a prolonged period of time. Health and Human Services Secretary Xavier Becerra stated, “Let us be clear: we are cracking down on enforcement of our nation’s poorest-performing nursing homes. As President Biden directed, we are increasing scrutiny and taking aggressive action to ensure everyone living in nursing homes gets the high-quality care they deserve. We are demanding better because our seniors deserve better.”

CMS announced the following revisions to the SFF Program:

  • Effective immediately, CMS will use escalating penalties for violations for deficiencies cited at the same level in subsequent surveys. This can include possible discretionary termination from Medicare and/or Medicaid funding for facilities that are cited with immediate jeopardy deficiencies on any two surveys while participating the in the SFF Program.
  • CMS will consider facilities’ efforts to improve when considering discretionary termination from Medicare and/or Medicaid programs.
  • CMS will impose more severe escalating enforcement remedies for SFF Program facilities for noncompliance and no effort to improve performance.
  • Increased requirements that nursing homes in the SFF Program must meet to graduate from the SFF Program.
  • For three years after graduation from the SFF Program, CMS will ensure nursing homes consistently maintain compliance with safety requirements by continuing to closely monitor these facilities.
  • CMS is offering more support resources to facilities selected for the SFF Program.

Additionally, the Biden administration released a fact sheet with the steps they are taking to in improve the quality of nursing homes. [iii] Some of the steps mentioned include more resources to support union jobs in nursing home care, establishing minimum staffing requirements, incentivizing quality performance through Medicare and Medicaid funding, and enhanced efforts to prevent fraud and abuse.

  1. https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/…
  2. https://www.cms.gov/files/document/qso-23-01-nh.pdf
  3. https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/21/…

Article By Thomas W. Hess, Kelly A. Leahy, Sydney N. Pahren, and Bryan L. Cockroft of Dinsmore & Shohl LLP

For more health law and managed care legal news, click here to visit the National Law Review.

© 2022 Dinsmore & Shohl LLP. All rights reserved.

Children’s Advertising Rules Apply in the Metaverse Too, CARU Says

CARU, the Children’s Advertising Review Unit of BBB National programs, issued a compliance warning last week reminding industry that the self-regulating body on children’s advertising and privacy intends to enforce its advertising guidelines in the metaverse, just like in the real world.

CARU’s August 23 compliance warning puts companies on notice of what perhaps should have been obvious: its guidelines for advertising to children apply in the metaverse, too. The warning heavily analogizes the metaverse, augmented reality (AR) and virtual reality (VR) worlds to other digital spaces like smartphone apps and online videos. CARU emphasizes the need to:

  • avoid blurring the lines between advertising and non-advertising content;
  • clearly disclose the use of brand-sponsored avatar influencers;
  • avoid manipulative tactics that induce children to view or interact with ads or to make in-game purchases; and
  • use clear, understandable, easily noticeable and prominent disclosures, repeated if necessary to ensure children notice and understand them.

The metaverse is a new area of focus for CARU and BBB National Programs: two recent posts, Know the Rules: How to Be Age Appropriate in the Metaverse and Advertising And Privacy: The Rules Of The Road For The Metaverse, emphasize the need to make sure advertising is truthful, non-deceptive and clearly identifiable as advertising, especially in brand-sponsored worlds. CARU recommends that advertisers and operators anticipate and stay aware of how their child audiences interact with the metaverse experience, including how, when and where ads will be shown to them and how influencers will engage in the space.

Article By Phyllis H. Marcus and Samuel J. Thomas of Hunton Andrews Kurth

For more communications, media, and internet legal news, click here to visit the National Law Review.

Copyright © 2022, Hunton Andrews Kurth LLP. All Rights Reserved.

Do I Have to Sign Over All My Assets when I Enter a Long-Term Care Facility?

I get asked some version of this question fairly frequently. I generally reassure clients that most facilities simply require you to pay month-to-month, and you can leave at any time. Now I may have to change my response, as news broke this week that a New Jersey woman allegedly had all her assets stolen by the very entity she trusted to care for her.

