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5.5 General CLE credits and 1 Ethics credit, plus 1 optional Elder Abuse Reporting credit

Elder Law 2016: Advanced Concepts

Elder Law 2016: Advanced Concepts ii

ELDER LAW 2016: ADVANCED CONCEPTS

SECTION PLANNERS

Penny Davis, Davis Pagnano McNeil & Vigna LLP, PortlandDon Dickman, Don B. Dickman PC, Eugene

Kay Hyde-Patton, Leahy Van Vactor Cox & Melendy LLP, SpringfieldRebecca Kueny, Rice | Kueny LLC, SalemJennifer Kwon, Kwon Law LLC, Portland

S. Jane Patterson, Attorney at Law, GreshamJulie Meyer Rowett, Yazzolino Rowett & Edgel LLP, Portland

Mark Williams, Gaydos Churnside & Balthrop PC, Eugene

OREGON STATE BAR ELDER LAW SECTION EXECUTIVE COMMITTEE

Kay Hyde-Patton, ChairMonica D. Pacheco, Chair-Elect

Erin M. Evers, Past ChairJan Elana Friedman, Treasurer

Darin J. Dooley, SecretaryKathryn M. BelcherJason C. Broesder

Don Blair DickmanDenise Nicole Gorrell

Theressa HollisAnastasia Yu Meisner

J. Thomas PixtonMichael A. Schmidt

Whitney D. Yazzolino

The materials and forms in this manual are published by the Oregon State Bar exclusively for the use of attorneys. Neither the Oregon State Bar nor the contributors make either express or implied warranties in regard to the use of the materials and/or forms. Each attorney must depend on his or her own knowledge of the law and expertise in the use or modification of these materials.

Copyright © 2016

OREGON STATE BAR16037 SW Upper Boones Ferry Road

P.O. Box 231935Tigard, OR 97281-1935

Elder Law 2016: Advanced Concepts iii

TABLE OF CONTENTS

Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Faculty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

1. Special Needs Trusts and Retirement Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–i— Melanie Marmion, Fitzwater Meyer Hollis & Marmion LLP, Portland, Oregon

2A. Changing Situations and Developing Conflicts—Scenarios . . . . . . . . . . . . . . . . . 2A–i— Wesley Fitzwater, Fitzwater Meyer Hollis & Marmion LLP, Portland, Oregon— Mark Fucile, Fucile & Reising LLP, Portland, Oregon— Mark Williams, Gaydos Churnside & Balthrop PC, Eugene, Oregon

2B. The Contours of RPC 1.14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2B–i— Mark Fucile, Fucile & Reising LLP, Portland, Oregon

3. Complex Issues in Medicaid Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–i— Darin Dooley, Law Offices of Nay & Friedenberg, Portland, Oregon— Julie Meyer Rowett, Yazzolino Rowett & Edgel LLP, Portland, Oregon

4A. Staying at Home Options: Technology for Remaining at Home—Gerontechnology . . . 4A–i— Claude Goodman, CareWheels Corporation, Lake Oswego, Oregon

4B. Benefits for the Home: Additional Resources to Consider for the Client . . . . . . . . . . 4B–i— Rebecca Kueny, Rice | Kueny LLC, Salem, Oregon

5. End-of-Life Options and Medical Aid in Dying—Presentation Slides . . . . . . . . . . . . 5–i— Matt Whitaker, Compassion and Choices, Portland, Oregon

6. Guardianship and Conservatorship: Beyond the Statutes . . . . . . . . . . . . . . . . . . . 6–i— The Honorable Katherine Tennyson, Multnomah County Circuit Court, Portland,

Oregon— Sibylle Baer, Cartwright Baer Johansson PC, Portland, Oregon

Elder Law 2016: Advanced Concepts iv

Elder Law 2016: Advanced Concepts v

SCHEDULE

7:30 Registration

8:15 Welcome

8:30 Special Needs Trusts and Retirement Assets

F Post-death minimum distribution rulesF Naming a trust as a beneficiaryF Conduit trustsF Accumulation trustsF Special needs trustsF Alternative strategies and case examplesMelanie Marmion, Fitzwater Meyer Hollis & Marmion LLP, Portland

9:30 Changing Situations and Developing Conflicts

F Common ethical conflicts in elder lawF When waivers are an optionF What to do when a conflict arisesWesley Fitzwater, Fitzwater Meyer Hollis & Marmion LLP, PortlandMark Fucile, Fucile & Reising LLP, PortlandMark Williams, Gaydos Churnside & Balthrop PC, Eugene

10:30 Break

10:45 Complex Issues in Medicaid Planning

F AnnuitiesF Increasing the community spouse resource allowanceF Transfers and giftsF Post-eligibility issuesDarin Dooley, Law Offices of Nay & Friedenberg, PortlandJulie Meyer Rowett, Yazzolino Rowett & Edgel LLP, Portland

11:45 Elder Law Section Annual Meeting

Noon Lunch Hour Elder Abuse Reporting Video Replay

1:30 Staying at Home Options

F Technology for remaining at home—gerontechnologyF Advising fiduciariesF State and local resourcesClaude Goodman, CareWheels Corporation, Lake OswegoRebecca Kueny, Rice | Kueny LLC, Salem

2:30 End of Life Planning

F Care optionsF Tools to manage end of life careF Oregon’s Death with Dignity ActMatt Whitaker, Compassion and Choices, Portland

