What’s the Latest on the Zappos’ Founder’s Estate?

Judge Gloria Sturman granted the ex parte motion filed by the attorney representing Zappos’ Founder Tony’s Hsieh’s father Richard Hsieh and brother Andrew Hsieh to serve as co-special administrators and legal representatives for the estate of Hsieh, who seems to have died intestate (dying without a will).

Court filings show that the Zappos’ founder’s family wasn’t aware of a will or other estate planning documents to direct how to handle his financial assets after his death. Because he died without a will, no one can be absolutely sure what he intended.

KTNV’s recent article entitled “Judge awards Tony Hsieh’s father, brother administrative duties over massive wealth, estate,” reports that Tony Hsieh’s wealth could be as much as $1 billion with a variety of assets including real estate and other business dealings. As a result, figuring out Hsieh’s finances will be a time-consuming and complicated process.

The Hsieh family released a statement, part of which says that the hope to “carry on Tony’s legacy by spreading the tenets he lived by – finding joy through meaningful life experience, inspiring and helping others, and most of all, delivering happiness.”

Hsieh was described by some as eccentric, unconventional and wasn’t known for fitting into normal business customs. He lived in a 250 square-foot travel trailer in downtown Las Vegas and had a pet alpaca named Marley and pet chickens. The billionaire internet mogul, during a 2015 interview, remarked that he owned just four pairs of shoes—despite running a company that sold millions of pairs.

In August, Hsieh abruptly left Zappos, the company he oversaw for more than 20 years. Reports say he bought millions in real estate in Park City, Utah around that time, which was seen as peculiar, even for Hsieh, who said he believed more in “experiences” than owning physical items or property.

There were signs of substance abuse.

The fire that caused his death is under investigation in New London, CT. Fire authorities there say they were called to a home at 3:30 a.m. on November 18. Initial reports were that a person was barricaded inside a shed on the property. Dispatch audio says that Hsieh was locked inside, and firefighters found him unconscious.

Reference: KTNV (Dec. 3, 2020) “Judge awards Tony Hsieh’s father, brother administrative duties over massive wealth, estate”

 

How will President-Elect Biden Help Seniors with COVID-19?

Before you object, take note. This is not a political “post”.  Whenever there’s a change of Administration, it makes sense to look to the winning candidate’s platform and policy aspirations to predict how new leadership may impact things we care about. And I care about care for seniors. Home Healthcare News’s recent article entitled “‘Our Work Begins with Getting COVID Under Control’: What a Biden Administration Means for Home-Based Care” says that long-term care and protecting America’s senior population will need to be at the very center of President-Elect Biden’s response.

“Our work begins with getting COVID under control,” Biden said during his victory speech. “We cannot repair the economy, restore our vitality or relish life’s most precious moments — hugging a grandchild, birthdays, weddings, graduations, all the moments that matter most to us — until we get this virus under control.”

As the U.S. nears the mark of 18 million total coronavirus cases, the Biden administration’s response to the ongoing pandemic will need to be wide-ranging and thorough, impacting everything from vaccine development and distribution, to additional rounds of relief for health care providers.

“I will spare no effort — or commitment — to turn this pandemic around,” Biden continued.

The 78-year-old Biden has commented that he has a deep appreciation of home-based care. In July, he outlined a $775 billion plan to overhaul the nation’s caregiving infrastructure, which primarily consists of women and people of color. Biden said he wants to create upwards of three million new caregiving and education jobs over the 10 years and provide pathways for former caregivers to re-enter the workforce. That plan also called for a $450 million increase in funding for senior care. Some of those funds would be earmarked to improve wages and labor conditions for in-home care workers.

“Home health workers do God’s work, but aren’t paid much,” the then presidential candidate said on social media. “They have few benefits, and 40% are still on SNAP or Medicaid. It’s unacceptable. I’ll give caregivers and early childhood educators a much-needed raise.”

Biden has repeatedly brought attention to very specific, innovative programs that typically only industry insiders know about. This includes making specific references to CAPABLE, the program from the Johns Hopkins School of Nursing aimed at supporting aging in place, by coordinating nursing, therapy and handyman services in the home.