The woman entered a facility for a short-term rehab stay with every intention of returning home. Apparently the facility thought otherwise, as they enlisted a financial company to “assist” the woman in liquidating her assets to pay for her facility care and spend down to apply for Medicaid. I and other elder lawyers, along with several consumer protection agencies in the state, have long warned consumers about nonlawyer Medicaid advisors. These entities work closely with the nursing home industry, often having the same ownership and leadership. In this case, the POA is both an officer with the facility and the principal of the Medicaid advisor company that was hired to make the resident Medicaid eligible without her knowledge.

Some facilities require or coerce residents to hire these Medicaid advisors to prepare Medicaid applications for them. Unfortunately, they are not lawyers, and their allegiance is clearly to the facilities and not the residents or their families. Therefore, they fail to advise residents of opportunities to protect assets or income. Even worse, in many cases they failed to complete or submit the application or did so in a negligent manner, resulting in the application being denied. But unlike when an attorney messes up, there is no recourse for families, as these entities do not carry malpractice insurance. Sometimes the Medicaid advisor will simply close up shop and disappear – only to resurface later with a different organization.

There have been prior reports of facilities and the Medicaid advisors they work with requiring residents to sign POAs and even accessing resident accounts through questionable means. These latest allegations, however, bring this situation to a new level. It is alleged that the resident was forced to sign a POA when she did not have the capacity to do so due to medications she was prescribed. It was further alleged that Future Care Consultants liquidated the resident’s assets without her knowledge, and the funds were not returned when she left the facility. The family also alleges they were prevented from visiting or communicating with the resident.

The allegations are reminiscent of the movie I Care a Lot, which I have previously criticized as being completely unrealistic. However, in recent months, I have had clients report they were threatened by facilities if they used the services of an attorney. It is essential that consumers know their rights. You cannot be required to sign a POA. You cannot be forced to hire anyone to file your Medicaid application. And you cannot be prevented from using an attorney if you wish to do so.

Article By Shana Siegel of Norris McLaughlin P.A.

For more family law legal news, click here to visit the National Law Review.

©2022 Norris McLaughlin P.A., All Rights Reserved

Pediatric Head Injury and Bicycles

There are few more memorable achievements for a child growing up than when they first learn to ride a bike. It’s a great moment. And while as a parent you can be proud of them, it’s natural to feel a little nervous. Especially if you look at injury statistics about children and bicycles. But the good news is that helmets make a big difference—research shows that helmets could have prevented 85% of all bicycle-related mortality.

Helmets Prevent Pediatric Head Injury

According to a study from Injury Epidemiology, younger children are at greater risk of bicycle injury than adults, yet their helmet use is low. Less than half of children age 14 and under usually wear a helmet when riding their bikes.

But if a child is wearing a helmet in an auto crash, it can save their life. In that same study, 226 bicyclists were treated for injuries caused by a moving vehicle. With a median age of 11, the helmeted cyclists were less likely to sustain a head injury than kids who weren’t wearing helmets. And the kids who were injured while wearing helmets were less likely to be diagnosed with a more severe head injury.

Without a doubt, when your child wears a bike helmet, they are less likely to receive head injuries. And if your child’s head does get injured when they’re wearing a helmet, it will likely be less severe.

Helmet Laws in New Jersey, New York, and Pennsylvania

State lawmakers have reacted to these statistics and enforced the use of helmets for children riding bicycles. In the state of New Jersey, children must wear helmets. The New Jersey Motor Vehicles and Traffic Regulation laws, under Title 39:4-10.1, state that “anyone under 17 years of age that rides a bicycle or is a passenger on a bicycle or is towed as a passenger by a bicycle must wear a safety helmet.” So whether your child is a passenger on your bicycle or riding their own, they must be wearing a helmet.

The rules are similar in the state of New York, where any child under the age of 14 must wear a helmet on a bike. Children from ages 1-4 must wear a certified bicycle helmet and sit in a specially designed child safety seat.