Elder Law 2016: Advanced Concepts vi

3:30 Break

3:45 Guardianship and Conservatorship: Beyond the StatutesF Conservatorships, jointly owned property, and trustsF Crafting limits and restrictionsF Preserving the estate planF When to involve the courtThe Honorable Katherine Tennyson, Multnomah County Circuit Court, PortlandSibylle Baer, Cartwright Baer Johansson PC, Portland

4:45 Adjourn

SCHEDULE (Continued)

Elder Law 2016: Advanced Concepts vii

FACULTY

Sibylle Baer, Cartwright Baer Johansson PC, Portland. Ms. Baer’s firm specializes in estate and trust litigation, which includes trust and will contests, protective proceedings, fiduciary litigation, and elder financial abuse cases. Before joining the firm, Ms. Baer was a trial attorney at Multnomah Defenders, Inc., where her practice focused on criminal and juvenile law with an emphasis on juvenile dependency cases and complex termination of parental rights cases. Ms. Baer is a founding board member and vice president of Guardian Partners, a nonprofit whose goal is to reduce abuse and neglect among the elderly, adults with disabilities, and children under guardianship.

Darin Dooley, Law Offices of Nay & Friedenberg, Portland. Mr. Dooley practices in the areas of estate planning, elder law, Medicaid, special needs planning, probate, estate tax planning, and trust administration. He is a member of the Oregon State Bar Estate Planning and Administration Section, the OSB Elder Law Section Executive Committee, and the Multnomah Bar Association.

Wesley Fitzwater, Fitzwater Meyer Hollis & Marmion LLP, Portland. Mr. Fitzwater’s practice emphasizes legal and crisis issues faced by the elderly and their families, including incapacity, guardianship and conservatorship, long-term care, and end-of-life concerns. He is a Fellow of the National Academy of Elder Law Attorneys and a member of the Multnomah Bar Association, the Clackamas County Bar Association, the Oregon State Bar Elder Law and Estate Planning & Administration sections, the Clackamas County Elder Abuse Coordinated Community Response Team, the Multnomah and Clackamas County Probate Court advisory committees, and the Guardian/Conservator Association of Oregon. He is an author and frequent speaker to senior groups and Oregon attorneys on topics including long-term care and Medicaid planning, incapacity, guardianships and conservatorships, and legal ethics and professionalism. He is coeditor of Elder Law (Oregon CLE 2000 & Supp 2005). Among other honors, Mr. Fitzwater is the 2006 recipient of the OSB President’s Membership Service Award for “volunteer law-related services on behalf of Oregon lawyers.”

Mark Fucile, Fucile & Reising LLP, Portland. Mr. Fucile handles professional responsibility, regulatory, and attorney-client privilege issues for lawyers, law firms, and corporate and governmental legal departments throughout the Northwest. He is the inaugural chair of the Washington State Bar Association Committee on Professional Ethics and past chair of its predecessor, the WSBA Rules of Professional Conduct Committee. He is also a member of the Idaho State Bar Section on Professionalism & Ethics. Mr. Fucile writes the quarterly “Ethics and the Law” column for the WSBA’s NWLawyer, writes the monthly “Ethics Focus” column for the Multnomah Bar Association’s Multnomah Lawyer, and is a regular contributor on legal ethics to the WSBA’s NWSidebar blog. He also is a contributing author/editor for the current editions of the WSBA’s Legal Ethics Deskbook, the WSBA’s Law of Lawyering in Washington, and the OSB’s The Ethical Oregon Lawyer. Mr. Fucile teaches legal ethics as an adjunct for the University of Oregon School of Law’s Portland campus. He is admitted to practice in Oregon, Washington, Idaho, Alaska, and the District of Columbia.

Claude Goodman, CareWheels Corporation, Lake Oswego. Mr. Goodman is the founder and president of CareWheels, a §501(c)(3) public benefit corporation that develops technology-empowered services to help people live safely with utmost independence by keeping elders, their families, and professional care teams connected and informed of their well-being. CareWheels has participated in founding the OHSU Oregon Center for Aging & Technology and the LeadingAge Center for Aging Services Technologies. Mr. Goodman is a biomedical engineer and inventor with seven U.S. patents and experience in health sciences research, development, and technology transfer as a guest scientist at the University of California, Lawrence Berkeley National Laboratory, and National Institute of Standards and Technology.

Elder Law 2016: Advanced Concepts viii

Rebecca Kueny, Rice | Kueny LLC, Salem. Ms. Kueny represents clients in estate planning, guardianships and conservatorships, Medicaid and VA long-term care planning, probates, and trust administrations. Ms. Kueny is accredited with the Veterans Administration to assist clients with the VA Aid and Attendance pension. She serves on the Oregon State Bar Elder Law Section Continuing Legal Education Committee. Ms. Kueny is a board member for the Oregon Women Lawyers Mary Leonard Chapter. She also actively participates with the Marion County Indigent Guardianship Committee, Willamette Valley Estate Planning Council, and the Willamette Valley American Inn of Court.

Melanie Marmion, Fitzwater Meyer Hollis & Marmion LLP, Portland. Ms. Marmion’s practice focuses on all aspects of estate planning and administration, including planning for high–net worth clients, complex trust administration, preparation of estate tax returns, and planning for people with special needs. She has written several articles and regularly speaks around the state on special needs trusts. Ms. Marmion holds a LL.M. in Taxation from New York University School of Law and previously served as an adjunct professor teaching in Golden Gate University’s LL.M. program.