Biden and his Administration will likely try to get more resources for home-based care providers and other long-term care operators. In its official policy plan for nursing home regulations, for instance, the Biden team stated it would invoke the Defense Production Act to increase the overall supply of PPE. Right now, “protecting older Americans” is one of the main priorities featured on the Biden-Harris Transition website, which hasn’t been overlooked by those in aging services.

“Dealing with the coronavirus pandemic is one of the most important battles our administration will face, and I will be informed by science and by experts,” President-Elect Biden said recently.

Regardless of how you voted, I hope you’ll join me in wishing the new team success in that fight.

Reference: Home Healthcare News (Nov. 9, 2020) “‘Our Work Begins with Getting COVID Under Control’: What a Biden Administration Means for Home-Based Care”

estate planning

Scottish Actor Sean Connery May Have Had Dementia

The famous screen actor, Sean Connery, who was famous for portraying the original on-screen James Bond, passed away recently at his home in the Bahamas.

Yahoo News’s recent article entitled “Sean Connery widow reveals he had suffered from dementia” reported that Connery died peacefully in his sleep surrounded by family members, according to his widow Micheline Roquebrune.

“I was with him all the time and he just slipped away,” the 91-year-old told the London Daily Mail.

“He had dementia and it took its toll on him. He got his final wish to slip away without any fuss. It was no life for him. He was not able to express himself lately.”

Connery will be remembered at a private funeral ceremony, with a memorial event to be held later, according to a publicist. He was knighted in 2000 and won many awards during his decades-spanning career, including an Oscar, three Golden Globes and two Bafta awards.

However, it was his smooth, Scottish-accented portrayal of the suave licensed-to-kill spy 007 that earned him lasting worldwide fame and adoration. He was the first actor to say the unforgettable “Bond, James Bond.”

He made six official films as novelist Ian Fleming’s spy, giving what many still consider to be the definitive portrayal.

Former 007 actor Pierce Brosnan joined the flood of weekend tributes to the Scottish actor, who he said, “led the way for us all who followed in your iconic footsteps.”

“You were my greatest James Bond as a boy, and as a man who became James Bond himself, you cast a long shadow of cinematic splendor that will live on forever,” Brosnan added.

Connery was born in Edinburgh in 1930. He married French artist Roquebrune in 1974 after they met in Morocco in 1970.

They lived outside his native Britain for decades, previously owning a home in the Spanish resort of Marbella and then in the Bahamas.

“He was gorgeous, and we had a wonderful life together,” the Tunisian-born widow said. “He was a model of a man. It is going to be very hard without him. I know that. But it could not last forever and he went peacefully.”

Dementia can happen to anyone. For information on how families deal its onset and paying for care, visit www.nancelawfirm.net and our past blogs. Or call for a time to call and review matters.

Reference: Yahoo News (Nov. 1, 2020) “Sean Connery widow reveals he had suffered from dementia”

 

exemptions

Making the Most of Exemptions and Flexibility in Gifting

The time period available to take advantage of the high transfer tax exemption has driven many to make or give more serious thought to making large gifts, while the estate tax exemptions are certain. However, not everyone is ready or able to give away large amounts of wealth, in case they may be needed in the future. For those who are concerned about needing these assets vs. making gifts, there are some strategies that can build flexibility into gift planning, reports the article “Five Ways to Build Flexibility Into Your Gift Planning” from Financial Advisor Magazine.

Depending on the outcome of two runoff elections for the U.S. Senate in Georgia in early 2021, there may or may not be large changes in the gift and estate tax laws in store, but now, before any changes, may be a good time for people with larger estates to make significant gifts.

Spousal Lifetime Access Trust, or SLAT, is one gifting option for married couplies. This is a type of irrevocable trust that includes the grantor’s spouse as one of the beneficiaries. The couple can enjoy the gift tax exemption, because the trust is funded while one spouse is living, but they can also have access to the trust’s assets because the grantor’s spouse may receive both income and principal distributions. A few things to keep in mind when discussing this with your estate planning attorney:

  • If both spouses want to create a SLAT, be careful not to make the trusts identical to one another. If they are created at the same time, funded with the same amount of assets and contain the same terms, it is possible they will not withstand scrutiny.
  • The term “spouse” has some flexibility. The spouse could be the current spouse, the current spouse and a future spouse, or a future spouse for someone who is not yet married.

