Bielski Law Office, Ltd.

Father Wants Apple to Unlock Son's iPhone

Law enforcement agents in the U.S. are not the only people who would like Apple to create a way to bypass the iPhone's security features.

The dispute between the FBI and Apple over the iPhone of the San Bernardino shooter appears to have been resolved. The FBI wanted Apple to create a way to bypass the security on the shooter's device so that the agency could try to determine if any information about the shooting or future terrorist acts was stored on the phone. Apple refused citing customer privacy. However, before a judge could decide the dispute, the FBI created its own way to bypass the iPhone's security and access the information on the device. As ABC 17 News reports in "Grieving father pleads with Apple to unlock his dead son's iPhone" that does not solve the problem that Apple's policy creates for everyone.

An Italian man, Leonardo Fabbretti, has been trying to get Apple to unlock his son Dama's iPhone for months. Dama passed away in 2015 from bone cancer. Fabbretti was able to unlock the phone by using his fingerprint. However, after the phone did a complete restart that option was no longer available. To access the information on the device a password is now needed and Fabbretti does not have it. Because of this he is unable to view the photographs of his son stored on the phone.

This is another in a long list of examples of how the policies of tech companies have an impact on estate law and grieving families. Allowing families to access digital information after a loved one passes away will continue to be an important legal battle for the foreseeable future.

Reference: ABC 17 News (April 1, 2016) "Grieving father pleads with Apple to unlock his dead son's iPhone"

Upcoming Changes to Gun Trusts

Gun trusts are a great way to keep firearms in a family. They have offered a cheaper and easier way to pass certain firearms between generations. However, new rules will make them somewhat less beneficial.

Certain firearms, such as machine guns and silencers, can be very difficult to transfer. A person-to-person transfer requires notice to the federal Bureau of Alcohol, Tobacco, Firearms and Explosives. Local law enforcement has to sign off on the transfer and a $200 transfer fee must be paid. Fingerprints and background checks must also be obtained. Gun trusts have offered a way around many of those burdens and allowed families to pass on their firearms without having to cut through too much red tape. However, as Private Wealth reports in "It Will Soon Get Tougher To Create A Firearms Trust" that is about to change.

As of July 13, 2016, new rules will be in place that will make transferring firearms into a gun trust more difficult. Every "responsible person" in the trust will need to go through fingerprinting and background checks. This includes the trust grantor, trustee and some beneficiaries. Notice will also need to be given to local law enforcement, however they will not need to sign off on the transfer.

Fortunately, gun trust applications received prior to July 13, 2016 will be grandfather into the existing rules. That means that if you are considering a trust as a way to pass on your firearms, now is the time to discuss it with a wills and trusts attorney.

Reference: Private Wealth (March 30, 2016) "It Will Soon Get Tougher To Create A Firearms Trust"

When to Start Social Security

One of the toughest decisions that seniors face is when they should start taking Social Security benefits. Thinking about a few possibilities makes the decision easier for most people.

It is common knowledge that monthly Social Security benefits increase if you do not begin taking them as soon as you are eligible. That leads many people to believe that the best option is to delay as long as possible to receive the maximum monthly amount. For many people that is the best option. However, it is not the best option for everyone. The Wills, Trusts & Estates Prof Blog recently posted some things to consider when deciding when to start Social Security benefits in "Considerations To Chew Over When Choosing When To Take Social Security" including:

• Monthly benefits are determined based on actuarial data and average life expectancy. While you can receive more money per month by delaying benefits, your expected total lifetime amount will be the same on average whenever you start benefits.
• Your health and your family's health history can play a key role in the decision. If you are in poor health or you have a family history of serious health problems in retirement, then it might be better to take benefits sooner rather than later.
• Your current financial situation is also very important. If you need money now, then taking benefits as soon as you are eligible is a good idea. However, if you do not need the money or plan to continue working for a few years, then delaying benefits is often a better idea.

Reference: Wills, Trusts & Estates Prof Blog (April 3, 2016) "Considerations To Chew Over When Choosing When To Take Social Security"

Reverse Mortgage Considerations

Reverse mortgages have always been controversial for elder law advocates, but most agree that for some consumers they are a good option. If you are considering a reverse mortgage, then it is important to know what needs to be considered to determine if it really is a good option for you.

Reverse mortgages have had a bad name among elder law advocates almost from the moment of their introduction. Advocates have pointed out that reverse mortgage terms are often confusing and often make it likely that seniors will be forced out of their homes. However, after the mortgage crisis of 2008 the government took some steps to reform the reverse mortgage industry. These reforms have alleviated some of the problems with the industry. This makes reverse mortgages an option for seniors who are properly informed about the terms of any mortgage they sign. Recently, Consumer Reports articulated some considerations for seniors who are thinking about a reverse mortgage in "Reforms Come to Reverse Mortgages."