Julie Meyer Rowett, Yazzolino Rowett & Edgel LLP, Portland. Ms. Rowett’s expertise includes estate planning and administration, protective proceedings, special needs planning, Medicaid, and planning for long-term care. She is an active member of the Oregon State Bar Estate Planning & Administration and Elder Law sections and a member of the National Academy of Elder Law Attorneys. She is a frequent presenter at continuing legal education events on Medicaid, income cap trusts, and guardianships. Ms. Rowett is corecipient of the 2013 Multnomah Bar Association Senior Law Project Volunteer of the Year award.

The Honorable Katherine Tennyson, Multnomah County Circuit Court, Portland. Judge Tennyson is a member of the Family Law Department, which is a unified family court. Judge Tennyson became the Chief Probate Judge for the county in January 2007. Judge Tennyson is the President of the National Council of Juvenile and Family Court Judges (NCJFCJ). Judge Tennyson has served as faculty for NCJFCJ national judicial training, including the Child Abuse and Neglect Institute, Enhancing Judicial Skills in Elder Abuse Cases, and the Institute for New Family Law Judges. She is a frequent speaker on issues including trial practice, elder abuse, family violence, and probate. Judge Tennyson is admitted to practice law in both Oregon and Washington. She is the 2015 recipient of the Oregon State Bar Wallace P. Carson Jr. Award for Judicial Excellence.

Matt Whitaker, Compassion and Choices, Portland. Mr. Whitaker is a former clinician with extensive experience in health policy and advocacy. He most recently served as Compassion & Choices Oregon State Director before stepping into his new role as a Multi-State Implementation Manager. He is a board-certified music therapist with clinical experience in long-term acute care and geriatrics who works to improve end-of-life care through patient empowerment and education. Mr. Whitaker has spoken at numerous conferences on bioethics and person-centered care across the country and testified as an expert resource on end-of-life choice to numerous legislative committees.

Mark Williams, Gaydos Churnside & Balthrop PC, Eugene. Mr. Williams has actively worked to develop the area of elder law, and his accomplishments in that area have been widely recognized. His practice comprises all facets of elder law, including contested guardianships and conservatorships for individuals and working with professional fiduciaries. He advises clients on planning for long-term care, special needs trusts, and Medicaid spend-downs. He has substantial experience in estate planning matters as well, working with clients on wills, trusts, domestic partnerships, and taxable estates. He is a member of the National Academy of Elder Law Attorneys, member and past president of the Oregon Law Institute, a member of the State of Oregon Continuing Care Retirement Communities Advisory Council, a member and past chair of the Oregon State Bar Elder Law Section, and a member of the OSB Legal Ethics Committee. Mr. Williams serves as adjunct professor to the Concordia University College of Health and Social Services and as adjunct instructor and lecturer at the University of Oregon Law School.

FACULTY (Continued)

Chapter 1

Special Needs Trusts and Retirement AssetsMelanie MarMion

Fitzwater Meyer Hollis & Marmion LLPPortland, Oregon

Contents

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–1

II. Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–1

III. Types of Retirement Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–1A. Qualified Retirement Plans (IRC Section 401(a)) . . . . . . . . . . . . . . . . . . . . . . 1–1

IV. Required Minimum Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–2A. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–2B. RMDs During Lifetime of Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–3C. Designated Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–4

V. Child Named as Direct Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–5A. Child Is Named as the Direct Beneficiary of a Retirement Plan and Receiving

Means-Tested Public Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–7B. Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–7

VI. Naming a Trust as Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–9A. Only See-Through Trusts Qualify as Designated Beneficiaries . . . . . . . . . . . . . . 1–9B. Advantage of Designated Beneficiary Status . . . . . . . . . . . . . . . . . . . . . . . . 1–9C. Five Requirements to Qualify as a See-Through Trust . . . . . . . . . . . . . . . . . . . 1–9D. Two Types of See-Through Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–10E. Conduit Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–10F. Accumulation Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–12

VII. Drafting the SNT as an Accumulation Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–16A. Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–16B. Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–17C. Other Drafting Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–19

VIII. The Beneficiary Designation Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–21A. Beneficiary Designation Form Is an Essential Piece of the Puzzle in See-Through

Trust Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–21B. The SNT Must Be a Direct Beneficiary of the Retirement Plan . . . . . . . . . . . . . 1–21C. The “Box” Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–22D. Memorandum to Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–23

IX. Alternative Estate Planning Ideas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–23A. Charitable Remainder Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–23B. Allocate Nonretirement Assets to SNT . . . . . . . . . . . . . . . . . . . . . . . . . . 1–24

X. Take-Aways. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–28

Presentation Slides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–29

Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–59A. Rev. Rul. 200620025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–59

Chapter 1—Special Needs Trusts and Retirement Assets

Elder Law 2016: Advanced Concepts 1–ii

B. Last Will and Testament of Harry James Potter. . . . . . . . . . . . . . . . . . . . . . 1–69C. Fidelity Investments 403(b) Beneficiary Designation Form . . . . . . . . . . . . . . . 1–81D. Sample Vanguard IRA Beneficiary Designation Form . . . . . . . . . . . . . . . . . . 1–85E. Sample Memo Re Beneficiary Designations. . . . . . . . . . . . . . . . . . . . . . . . 1–89F. Article Excerpt: Charitable Remainder and Special Needs Trust Combo: An

Example of a Win-Win-Win Situation for Parent, Child with a Disability, and Charity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–93

G. Last Will and Testament of Percival Dumbledore . . . . . . . . . . . . . . . . . . . . 1–95

Contents (continued)


Elder Law 2016: Advanced Concepts 1–1

I. Introduction

Obviously the subject of retirement plans and all of the rules and regulationsassociated with them is far too expansive a subject for these materials to cover. Frankly,the subject of distributions from retirement plans is too broad for this presentation. Inan effort to narrow the scope of this presentation to focus on working with retirementbenefits and special needs trusts, many topics have been brushed over or notmentioned at all. For example, the discussion of naming a spouse as a beneficiary of aretirement plan is only mentioned briefly. You can find a very detailed explanation ofanything retirement plan related in Natalie Choate’s excellent diatribe, Life and DeathPlanning with Retirement Benefits,1 a tome that was heavily relied on by this author inthe preparation of these materials.