Special Power of Appointment is a power granted to a person to direct trust assets to a specified person or class of people (other than the power holder, the estate of the power holder or the creditors of either one). The power holder may direct distributions to one or more people, change the beneficiaries of the trust and/or change the terms of the trust, as long as the changes are consistent with the power of appointment. Note the following:

  • The permissible appointees of a power of appointment can be broad or narrow, and the grantor may even be a permissible appointee for outright distributions.
  • If the grantor is a permissible appointee, special care must be taken when naming the power holder(s) to avoid any challenge that the trust was always intended for the grantor. The trust may need to have multiple power holders, or a third party, to agree to any distributions.

A Trust Protector is a person who has powers over the trust but is not a trustee. This is an increasingly popular option, as the trust protector has the ability to address issues and solve problems that were not anticipated when the trust was created. The Trust Protector may often remove or replace trustees, make changes to beneficiaries, divide the trust, change administrative provisions, or change trust situs.

A Disclaimer is used when a gift recipient renounces part or all of a gift transferred to them. When a gift is made to a trust, the trust instrument is used to specify how the assets are to pass, in the event of a disclaimer. If the grantor makes a gift to the trust but is then concerned that the gift is unnecessary or the grantor might need the assets back, the trust can provide that the assets revert to the grantor in the event of the disclaimer.

Planning with Promissory Notes is another way to include flexibility in the timing, implementation and amount of gift planning. An asset is sold by the grantor to a grantor trust in exchange for a promissory note. There are no income tax consequences, as the sale is to a grantor trust. If the sale is for full market value, there is no gift. The grantor gets to decide when, and if, to make a gift with the promissory note.

Speak with your estate planning attorney to determine which, if any, of these strategies is the right fit for you and your family, and to learn more about flexible solutions to making large gifts. While it is impossible to know exactly when and how the federal exemptions will change, there are many different tools that can be used while waiting for any changes.

Reference: Financial Advisor Magazine (Sep. 10, 2020) “Five Ways to Build Flexibility Into Your Gift Planning”

 

Estate hassles start here

Prince’s Estate Hits the IRS with a Multi-Million Dollar Lawsuit

Filing probate documents was just the beginning of a process that still hasn’t ended the bad news from Prince’s estate. The megastar did not have a spouse or children, but Prince had half-brothers and half-sisters, says a recent article from Forbes titled “Prince’s Estate Sues IRS Over Claimed $135 Million Tax Value.” There were a number of claims against the estate, and claims by Prince’s estate as well, including a wrongful death action that was eventually dismissed. For Prince or anyone else who dies without a will, probate can be lengthy and expensive. Things also get complicated quickly, especially with an estate of this size.

One of Prince’s half-sisters, Tyka Nelson, sold a portion of her share of the estate to Primary Wave, a music publisher. So did another sibling. And then the tax troubles began. Cash poor or not, larger estates must pay a federal estate tax of 40%. A federal estate tax return needs to be filed, and while audits are rare, almost every estate of this magnitude is audited by the IRS. The estate reported a taxable value of $82 million, but the IRS isn’t satisfied.

Estate tax fights with the IRS can go on for a long time. Michael Jackson’s estate battle with the IRS is still going on—and he died in 2009.

Papers filed by Prince’s estate in the U.S. Tax Court show that the estate reported a taxable value of $82 million, but the IRS claims that the value is really $163 million and wants an additional $38.7 million. In every case, Prince’s estate has obtained appraisals to support its reported values, but the IRS has its own appraisers who disagree.

Even if Prince had a will, there still could have been problems. Heath Ledger had a will, but it was five years old when he died and there was no provision made for his daughter. James Gandolfini had a will, but his estate gave the IRS $30 million of his $70 million. These stories make estate planning attorneys cringe. Seymour Hoffman, Heath Ledger, and James Gandolfini’s estates all ended up with wills in probate, which is public, expensive, time-consuming and unnecessary. A will does have to go through the court process, but the use of a revocable trust could have disposed of their assets outside of probate. A simple pour-over will would have given everything to the revocable trust, simply, and privately in terms of the ultimate inheritance disposition.