While the age is lower for required helmet use in the state of Pennsylvania, it’s still a law. Any child under the age of 12 must wear a helmet while riding their bicycle, riding as a passenger, or in an attached seat or trailer. Pennsylvania strongly recommends that every person wear a helmet, no matter their age.

New Jersey Bike Safety Programs

Starting in 2014, SHAPE America published Bikeology, a curriculum designed for physical education teachers to teach young children bike safety. Anyone can download and use the curriculum to teach their own children or kids in their neighborhood.

The Bikeology program works. It was created by consulting physical and bicycle education specialists, as well as injury prevention experts. The curriculum was put through vigorous testing. Nine teachers and 300 students pilot-tested the curriculum to ensure that it secured bike safety.

Tips to Keep Your Child Safe While Bicycling

The number one way to keep your child safe while bicycling is by wearing a helmet. On top of that, here are some other safety tips from the United States Department of Transportation:

  • Check that your child’s bike fits them properly

  • Before riding, inflate tires fully and test the brakes

  • Put your child in bright, fluorescent colors while riding so they are easily seen

  • Teach your children to ride their bikes with both hands on the handlebars

  • Have children look out for any obstacles in the road, like potholes or broken glass

Article By Domenic B. Sanginiti, Jr. of Stark & Stark

For more personal injury legal news, click here to visit the National Law Review.

COPYRIGHT © 2022, STARK & STARK

Estate Planning Considerations That Apply to Nearly Everyone

This article contains core information about the vital estate planning measures that almost all North Carolinians should have in place. 

Why You Need an Estate Plan

Estate planning is not just for affluent individuals.  While good estate planning can lead to desirable financial outcomes under the right circumstances, estate planning in its most basic form involves implementing the legal steps and directives that are necessary to ensure that your health and your assets are managed properly in the event of incapacity and death.

Everyone should consider:

  • Do you want to make sure that your family has the legal authority to direct and take part in your medical care if you become ill?
  • Do you care whether your assets will pass to your spouse, children, or other beneficiaries after your death?
  • Do you want to avoid a costly and uncertain court proceeding if you, your spouse, or your adult child becomes mentally incapacitated?
  • Do you have minor children or grandchildren, and specific desires about how they would be cared for in the event of your death?
  • Do you care about your finances and affairs becoming part of the public record when you die?

If your answer to any of the these questions is “yes,” then you likely need an estate plan.

Foundational Estate Planning Documentation

The following documents are the foundation of any good estate plan.

  • Last Will and Testament. A simple Will directs the disposition of a person’s assets and names someone to handle final affairs, in the event of death.  In the absence of a Last Will and Testament, the disposition of your assets may be controlled by state law, and the result may be much different from what you intended.
  • Revocable Trust. A revocable trust can help ensure that the management and disposition of your assets is more private and efficient during your lifetime and at death.
  • Durable Power of Attorney. A durable power of attorney typically names a spouse, adult child, or other individual(s) of your choosing to step in and handle your financial and legal affairs when you are unable due to incapacity or absence.
  • Health Care Power of Attorney. A health care power of attorney is a document that nominates a trusted person (usually a family member) to make health care decisions in the event of your incapacity.  Without this document, decisions about your medical treatment may be made by the attending physician or might involve petitioning the court for a guardianship – an expensive and cumbersome process.
  • Living Will. A living will addresses medical decisions and directives related to end-of-life care.
  • HIPAA Authorization. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) protects an adult’s private medical information from being released to third parties without the patient’s consent.  Without a valid HIPAA authorization on file, a doctor or medical provider legally cannot, and frequently will not, discuss the patient’s medical information with family members.

Ownership and Beneficiary Designations

An essential component to planning for death involves reviewing the way that your assets and accounts are structured.  Asset ownership and account-specific beneficiary designations can supersede and undermine even the most carefully-drafted estate planning documentation.  Unfortunately, these aspects are often overlooked, and unintended consequences ensue.  Having the advice of an attorney with significant experience in estate planning and administration is the best way to ensure that your assets and your estate plan will work hand in hand.