II. Terminology

A. RMD = required minimum distribution = MRD = minimum requireddistribution

B. Owner = the individual who contributed to and funded the retirement

plan.

C. Beneficiary = the person/entity who receives the benefits of the plan afterthe owner dies

D. Retirement Plan = a retirement account that is established and managedby an Owner’s employer

E. Retirement Account = a private retirement account that is established bythe Owner outside the context of his employment.

III. Types of Retirement Plans

A. Qualified Retirement Plans (IRC Section 401(a))

1. Defined Benefit Plans

a. Employer promises to pay the employee a specific sum ofmoney beginning at retirement for the employee’s life. Thepayment is usually on a monthly basis and is based on aformula the takes into account the length of employmentwith the company.

1 Choate, Natalie, Life and Death Planning for Retirement Benefits (7th Edition, 2011).



b. Defined Benefit Plans are a rare find. Mostly regulated toteachers and government employees.

2. Defined Contribution Plans

a. Employer commits to making certain contributions to theplan. As distinguished from a defined benefit plan, theemployer does not guarantee any level of retirement benefitto the employee. Rather, the amount of funds in theemployee’s account will depend on: (1) the amount ofcontributions from the employer; (2) if the plan contains a401(k) feature, the amount of deferred contributions fromthe employee; and (3) the investment performance of thefunds in the account.

b. 401(k), Profit Sharing Plans and Employer Stock OwnershipPlans (ESOPs) are examples of defined contribution plans.

3. 403(b) Plans

4. Individual Retirement Accounts (IRAs)

a. Traditional IRA

b. Roth IRA

IV. Required Minimum Distribution rules

A. Purpose. Remember that retirement plans are tax-favored investmentvehicles that allow the owner/beneficiary to invest the funds withoutpaying current income taxes on the profits. The tax is deferred until thefunds are withdrawn from the account. The value of this tax-deferral canbe dramatic.



Example: Assume a $500,000 retirement account over a 40 year period2:

Action Amount held bybeneficiary at year 40

Immediate distribution from IRA, followed by investment offunds in taxable investment account $2,867,061

Deferred distribution over 5 year period followed byinvestment of funds in taxable investment account $2,972,035

Deferred distribution based on 42-yr old life expectancy $4,161,003

Deferred distribution based on 18-yr old life expectancy $5,704,839

However, it was the intent of Congress to install the tax-favoredinvestment opportunities to encourage saving for retirement and NOT forthe transfer of wealth to succeeding generations. For this reason,Congress built-in a rigid set of rules, the minimum required distributionrules (“RMDs”) to ensure that funds will be distributed out of the accountand subject to income tax, RATHER than remain in the tax-favoredinvestment indefinitely. Despite the intention of the RMDs to forcedistributions out of the plan (and subject to income tax), the tax-deferredbenefits of the plan can exist long past the death of the owner if theowner designates the “right” beneficiary.3

B. RMDs during Lifetime of Owner

1. Because this presentation is focused on the rules regarding thetransfer of an account after an Owner’s death, only the broadhighlights of the lifetime distribution rules follow.

2 7% assumed rate of growth; 35% tax bracket

3 While many of the code sections and regulations cited in this outline appear to refer toqualified plan section rules, IRC section 408(a)(6) makes those rules applicable to IRAs.



2. Highlights

a. No distribution prior to age 59 ½ without 10% penalty4

(1) certain exceptions apply; see 26 USC §72(t)(2)

b. Must begin taking annual distributions upon reaching age 70½. Actually, the first distribution must be withdrawn by April1st of the year following the year in which the Owners turns70 ½ (a.k.a. the “required beginning date” or “RBD”).5

C. RMDs after Death of Owner will depend on whether the Owner diedBEFORE or AFTER her required beginning date (RBD).

1. Death before Owner’s RBD

a. Designated Beneficiary–>If the beneficiary of the accountqualifies as a “Designated Beneficiary,” the RMDs will bebased upon the age of the Designated Beneficiary (seesection below for more detailed discussion of DesignatedBeneficiary).6

b. NO Designated Beneficiary–>If there is no beneficiary for theaccount OR the named beneficiary does not qualify as aDesignated Beneficiary, the RMDs are subject to the 5-yearrule.7 That is, the funds in the account must all be withdrawnby the date that is the 5th anniversary of the Owner’s death.8

2. Death after the Owner’s RBD

a. Designated Beneficiary–> same as above. If the beneficiaryof the account qualifies as a Designated Beneficiary, theRMDs will be based upon the age of the Designated

4 26 USC §72(t)

5 Pursuant to the Tax Reform Act of 1986, April 1, of calendar year following 70 ½.

6 IRS Publication 590-B.

7 Treas. Reg. § 1.401(a)(9)-3, A-2

8 The 5-year rule only requires that the funds be withdrawn by the 5th year anniversary, but doesnot require that the distribution take place in 5 equal installments. The beneficiary may wait until the 5th

year to take any distributions (although all the funds must be withdrawn) or may stagger the distributionin any way that she wants.