Estate planning attorneys advise clients to update wills and trusts every time there is a birth, marriage, divorce, etc. It is good advice for both celebrities and regular people. Probate is complicated.

You can give an unlimited amount to your U.S. Citizen spouse during life or on death. Prince’s estate may face a 40% estate tax, but if he had been married and left his estate to his spouse, there would not have been any federal estate tax until the death of the spouse.

A lesson for the rest of us: have an estate plan, including a will and make sure that it includes tax planning.

Reference: Forbes (Oct. 7, 2020) “Prince’s Estate Sues IRS Over Claimed $135 Million Tax Value”

Social Security Cost-of-Living Adjustment

How Big Is the Social Security Cost-of-Living Adjustment?

“The 1.3 percent cost-of-living adjustment will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. Increased payments to more than 8 million [Supplemental Security Income] beneficiaries will begin on December 31, 2020,” the Social Security Administration said in a news release. That’s a smaller increase for retirees once again.

As The Federal Times reports in its article, “Retiree cost of living adjustments sink for the second year in a row,” the Bureau of Labor Statistics calculates the cost-of-living adjustment — known as the COLA — each year based on the consumer price index for workers. It looks at the changing prices of common goods to which the average worker would be exposed.

However, the National Active and Retired Federal Employees Association has for many years had an issue with that type of calculation. That’s because it fails to take into account the differences in costs experienced by the elderly, who receive Social Security benefits, rather than the standard worker.

“This insufficient COLA fails to keep up with inflation experienced by seniors, further eroding their purchasing power. The cost of health care continues to rise faster than other goods. Seniors spend more on health care than any other segment of the population — just as the nation struggles to contain a virus that poses particular danger to older Americans. And federal retirees will almost certainly be further burdened by significantly higher Federal Employees Health Benefits program premiums, which have yet to be announced for 2021,” NARFE National President Ken Thomas said in a statement.

“This didn’t need to happen. For years, NARFE has urged Congress to address the inequity of COLAs that don’t keep up with rising health care costs by passing legislation requiring the BLS to calculate COLAs based on the consumer price index for the elderly instead of the consumer price index for workers.”

COLA adjustments have varied widely each year. For example, in 2015, there was no increase, and in 1980, the bump was 14.3%!

In the past 20 years, COLA increases have only twice been more than 4%. The good news is that military veterans will also see an increase to some of their benefits based on the COLA increase.

In September, Congress okayed plans to link a COLA in veterans benefits with the annual Social Security increase. Under current law, Congress must approve the veteran’s benefits increase each year, but Social Security beneficiaries get the boost automatically.

The benefits for vets include disability compensation, compensation for dependents, clothing allowances and dependency and indemnity compensation checks.

Those receiving Social Security benefits should be notified of their new benefit amount beginning in early December. Most recipients should also be able to see the notice in their online Social Security accounts.

Reference: The Federal Times  (Oct. 13, 2020) “Retiree cost of living adjustments sink for the second year in a row”

Suggested Key Terms: Social Security, Retirement Planning, VA Benefits, Veterans, Military, Legislation

Moving extends your life.

Little Things Add Years to Your Life

Get moving, says a 20-year study conducted with nearly 15,000 residents of the United Kingdom age 40 to 79. The study found that lifestyle changes could add years to your life.

And you are probably not surprised. We’ve seen the connection with lifestyle and reduced risk of Alzheimer’s before.

This new research was conducted by the MRC Epidemiology Unit at the University of Cambridge, and the results were published in The British Medical Journal.

Considerable’s recent article entitled “This small lifestyle change can add years to your life” explains that the subjects who kept or increased to a medium level of activity were 28% less likely to die than those who stayed at a low level of activity.

The researchers split the sample into three groups who engaged in low, medium, and high levels of activity. They monitored changes to their activity for about eight years. Then they looked at the health effects over the next 12½ years.

The researchers found that those who stayed or increased their level of activity from low to medium were 28% less likely to die during that second phase than those who kept a low level of activity.