Changes in Circumstances

If you already have an estate plan in place, that’s great.  But in the vast majority of cases, an estate plan will need to be updated over the course of a person’s life.  If your estate plan no longer addresses your needs or accurately expresses your wishes, it’s time for an update.

The following are common reasons for updating one’s plan:

  • Children grow up and become able to manage a parent’s healthcare and estate matters.
  • Changes in financial circumstances.
  • Relocation to a new state.
  • Separation, divorce, or remarriage.
  • Changes to applicable law.
  • Birth, death, or marriage of a beneficiary.

Article By Peter B. von Stein of Ward and Smith, P.A.

For more estates and trusts legal news, click here to visit the National Law Review.

© 2022 Ward and Smith, P.A.. All Rights Reserved.

Joint Trusts: A Useful Tool for Some Married Couples

Though not a silver bullet for every situation, in appropriate circumstances, a Joint Revocable Living Trust (“Joint Trust”) can provide a married couple with significant benefits and simplify the administration of assets upon death or incapacity.

The Probate and Estate Administration Process

In order to illustrate the benefits that can be achieved with a Joint Trust, it’s helpful to first understand the typical probate and estate administration process that occurs when a person dies.

When a person dies with a Will, the designated Executor in the Will typically submits the original Will for probate in the Estates Division of the Clerk of Superior Court in the county where the decedent resided at the time of death.  “Probate” is the legal process by which the court validates the submitted document as the legal Will of the decedent.  When offering the Will for probate, the designated Executor typically also files an application with the court to be appointed as Executor of the estate and granted Letters Testamentary, which is the legal document confirming the Executor’s authority to act for the decedent’s estate.

If a person dies without a Will, the decedent’s spouse or nearest relative typically files an application with the court in the county where the decedent resided at the time of death seeking to be appointed as Administrator of the estate and granted Letters of Administration which is the legal document confirming the Administrator’s authority to act for the decedent’s estate.

Once the court appoints an Executor or Administrator of the estate, as the case may be, that person is referred to as the “Personal Representative” of the estate and is charged with several duties and obligations.  Actions required of the Personal Representative include:

  • Taking control of the decedent’s assets;
  • Filing an inventory with the court identifying the value of all of the decedent’s assets to the penny;
  • Publishing a notice to creditors giving them three months to file claims with the estate;
  • Satisfying any creditors’ claims;
  • Distributing all remaining assets to the decedent’s beneficiaries; and,
  • Filing an accounting with the court to report to the penny what occurred with all of the assets.

The court supervises the process at every step along the way and must ultimately approve all actions taken in the course of the estate administration before the Personal Representative will be relieved of their appointment.

Movement Away from Probate

Over the last few decades, a trend has developed in the estate planning community to attempt to structure a person’s affairs so that no assets will pass through a probate estate supervised by the court.  That trend has developed in response to a public perception that the court supervised process is not only unnecessary but also yields additional costs.  For instance, additional fees must be paid to attorneys and other advisors to prepare the inventory, accountings, and other documentation necessary to satisfy a court that the estate was properly administered.  Also, in North Carolina, the court charges a fee of $4 per $1,000 of value that passes through the estate, excluding the value of any real estate.  Currently, there is a cap on this fee in the amount of $6,000, which is reached when the value of the estate assets equals $1,500,000.

Additionally, all reporting made to the court about the administration of an estate is public record, meaning that anyone can access the information.  The public nature of the process is why news organizations often are able to publish articles soon after a celebrity’s death detailing what assets the celebrity-owned and who received them.  Such publicity causes concern for many people because they fear that their heirs will become targets for gold-diggers.  This has further strengthened the trend away from court supervised estate administration.

Several techniques are available to avoid the court supervised estate administration process.  These include:

  • Registering financial accounts as joint with rights of survivorship;
  • Adding beneficiary designations to life insurance or retirement accounts; and,
  • Adding pay-on-death or transfer-on-death designations on financial accounts.