Beneficiary (see section below for more detailed discussionof Designated Beneficiary).9

b. NO Designated Beneficiary–> If there is no beneficiary forthe account or the beneficiary does not qualify as aDesignated Beneficiary, the RMDs are calculated based onthe Owner’s remaining life expectancy. That is, the fundsmust be withdrawn over the Owner’s single life expectancyas if he/she were alive. 10

D. Designated Beneficiary

1. As discussed above, the tax-deferred benefits of retirement planscan continue past the lifetime of the Owner if a DesignatedBeneficiary is named on the account. In that case, the measuringlife of the RMD will switch the life expectancy11 of the DesignatedBeneficiary. This is what’s known as “stretching out” thedistribution term to cover two lives, instead of just the life of theOwner.

2. A Designated Beneficiary is either:

a. A living individual.12

b. A See-Through Trust.13

9 26 CFR 1.401(a)(9)-5, A-5(a)(1)

10 The RMD is based on the participant’s life expectancy however the beneficiary is alwayspermitted to withdraw MORE than the RMD.

11 26 CFR 1.401(a)(9)-5, A-5(c)

12 Surviving Spouses have special Designated Beneficiary privileges. Unlike other DesignatedBeneficiaries who must start taking their re-calculated RMDs the year following the year of the Owner’sdeath, surviving spouse DBs may choose to roll the funds in the plan to their own IRA and wait until theirown RBD to start taking distributions from the plan... AND then name their own Designated Beneficiaryand continue the tax deferral into a 3rd life span!

13 Technically speaking, only individuals can be Designated Beneficiaries. So, when I state that aSee-Through Trust qualifies as a Designated Beneficiary, I really mean that the trust is ignored and one ofthe individual beneficiaries of the trust is the Designated Beneficiaries. However, I find it more helpful tounderstanding these rules to make the distinction between “living individuals” (i.e. those individualsnamed as the outright beneficiary of the retirement plan) and “see-through trusts” (i.e. those trusts inwhich RMDs are payable to the trust based on a beneficiaries life expectancy). 26 CFR 1.401(a)(9)-4, A-5



3. NO entity other than a See-Through Trust can be a DesignatedBeneficiary, including an estate or a “opaque” trust (i.e. a trust thatdoes not qualify as a See-Through Trust).14

4. Whether or not a Designated Beneficiary exists is determined as ofSeptember 30th of the year following the year of the owner’sdeath.15 Because of this delayed time frame, it is possible toemploy post-death “fixes” to get to Designated Beneficiary status.

a. For example, assume that a retirement plan is payable in

equal shares to owner’s daughter and his favorite charity. Because of the presence of the charity as a partialbeneficiary, there is no Designated Beneficiary as of theowner’s death. The payout period would either be 5 years orthe remaining life expectancy of the owner, depending onthe age of the owner at death. The charity would not likelycare about this result, but the daughter would miss anopportunity to stretch out the deferral of income taxes overher lifetime. To fix this situation, the charity could be paidout its share of the plan by September 30th following theyear of death. Once paid, the charity is no longer abeneficiary of the retirement, leaving the daughter as thesole AND DESIGNATED beneficiary.16

5. Separate Account Rule. If a retirement plan is payable to multiplebeneficiaries, each beneficiary may establish a separate accountwith his/her/its share of the plan. IF the separate account isestablished prior to December 31st following the year of death, thebeneficiary of each account will be considered the sole beneficiaryof that account. Thus, all of the rules of determining the payoutperiod of the RMD will apply separately to that account. 17

a. Important Caveat! The separate account rule does NOTchange the calculation of the RMD if the division intoseparate accounts occurs via a single funding trust. In that

14 26 CFR 1.401(a)(9)-4, A-3

15 26 CFR 1.401(a)(9)-4, A-4(a)

16 This problem could also be solved by the separate share rule described in TreasuryReg.§1.401(a)(9)-8, A-2(a)(2).

17 26 CFR 1.401(a)(9)-8, A-2(a)(2).



case, the RMD will still be determined by applying the rulesrelating to trusts as beneficiaries.

b. Example: Professor Dumbledore leaves his IRA to hisrevocable living trust. At his death, the RLT will terminateand pay out to Harry Potter, Hermione Granger and RonWeasley in equal shares. Here, even if Harry, Hermione andRon each establish separate shares by the end of the yearfollowing Professor Dumbledore’s death, the RMDs for eachseparate account will be based on the age of the oldest ofthem as required by trust distribution rules (see below formore detailed discussion of RMDs relating to trusts) RATHERthan allowing each of them to calculate his/her separateRMD based on their own life expectancy.

V. Child Named as Direct Beneficiary

A. If the child is named as the direct beneficiary of a retirement plan AND thechild is receiving means-tested public benefits.18

1. Good News–> DB status accomplished. The child’s age will beused to calculate the RMDs

2. Bad (Terrible) News–> Child is now over-resources and ineligible tocontinue to receive means-tested public benefits.

B. Solution

1. Transfer child’s portion of the retirement account to first-party (aka“payback”) trust.19

a. Normally, retirement plans cannot be assigned to a trust oranother person without triggering an immediate taxation ofthe value of the retirement account. 20

18 By “means-tested public benefits”, I am referring to those benefits that require the recipient tohave a lack of resources/assets and/or income such as Supplemental Security Income (“SSI”) and Medicaid.