Moreover, those subjects who’d been moderately active but raised their activity level achieved a significant 42% increase in survival, compared to the low-activity subjects.

This impact was present even for those respondents who ate an unhealthy diet or had experienced a health condition, like high blood pressure, high cholesterol, or obesity.

So, the big question is just how much activity is required?

The study defined the activity levels according to the following guidelines:

  • Low: Less than the guideline of 150 minutes per week of moderate intensity activity
  • Medium: achieving the guideline of 150 minutes of moderate-intensity activity per week; and
  • High: The guideline of 300 minutes of moderate-intensity weekly activity.

The high level also allowed for an equivalent, like 75 weekly minutes of high-intensity activity, or 60 minutes of high-intensity activity and 30 minutes of medium-intensity activity per week.

The researchers think that their study will motivate more people to take it up a notch, regardless of their age.

“These results are encouraging, not least for middle aged and older adults with existing cardiovascular disease and cancer, who can still gain substantial longevity benefits by becoming more active, lending further support to the broad public health benefits of physical activity,” the authors commented.

Reference: Considerable (Sep. 22, 2020) “This small lifestyle change can add years to your life”

 

Medicare Advantage Premiums

Are Medicare Advantage Premiums Going Down?

You’ve heard the cable TV ads this month. And as the celebrity spokespersons tell it, there’s a Medicare Advantage plan out there that will practically make your coffee in the morning. Maybe not, but change is coming and a lot of it sounds good this time. Choices are going up and premiums are coming down. “The Medicare Advantage average monthly premium will be the lowest in 14 years (since 2007) for the over 26 million Medicare beneficiaries projected to enroll in a Medicare Advantage plan for 2021,” The Centers for Medicare & Medicaid Services (“CMS”) said in a press release.

Health Payer Intelligence’s recent article entitled “Big Premium Drop, More Medicare Advantage Benefits Slated for 2021” explains that the high enrollment projections would represent a 44% enrollment increase since 2017. This includes a newly eligible population of end stage renal disease patients, which some say will up the costs for health plans. However, other patient populations and Medicare Advantage beneficiaries as a whole will have access to a wider range of benefits in 2020 and save money. There are numerous potential implications for elder law and estate planning.

Beneficiaries with diabetes are now able to select from more than 1,600 Medicare Advantage and Part D prescription drug plans—they all will have insulin for a copay of $35 per month in 2021. That’s because of the Part D Savings Model that CMS announced in March 2020, primarily in response to the coronavirus pandemic. Additional plans have joined this model, which has a fixed insulin copay rate for the coverage gap phase of Medicare coverage. CMS said that more than 1,750 Medicare Advantage and Medicare Part D plans would participate in the model.

In addition, roughly 500 Medicare Advantage plans will offer lower copayments or supplemental benefits to enrollees with specific chronic diseases and other conditions. About 900 plans will offer benefits that aren’t primarily health benefits (such as meal delivery) to help enrollees manage their chronic diseases.

Enrollees will also have added access to supplemental benefits. Approximately 730 plans are offering their three million enrollees benefits like in-home support, therapeutic massage and adult day health services. Just over 50 Medicare Advantage plans are also offering palliative care and integrated hospice care. A total of 94% of Medicare Advantage plans will provide extra telehealth benefits, a 36% increase from 2020.

The good news is that Medicare Advantage beneficiaries will pay less for these benefits this year than they have in the past. The average Medicare Advantage premium should go down about 11% to $21 in 2021. The decreases vary by states, and some will see up to a 50% decrease from their 2017 premiums.

In fact, premiums have been dropping since 2017, so beneficiaries have saved around $1.5 billion in premiums, CMS estimated. The number of Medicare Advantage plans is also going up. There will be 76.6% more Medicare Advantage plans available in 2021 than in 2017 (2,100 more health plans). The average number of plans per county will rise 78.5% since 2017 and from 39 plans in 2020 to 47 plans per county in the new year.

Medicare open enrollment began on Oct. 15, 2020 and ends Dec. 7, 2020.