These considerations include:

• If you are not planning on staying in your home for very long, then a reverse mortgage is probably not a good idea. The fees associated with the mortgages make them less desirable the shorter amount of time that you will stay in the home.
• If you can meet your financial needs in a different way, then consider doing so. For instance, instead of getting a reverse mortgage it might be a better idea to downsize into a cheaper or smaller home.
• Consider whether your home will still be appropriate as you get older. Houses with lots of stairs may not be the best place for many seniors.
• If a spouse passes away, consider whether the surviving spouse will be able to afford to keep the home and pay the bills on time.

Discussing your options with an elder law attorney will help you make the best decision for your situation.

Reference: Consumer Reports (April 4, 2016) "Reforms Come to Reverse Mortgages"

Hospices May Be Overcharging Medicare

Medicare has always been plagued by fraud that investigators have had to sort out. A new report suggests that hospices are now a large source of that suspected fraud.

A new study conducted by the Department of Health and Human Services has revealed that overbilling by hospices is costing Medicare an estimated $260 million a year. The biggest source of the problem is that patients are being given costly inpatient care when it is not necessary instead of less expensive in-home care. Some hospices are also charging twice for prescription medications by charging Medicare and Medicare Part D. The Tampa Bay Times reported on this study in "Report: Medicare often overbilled by hospices and pays twice for some drugs."

The results of this study are of natural concern for all taxpayers, but they are of particular concern for seniors for a couple of reasons. First, seniors who may need hospice care should receive the proper care. When in-home care is the appropriate treatment, then they should not be given inpatient care because that is better financially for the hospice. Secondly, many seniors have co-pays for Medicare Part D prescriptions. If the drugs are already being paid for by Medicare, seniors lose money when Medicare Part D is charged as well.

Another issue for seniors is that many politicians would like to save the government money by cutting Medicare benefits. Eliminating $260 million per year of unnecessary charges would make it much less likely that benefits would need to be reduced.

Reference: Tampa Bay Times (April 2, 2016) in "Report: Medicare often overbilled by hospices and pays twice for some drugs"

Special Needs Estate Planning

Families with members who have special needs that require continuing care have some estate planning options to make sure that care is provided fairly.

When an adult child has special needs that require the help and support of parents it is important to create an estate plan that makes sure that support is provided after the parents pass away. This requires an estate plan that provides for the child's monetary needs in a way that does not disqualify the child from receiving government benefits. It also often requires creating an estate plan that provides those funds in a way that is fair to other children.

Recently, the Wall Street Journal discussed a couple of tools to accomplish these goals in "Estate Planning When You Have a Special-Needs Child."

The tools include:

• Supplemental Needs Trust – These trusts allow parents to leave assets for the care of a child with special needs, but leave those assets under the control of a trusted third-party who can make sure the assets are used appropriately and invested wisely. They also help prevent disqualification from receiving government benefits, which is often the result if a child with special needs is left a large inheritance in one lump-sum.
• Life Insurance – To fund a trust for a child with special needs, parents can take out life insurance policies and make the trust the beneficiaries of the policies. This allows the parents to divide their assets between all of their children equally while providing the extra funds for the child with special needs in a way that other children will not view as unfair.

These are only two of several options for providing for child with special needs in an estate plan.

Speak with an estate planning attorney about the other options and what might be best for your family.

Reference: Wall Street Journal (March 27, 2016) "Estate Planning When You Have a Special-Needs Child."

Social Security Benefits and Inflation

Annual adjustments to Social Security benefits should allow those benefits to keep up with inflation. In reality, the system does not always work well.

Since 1972 Social Security benefits have received annual cost-of-living adjustments. Using information from the Consumer Price Index, annual adjustments are made to benefits. When the index rises, benefit amounts rise accordingly. Benefits do not decrease when the index decreases or remains the same.

By increasing benefits in accordance with the CPI, Social Security payments should theoretically keep up with inflation and provide seniors with the same purchasing power every year. However, the reality is that it does not work that way. In fact, seniors have seen a decrease of 31% of their purchasing power since 2000.

This was the topic of recent My San Antonio article titled "Will Social Security Keep Up With Inflation?"

The problem is that the Consumer Price Index uses a broad range of goods and services to determine the change in cost of living from year to year. Seniors, however, are not equally affected by everything that is measured in the index.

For example, falling gas prices have recently led the CPI to indicate that Social Security benefits should not get an annual increase. Retirees who no longer need to commute to work are not as helped by falling gas prices as much as other demographic groups. Instead, retirees are more affected by the rising costs of health care and prescription medications.