19 42 USC §1396p(d)(4)(A).

20 IRC § 691(a)(2).



b. There is an exception if the transferee is a 100% grantortrust21

c. First-party SNTs are deemed to be grantor trusts with regardto the special needs beneficiary because:

(1) The assets are initially owned by the beneficiary

(a) this is the reason that the first-party needs tobe set up in the first place–> the beneficiaryowns assets that is putting him over-resourcesfor public benefits purposes.

(2) The beneficiary (or someone on his behalf) musttransfer the assets into the SNT.

(3) The terms of the trust allow the income in the trust tobe distributed to or for the beneficiary.22

(4) Summary: When an individual transfers assets to atrust and retains the right to receive distributions ofincome from that trust, the trust is deemed to be agrantor trust.23

2. This technique is blessed by Rev. Rul 200620025.

a. Rev. Rul 200620025 has an excellent discussion of theinterplay between first-party SNTs and the minimumdistribution rules, so I’ve included a copy in the materials. See Exhibit A.

3. The real “trick” to this technique is getting the IRA provider (thefinancial institution) on board.

a. For public benefits purposes, the first-party SNT must be theOWNER of the account (not just the beneficiary of theaccount).

21 Rev. Rul. 85-13 established the principal that transactions between an individual and a trustwhich is deemed to be deemed owned by the individual under the grantor trust rules of §674 et seq. willbe ignored (i.e. will not trigger income tax consequences).

22 IRC 677(a).

23 IRC §677(a).



b. The transfer of the retirement plan to the first-party SNTDOES NOT change the DB status. The special needs child’sage is STILL the measuring age for RMD purposes; it doesnot flip to the SNT being treated as the beneficiary of theretirement account.

c. The concept of a trust owning a retirement account isweird24 to financial institutions. Their systems are not set upto handle this transaction.

(1) Be Pro-active!. FIRST, find the financial institutionwho understands what you are trying to do– i.e. keepthe stretch payout of the RMDs in place!!

(2) If you are setting up first-party SNT via Court, ask thefinancial institution to provide you with the exactlanguage that they want to see in the court order.

VI. Naming a Trust as Beneficiary

A. As described above, only See-Through Trusts qualify as DesignatedBeneficiaries. Any other trusts that do not meet the requirements of aSee-Through Trust will trigger RMDs based either the 5-Year Rule25 or theLife-Expectancy Rule.26

B. Remember that the advantage of Designated Beneficiary status is theability to stretch out the required payout of the retirement plan over theage of an individual.

C. To qualify as a See-through Trust, the following FIVE requirements mustbe satisfied27:

REQUIREMENT #1: The trust must be valid under state law– EASY tomeet

REQUIREMENT #2: The trust must be irrevocable – EASY to meet

24 “weird” is a technical term used by financial institutions when discussing the interrelationshipbetween special needs trusts and retirement plan distributions.

25 If Owner’s death occurred BEFORE the RBD.

26 If Owner’s death occurred AFTER the RBD.

27 26 CFR 1.401(a)(9)-4, A-5(b)



REQUIREMENT #3: A copy of the trust agreement must be provided tothe retirement plan provider no later than October 30th of the yearfollowing the year of the Owner’s death. —should be EASY to meet

REQUIREMENT #4: All of the beneficiaries of the trust must beidentifiable- should be EASY to meet

a. Note that the beneficiaries do not have to be identified byname. Identifying them by class is fine. E.g. “All of mychildren” or “My nieces and nephews who survive me”. Anexample of a trust beneficiary who is not identifiable wouldbe “to my daughter’s husband”.

REQUIREMENT #5: All of the beneficiaries must be individuals

a. EASY to meet for Conduit Trusts (see below)

b. VERY TRICKY to meet for Accumulation Trusts (see below)

D. There are 2 types of See-Through Trusts

1. Conduit Trusts–> use age of lifetime beneficiary to determine RMD

2. Accumulation Trusts-> use age of oldest beneficiary to determineRMD

E. Conduit Trusts

1. Conduit Trusts specifically provide that any RMDs received by thetrust from a retirement plan will be immediately distributed out tothe lifetime beneficiary of the trust. In this way, the trust acts as amiddle-man that receives the RMD and passes it right back out tothe beneficiary. For this reason, the IRS is willing to “see through”the trust and assume that the primary beneficiary is the “true”recipient of the RMD.

2. Conduit Trusts use the primary beneficiaries age to calculate the

RMD, as if the primary beneficiary had been named directly as thebeneficiary on the retirement account.

3. It is NOT enough that the terms of the trust require that “allincome” be paid out to the beneficiary. Without more of anexplanation, this terminology would default to fiduciary accountingincome and would not necessary capture all of the RMD’s funds.



4. The advantages of using a Conduit Trust are:

a. If properly drafted, the analysis is easy and clear– the trustqualifies as a Designated Beneficiary and the RMDs arecalculated using the life expectancy of the primarybeneficiary.

b. It provides the benefits of naming an individual beneficiarywith the protection of putting the access to the account inanother’s control (the trustee’s). This is especially handywhen a parent wants to ensure that the RMDs are taken overtime and does not want to tempt the beneficiary into takingmore than the RMD.

5. The big disadvantage of a Conduit Trust is that it requiresautomatic annual distributions to the beneficiary. Obviouslyproblematic in cases with beneficiaries who may be vulnerable tobad influences, but this feature is generally a SHOW-STOPPER forSpecial Needs Trusts.