However, because it is rarely possible to utilize those techniques to fully exempt a person’s assets from the court supervised estate administration process, the most commonly used avoidance device is the Revocable Living Trust.

The Revocable Living Trust

A Revocable Living Trust is essentially a substitute for a Will.  To create a Revocable Living Trust, a person typically transfers the person’s assets to himself or herself as trustee and signs a written trust document that contains instructions as to what the trustee is to do with those assets while the person is alive as well as upon death.  The trust document also identifies who should take over as successor trustee when the person is no longer able to serve due to death or incapacity.

During life, the person’s assets in the trust may be used in any way the person, as trustee, directs, and the person may change the instructions in the trust document in a similar manner as one can change a Will.  If the person becomes incapacitated, the successor trustee is instructed to use the trust assets for the person’s care.

At death, the successor trustee wraps up the person’s affairs by utilizing the trust assets to satisfy all of the person’s liabilities and distributes the remaining assets to the beneficiaries identified in the trust document.  No court supervises the process, so no court fees are incurred.  Moreover, advisors’ fees related to preparing court filings are avoided.  Also, the administration of the trust is a private matter with nothing becoming public record.  This process often results in a much better outcome for the person’s beneficiaries as compared to having the assets pass through the court supervised estate administration process.

The Joint Trust

Typically, when a married couple utilizes a Revocable Living Trust-based estate plan, each spouse creates and funds his or her own separate Revocable Living Trust.  This results in two trusts.  However, in the right circumstances, a married couple may be better served by creating a single Joint Trust.

A Joint Trust tends to work best when a couple has the following characteristics:

  • The couple has a long, stable relationship;
  • Divorce is not a concern for either spouse;
  • The couple is willing to identify all assets as being owned one-half by each of them;
  • No creditors’ claims exist, whether current or contingent, for which the creditor could seek to collect from only one spouse and not the other;
  • Neither spouse has children from a prior relationship;
  • Each spouse is comfortable with the surviving spouse having full control over all of the assets after the death of one of the spouses; and,
  • The value of the couple’s assets is less than the federal estate tax exemption amount.  For deaths occurring in 2022, this amount is $12.06 million (or $24.12 million per couple) reduced by any taxable gifts made during life.

A couple who meets these criteria could establish a Joint Trust by transferring their assets to themselves as co-trustees and signing a trust document to provide instructions as to what the co-trustees are to do with the assets.  Typically, while both spouses are alive and competent, they retain full control over the trust assets and can change the trust document at any time.  If one of the spouses becomes incapacitated, the other spouse continues to control the trust and can use the trust assets for the couple’s care.

After the death of one of the spouses, the Joint Trust will continue.  The surviving spouse would continue serving as trustee and have full control over the trust assets.  No transfers of assets are required at the first death because all assets are already in the Joint Trust.

Upon the death of the surviving spouse, the designated successor trustee wraps up the surviving spouse’s affairs by utilizing the Joint Trust assets to satisfy any liabilities and distributes the remaining assets as directed in the trust document.

The following are some of the benefits afforded by a Joint Trust:

  • Throughout this entire process, there is no court involvement.  This minimizes costs and promotes privacy.
  • The couple no longer has to worry about whether a particular asset is owned by one of the spouses or by one of the spouses’ separate Revocable Living Trusts.  All assets are simply owned by the Joint Trust.
  • Since only one trust is ever created, no transfers need to be made after the death of the first spouse to die.  This simplification in the administration process minimizes advisors’ fees and other costs and is a key advantage of using a Joint Trust.

A Joint Trust can possibly yield even more benefits in certain situations.  For instance, it may be possible to characterize some or all of the assets in a Joint Trust as community property.  The benefit of having assets characterized as community property is that such property will receive a full basis adjustment for income tax purposes (commonly referred to as a “step-up” in basis) at the death of the first spouse to die as opposed to only one-half of the property receiving such a basis step-up.