The net effect is that since the year 2000 seniors' living expenses have increased by 84% while Social Security benefits have only increased by 41%. This is obviously a cause of great concern for seniors and elder law advocates.

Reference: My San Antonio (March 27, 2016) "Will Social Security Keep Up With Inflation?"

Should You Be Confident about Your Retirement Plans?

Many Americans who are confident about their plans for retirement might want to reconsider, especially if those plans rely on Social Security or part-time employment.

Recent survey results indicate that almost two-thirds of Americans are at least somewhat confident about their plans for retirement. Experts, however, fear that much of that confidence might be misplaced.

The Deseret News discusses this in "Are Americans feeling too good about their retirement finances?"

As the article notes, the same survey found that 42% of Americans have not even saved $10,000 for their retirements. Instead of saving and investing money, Americans may be relying on Social Security and the possibility of working part-time during their retirement years.

Both are problematic.

While many seniors can and do work part-time after they retire from their regular employment, the option to do so is not available for everyone. Every year approximately half of the people who retire do so earlier than they had anticipated due to their failing health or the health of a spouse. This suggests that many of the people who are planning to work part-time may not be able to do so.

Retirees may also need to compete with younger workers for the part-time employment. Relying on Social Security is also problematic as it is not meant to be a full pension system. Social Security offers benefits that are less than needed to provide as a cushion against elder poverty.

It is important that people adequately plan for retirement without a false sense of security. Retirement plans should be made with the help of experts in coordination with elder law and estate planning attorneys.

Reference: Deseret News (March 27, 2016) "Are Americans feeling too good about their retirement finances?"

It Is Important to Designate a Contingent Beneficiary for Your IRA

A recent IRS private letter ruling highlights why it is important to designate a contingent beneficiary for your IRA in case the primary beneficiary predeceases you.

Individual retirement accounts are an important part of many estate plans. By designating a beneficiary for the account the funds can pass to another person automatically without having to go through probate. However, if the primary beneficiary of your IRA passes away before you do, then the IRA might have to go through your estate. That can cause problems as a recently released private letter ruling by the IRS illustrates.

This was the subject of a recent Wealth Management article titled "The Importance of Naming a Contingent Beneficiary of a Retirement Account."

In this case the primary beneficiary of an IRA and a Roth IRA passed away before the testator. As a consequence the accounts had to go through the estate. As the sole beneficiary of the estate, the IRA and Roth IRA went to the deceased's spouse.

The spouse elected to roll over the IRA and Roth IRA into her own IRA. The IRS determined that she could do that. However, she was only allowed to do so because of the particular facts of this case and some language in the preamble of the regulations, not the body of the regulations.

This is important because the ruling seems to indicate that in other situations the result would not be as favorable. Naming a contingent beneficiary on your IRA can guard against such outcomes. If the primary beneficiary has already passed away, the contingent beneficiary will receive the funds instead.

Reference: Wealth Management (March 21, 2016) "The Importance of Naming a Contingent Beneficiary of a Retirement Account."

Medicare Options

When signing up for Medicare benefits it is important to know your options and how they might interact with your current healthcare coverage.

For most Americans over the age of 65 the benefits of Medicare are obvious. It provides affordable health care coverage at a time when most people are looking to retire and thus in danger of losing employer provided health insurance.

Unfortunately, signing up for Medicare is not as simple as filling out a single form when you are eligible. You need to know your options and how they relate to other health care coverage.

Recently, the Motley Fool discussed some of the options in "Read This Before You Take Medicare Benefits."

The things to consider include:

• Employer Provided Coverage – If you are still working when you become eligible for Medicare, you need to understand how Medicare benefits will interact with your employer provided insurance. There is not a hard and fast rule, but generally if an employer has fewer than 20 employees, then Medicare will be the primary insurer with the employer provided insurance acting as a secondary insurer. The opposite is true for larger companies. It is important to speak to your current insurer to find out for certain and if that insurer has any policies concerning when you must sign up for Medicare.
• Medicare Advantage – You have the option of signing up for traditional Medicare or Medicare Advantage. Traditional Medicare benefits are administered directly through state agencies and allow the option of signing up separately for Part D prescription benefits. Medicare Advantage plans are operated by private insurers and have prescription drug benefits rolled into them. Depending on your needs one or the other may be cheaper or provide better coverage.
• Penalties – If you do not sign up for Medicare when you first become eligible, then you might face penalties when you do start receiving benefits. Those penalties are different for each part of Medicare.

If you are one who likes to do Internet research, then you will find the Medicare official website helpful.

Reference: Motley Fool (March 26, 2016) "Read This Before You Take Medicare Benefits."