6. Trusteed IRAs. There is much confusion regarding trusteed IRAs

and how they operate. Essentially, a trusteed IRA is a corporatemanaged conduit trust. While trusteed IRAs allow the owners tocustomize distributions from the account that exceed the RMD,they still require that all RMDs be paid out of the account to (or forthe benefit of) the beneficiary. Thus, like privately-drafted conduittrusts, trusteed IRA accounts will NOT protect the beneficiary’seligibility for needs based benefits. 28

7. IMPORTANT: Drafting a Special Needs Trusts to be a conduit trustfor retirement plan distribution rules requires VERY CAREFULconsideration because there will be automatic distributions that arenot: (1) subject to the trustee’s discretion; (2) nor qualified byspecial needs language would likely jeopardize the beneficiary’seligibility for his/her means-tested benefits.29

28 Natalie Choate has a brief explanation of trusteed IRAs in her book, see fn 1 at p. 407.

29 I suppose that given the right facts, drafting a SNT as a conduit trust could work. You wouldhave to a low value IRA and/or a young beneficiary so that the MRD would be an amount that could spenddown in the month received; or perhaps timing the MRD distribution to be received in different months toassist with spend-down.



F. Accumulation Trusts

1. Key Feature: The age of the OLDEST trust beneficiary is used tocalculate the RMDs that will be paid to the trust each year from theretirement plan.30

2. An accumulation trust is a trust that does not require the trustee todistribute any RMDs that the trust receives from a retirement planto the beneficiary. In other words, the RMDs can accumulate insidethe trust to be subject to the trust’s distribution rules.

3. Any testamentary trust in which all distributions are within thediscretion of the trust will NEVER qualify as a Conduit Trust butMAY qualify as an Accumulation Trust if the 5 see-through trustrequirements (outlined above in V. B) are met.

4. A SNT has the potential to be treated as an Accumulation Trust forpurposes calculating the RMDs if carefully drafted to meet all 5 see-through trust requirements.31

a. The trust must be valid under state law;

b. The trust must be irrevocable;

c. A copy of the trust agreement must be provided to theretirement plan provider no later than October 30th of theyear following the year of the Owner’s death;

d. All of the beneficiaries of the trust must be identifiable; and

e. All of the beneficiaries must be individuals.

5. Requirements #4 & #5 - All beneficiaries must be identifiableindividuals.

a. Which Beneficiaries Count???

(1) All potential beneficiaries, including remainderbeneficiaries count.

30 26 CFR 1.401(a)(9)-5, A-7

31 26 CFR 1.401(a)(9)-4, A-3, A-5



(2) Mere Potential successor beneficiaries32 do not count.

b. Using Natalie Choate’s “Chain” test33

(1) Assume current beneficiary counts as first “link” incountable beneficiary chain.

(2) Analyze all future (i.e remainder) beneficiaries of thetrust by counting all successive beneficiaries until youcome to the beneficiary(ies) who will be entitled toreceive the trust property immediate and outrightupon the death of the prior beneficiaires. That“immediate and outright” beneficiary(ies) is the last“link” in the countable beneficiary chain.

(a) Powers of Appointment: If a beneficiary has apower of appointment, all of the potentialappointees as well as those who take in defaultof the exercise of the power of apppointmentmust be analyzed in the chain.34

(b) Embedded successor trusts: If the terms of atrust allow for funds to be held in further trustfor a remainder beneficiary, the secondary trustmust pass all five requirements of See-ThroughTrust Status.

(3) Consider all of the links: These are the beneficiariesthat count for test requirements #4 & #5.

(a) Are they all identifiable?

(b) Are they all individuals?

i) Yes–? You have Accumulation Trust. TheRMD is based on the age of the oldestchain beneficiary.

32 Treas Reg. §1.401(a)(9)-5, A-7(c).

33She actually refers to this test as the “outright-to-now-living-persons” or “O/R-2-NLP” but thisauthor prefers the simpler, albeit less descriptive, terminology. See fn 1 at pgs. 440-443.

34 See fn 1 at pgs. 445-447



ii) No?– The trust is NOT an AccumulationTrust. The RMD is either the 5-YearRule (owner died prior to RBD) or theowner’s remaining life expectancy(owner died after RBD).

(4) Chain Test is applied ONCE at the death of the ownerbased on the identities of the beneficiaries who aresurviving at that moment in time and the hypotheticaldeath of each of them until you reach the end of thechain.

6. Example: SIRIUS BLACK

Sirius Black directed his IRA to a trust to benefit his nephew, HarryPotter. The terms of the trust directed the trustee to distribute incomeand principal to Harry for his health, education, and support while he wasunder the age of 60. At age 60, the trust would terminate and the trusteewould distribute the remaining assets to Harry outright. If Harry diedprior to age 60, the trustee would distribute the trust to Harry’sdescendants, per stirpes; provided, however, that if any descendant ofHarry’s was under the age of 25, that descendant’s share would be held infurther trust for the descendant until age 60. The contingent beneficiaryof Harry’s and the descendants’ trust is Sirius’ favorite charity, Hogwart’sSchool of Magic. Sirius dies with $500k remaining in his IRA.

a. Note that at the time the attorney drafts the trust (andhopefully the beneficiary designation) there is no way toconfirm that the trust will qualify as a See-Through Trust.

b. The presence of the charity creates the potential to fail TrustRequirement #5 (all “countable” beneficiaries must beindividuals).