Additionally, it may be possible to include asset protection features in the Joint Trust so that any real property owned by the trust would be afforded the same protection as real property owned by a married couple as tenants by the entireties.  Such protection prevents a creditor of just one spouse from enforcing the liability against the real property owned by the couple.  Though the details of these benefits are beyond the scope of this article, they demonstrate that a Joint Trust potentially can provide additional advantages beyond those listed above.

Conclusion

In the right circumstances, utilizing an estate plan that involves a Joint Trust can simplify a married couple’s affairs and, as a result, make the administration process easier after death and ultimately lower costs.  Any couple interested in a Joint Trust should contact competent counsel to assist them in evaluating whether the technique is appropriate for them.

Article By Zachary F. Lamb of Ward and Smith, P.A.

For more family, estates and trusts legal news, click here to visit the National Law Review.

© 2022 Ward and Smith, P.A.. All Rights Reserved.

5 Questions You Should Be Asking About Succession Planning for Your Family Office

Succession planning for family offices is often a difficult process. It is emotional. It takes longer than it should. But succession planning that is deliberate, collaborative, and strategic can offer so much opportunity.

Katten recently hosted a conversation with Jane Flanagan, Director of Family Office Consulting at Northern Trust, who discussed a survey conducted with former family office CEOs to capture their experience with succession and succession planning. The results were illuminating, and the survey participants spoke loud and clear about two major points: 1.) they wished they had begun the process sooner, and 2.) they wished they’d known what questions to ask along the way.

We’ve pulled together a series of basic questions about succession planning to help you consider your own approach.

Why should I create a succession plan?

Like it or not, a succession will take place eventually. The last thing you or your family office want is the chaos, acrimony, and setbacks an unexpected succession can cause.

Putting a plan in place can give your current leadership peace of mind, ensure buy-in and collaboration throughout the family, and prepare potential internal successors or identify key attributes for external candidates.

When should I start?

Now! It’s never too early to begin planning, and there are some easy steps you can take right away to set you on the right path.

If you aren’t sure where to begin or what a planning process looks like, you’re in good company. According to Northern Trust’s recent survey, 64 percent of family office CEOs expect a succession event in the next three to five years.

What is included in a succession planning process?

The planning process will differ from family to family, but Northern Trust created a checklist to help you think through your own approach.

Taking on the entire process at once can be daunting. To build momentum (and buy-in), consider starting small by documenting the responsibilities of the current leadership.

Once you have a good sense of the current role’s responsibilities, think about the knowledge and relationships critical to the role’s success.

These should be top considerations throughout the succession planning process.

Where should I begin?

First, consider putting an emergency succession plan in place as soon as possible while you develop a long-term succession plan.

You want to give this process the time, attention, and consideration it deserves. An emergency plan will help immensely if an unexpected succession is needed, so focus first on getting that in place before you set out on a long-term planning process.

How do I find the right successor?

This is why the planning process is so important. These decisions can have a big impact, so you want to have a plan in place well before you need it.

Consider what works and what could be improved about the current role. Are there creative approaches or changes to consider? (Such as shifting to a CIO/CEO hybrid role, refocusing the role’s priorities, or even expanding into a multi-family office.)

Northern Trust’s survey participants were evenly split on their choices to hire an external successor or grow a successor from within. There are pros and cons to each approach, but so many of the factors to consider will be specific to your situation.

Article By Adam M. Damerow, Abby Feinman, and Saul E. Rudo of Katten

For more family law legal news, click here to visit the National Law Review.

©2022 Katten Muchin Rosenman LLP

CMS Removes All Nursing Home Visitation Restrictions as COVID-19 Cases Decrease

In order to continue addressing the impacts of COVID-19 on nursing home residents, the Centers for Medicare & Medicaid Services (CMS) recently issued a memo updating guidance for nursing home visitation. You can read the full memo here.