Reference: Health Payer Intelligence (Sep. 29, 2020) “Big Premium Drop, More Medicare Advantage Benefits Slated for 2021”

 

COVID worries older Americans

New Survey Conducted on Keeping the Elderly Safe in the Pandemic

Older Americans are more distrustful of senior living and care operators than younger generations, according to a new survey. They just don’t believe institutionalized settings will keep them safe from COVID-19.  And who can blame them?  Richmond nursing homes and senior living facilities have all battled the virus.

Nearly half (49.5%) of baby boomers said they don’t trust senior living and care providers to keep residents safe, while 43.9% of the Silent Generation reported the same distrust.

Younger people are more trusting: 42.3% of Generation X reported distrust, 31.8% of millennials and 38.2% of Generation Z.

McKnight Senior Living’s recent article entitled “41% don’t trust assisted living, nursing homes to keep residents safe during pandemic: survey” notes that 43.1% of baby boomers responded that they trust facilities “somewhat,” as did 51.4% of the Silent Generation respondents.

Some of this mistrust may come from the extensive media coverage of coronavirus deaths in nursing homes because senior residents are especially vulnerable to the illness. We’ve certainly seen our share in Virginia homes.

Some say that it goes further than that: the quarantine and social distancing has added to families’ stress and anxiety over the safety and mental well-being of seniors who live in these facilities because they aren’t able to visit as often as they want.

An online survey from ValuePenguin.com and LendingTree of more than 1,100 Americans recently found that COVID-19 has generated a rush of loneliness and worry among older adults.

According to the results, 36% of older adults feel lonelier than ever. In addition, more than 70% of seniors said that they have worries about the virus’ effects on their younger relatives. Those concerns were equally expressed by younger generations for their older relatives. Almost 50% of both age groups are worried that their relatives will catch the virus.

However, the pandemic looks to have a silver lining for family communications. An overriding sense of concern for the mental and physical health of elderly loved ones has led to more contact since the pandemic began.

Nearly 44% of the younger survey-takers stated they’ve spoken to their older relatives more frequently during the pandemic, about 25% of young people reported visiting their older relatives in person more frequently.

The top request from respondents aged 75 and older to their loved ones, is to call more frequently.

Reference: McKnight Senior Living (Sep. 11, 2020) “41% don’t trust assisted living, nursing homes to keep residents safe during pandemic: survey”

 

keeping elderly save

C19 UPDATE: Keeping Ourselves and Our Elderly Loved Ones Safer

We have all been warned that our elderly loved ones are at heightened risk during the coronavirus pandemic. Not only are they weaker, but they may live in concentrated senior communities and have underlying health concerns. If you are a caregiver for someone in this high-risk population, here are some tips from Dr. Alicia Arbaje, who specializes in internal medicine and geriatrics at Johns Hopkins.

  1. Keep Yourself Well
    Be sure to follow all the guidelines and precautions about social distancing, hand washing, and cleaning to keep yourself well.
  2. Limit In-Person Visits
    It may be emotionally challenging but keeping in-person visits to a minimum is the best way to reduce the risk of infection. When you can’t be there in-person, use technology to stay in touch. Teach your older loved ones how to use video chat applications. Remember to add captions to your videos if they are hearing-impaired. Also, encourage others to telephone or send cards or notes as well.
  3. Be Creative About Home-Based Projects
    Now may be a great time to encourage your loved ones to record their personal stories, organize family photos or reconnect with old friends online.
  4. Decide on a Plan
    Discuss now your emergency response plan. Who will be the emergency contact? Do you know where the estate planning documents are and can you quickly access them, especially health care directives?

If you or your loved one do not have an updated will or trust and health care documents, please reach out to our office. We can help get planning in place quickly and easily and are even offering virtual meetings now to keep everyone safe.

What if your elder loved one starts to develop symptoms?

If you or your loved one learn that you might have been exposed to someone diagnosed with COVID-19 or if anyone in your household develops symptoms such as cough, fever or shortness of breath, call your family doctor, nurse helpline or urgent care facility. For a medical emergency such as severe shortness of breath or high fever, call 911.

Resource: Johns Hopkins Medicine, Coronavirus and COVID-19: Caregiving for the Elderly, https://www.hopkinsmedicine.org/health/conditions-and-diseases/coronavirus/coronavirus-caregiving-for-the-elderly

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