Early in the pandemic, CMS implemented visitation restrictions to mitigate the risk of visitors introducing COVID-19 to nursing homes. Now, CMS is updating its guidance and allowing visitation for residents at all times. CMS explained its decision to allow visitation is based upon data which shows approximately 86% of residents and 74% of staff are fully vaccinated, and the number of new COVID-19 cases each week in nursing homes has dramatically decreased.

Under the new guidance, nursing homes cannot limit the frequency and length of visits for residents, the number of visitors, or require advance scheduling of visits as mandated under the previous guidance. However, CMS is still directing nursing homes to follow infection-control policies and procedures. Visitors who have tested positive for COVID-19, have symptoms of COVID-19, or currently meet the criteria for quarantine, should not enter the facility. Nursing homes should still screen all visitors before entry.

Although not required, CMS is encouraging nursing homes in counties with substantial or high levels of community transmission to offer testing to visitors, if feasible. Nursing homes should also educate and encourage visitors to become vaccinated. Visitors should still wear face coverings and social distance at all times while in the nursing home. Nursing homes should stay diligent in their infection-control efforts.

Article By Sydney N. Pahren and Timothy Cahill of Dinsmore & Shohl LLP

© 2021 Dinsmore & Shohl LLP. All rights reserved.

Does It Matter if a Trust Is Revocable or Irrevocable? Yes, It Matters a Lot!

A recent decision issued by the Supreme Court of Alabama highlights the importance, for both creators and beneficiaries of trusts, of understanding whether a trust is Revocable or Irrevocable, and the consequences that flow from that distinction.

Revocable and Irrevocable Trusts

Any trust has three players: a Settlor, a Trustee, and a Beneficiary. The Settlor creates (or “settles”) the trust, and the Trustee manages the trust assets based on written instructions from the Settlor (typically in the form of a Trust Agreement) for the benefit of a Beneficiary. A trust can be created during the Settlor’s lifetime (a “Living Trust”), in which case the trust can be either revocable or irrevocable, or upon the Settlor’s death, usually under the provisions of a Will (a “Testamentary Trust”) which, because the Settlor is deceased, is always irrevocable.

An Irrevocable Trust generally cannot be revoked or modified, exactly as the name implies. However, in some states (including New Jersey and Alabama), either the Trustee or a Beneficiary (not the Settlor) of an Irrevocable Trust may bring an action in court to modify or terminate the trust, or an Irrevocable Trust can be modified or terminated upon consent of the Trustee and all Beneficiaries if the modification or termination is not inconsistent with a material purpose of the trust.

The Alabama Case

The Alabama case referenced above involved a Husband and Wife who in 2012 engaged in a common estate planning technique known as non-reciprocal SLATs, or Spousal Lifetime Access Trusts. Essentially, the Husband created a trust for the benefit of the Wife during her lifetime, and upon her death, the trust assets would pass to their three children; and the Wife created a trust for the benefit of the Husband during his lifetime, and upon his death, the trust assets would pass to the children.

The trusts were designed to utilize the couple’s Federal Estate Tax Exemptions before those Exemptions were to be substantially reduced beginning in 2013 (which, as it turns out, did not happen), while retaining access to the underlying trust assets through their interests as beneficiaries. However, the Wife died in 2017. Accordingly, the assets of the trust that the Husband created for her passed to the children, thereby ending his access to the assets of that trust.

The Husband brought an action in court to have the trust rescinded (in other words, revoked) and the assets returned to him, claiming that he did not understand that the trust assets would pass to his children if his Wife predeceased him. The court, relying on the testimony of his attorney, who stated that the trust worked exactly as designed and explained to his clients, held in favor of the children.

It Matters a Lot

The takeaway for Settlors of an Irrevocable Trust is that irrevocable means irrevocable; they cannot get back whatever money or property they transfer to the trust. The lesson for beneficiaries of those trusts is the same: if the Settlor has a change of heart after the trust is formed and funded, irrevocable means irrevocable.

This article was written by James J. Costello Jr.

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