c. But the facts, as they exist at Sirius’ death, may save the trustfrom failing.

d. If Harry is older than 60–> DB status exists. The trust isignored and Harry is deemed to be the direct beneficiary ofthe IRA. The RMD will be based on his life expectancy.

e. If Harry is younger than 60 but has 1 child who is older than25, the trust can qualify as a See-Through Trust because allof the “countable” beneficiaries are individuals. That is,under these facts, if Harry died, the trustee would distribute



the remaining trust property to Harry’s child immediatelyand outright. Because of this, Harry’s child is the last link inthe countable beneficiary chain and we can ignore thecharity.

f. If Harry is younger than 60 and either: 1) does not have anychildren; or 2) has a child younger than age 25, the charitywould be a countable beneficiary because there is noindividual entitled to an immediate and outright distribution(assuming all preceding beneficiaries died).

7. Example: Druella Black

Druella Black named her revocable living trust as the beneficiary of herIRA. Her RLT stated that at her death, the trust would be split into 2 equalshares. One share would be distributed to her surviving daughter,Narcissa Malfoy, outright and free of trust. The other share would befurther divided into 3 separate lifetime trusts for the benefit of threegrandchildren (the children of Druella’s predeceased daughter, BellatrixLestrange).

At the grandchild’s death, the remainder of the trust would be distributedto such individuals as the grandchild should direct as long as theindividuals receiving the directed property were younger than thegrandchild. If the grandchild failed to exercise the power of appointment,the remainder of the trust would be distributed to Druella’s descendant’sper stirpes.

Druella Black died with $600,000 in her IRA survived by her daughter,Narcissa Malfoy, and her 3 grandchildren.

a. Assuming all of the See-Through Requirements are met (andthey appear to be), then we must determine the age of theOLDEST beneficiary of the RLT.–>

b. It does not matter that the RLT will terminate. Similarly, theresult will not chance if the account was divided andseparate inherited IRA accounts were established (forNarcissa and each of the grandchildren’s trusts). Separateshare/account treatment DOES NOT FIX the problem if thedirect beneficiary is a single funding trust, like a RLT.

c. Note that the drafting attempt to limit the Power ofAppointment to individuals younger than the grandchild did



not accomplish what the drafter likely intended– to limit theage to the grandchild or someone younger.

d. These facts were adapted from a real case in my office. Interestingly, the financial institution who managed the IRAreviewed the trust, set up separate accounts for each ofNarcissa’s and the grandchildren’s trusts and set themeasuring age for each separate account to the primarybeneficiary of that account. Narcissa’s account used her ageand each grandchild’s trust used the grandchild’s age!

e. Even more interesting is the fact that EVEN IF you were toignore the RLT (which you cannot35) and test only thegrandchildren’s trust, you would still use Narcissa’s agebecause the testing occurs on date of Druella’s death, andassuming none of the grandchildren had prospectivelyexercised their power of appointment (how could they whenthey had never seen a copy of the RLT), Narcissa is still theoldest potential beneficiary of the grandchildren’s trust (inabsence of the exercise of the POA, the trust propertyreverted to Druella’s descendants, the oldest of which wasNarcissa).

f. These rules are extremely difficult to analyze and thefinancial institutions are not immune from reaching anincorrect conclusion.

VII. Drafting the SNT as an Accumulation Trust

A. GOAL: Draft trust so that the primary beneficiary (the beneficiaryexperiencing disabilities) is the OLDEST potential beneficiary so that thebeneficiary experiencing disability’s age is used to calculate the RMD.

1. Because we know that the primary beneficiary’s age must count inthe chain test, the goal is for that age is to be the “oldest” age.

2. Drafting focus is on the payout of the trust assets after the death ofthe primary beneficiary.

35Treas. Reg. § 1.401(a)(9)-4, A-5(c).



3. What are the client’s goals?

a. Charity?

(1) Charitable beneficiary will cause SNT to fail asAccumulation Trust. Consider alternative estateplanning ideas (see below).

b. Siblings or other family members?

(1) Can they receive distributions outright?

(a) Yes? –> easier to draft

(b) No? –> must then analyze remainder trust totest for oldest beneficiary

B. Examples:

Ron and Hermione Weasley have two adult children. Their daughter,Rose (35 yrs), is married with 3 children and their son, Hugo (38 years), hasspecial needs. Ron and Hermione want to split their estate equally between theirchildren and direct Hugo’s share to an SNT. One of the largest assets of theirestate is Ron’s IRA account which is $800,000.

1. Under these basic facts, an Accumulation Trust using Ron’s age asthe measuring age could be drafted if: The remainder beneficiaryof the SNT is Rose, or if Rose is not then living, to Rose’s children,outright.

2. If the clients want to hold any grandchild’s share in trust until theyreach a certain age, the drafting becomes trickier and the potentialfor failure of See-Through Status increase.

a. Consider the following:

“At the death of Hugo, the trustee shall distribute the remainingtrust property to our daughter, Rose. If Rose is not then living, thetrustee shall distribute the remaining trust property to Rose’sdescendants, by right of representation; provided however, if anydescendant of Rose is under the age of 35, the trustee shallcontinue to hold that descendant’s share in a separate trust forsuch descendant until age 35.”



Assume that the terms of the separate descendant’s trust direct thetrustee to distribute income and principal for the descendant’shealth and education until age 35, and if the descendant should dieprior to age 35, the trustee should distribute the remainder of thedescendant’s trust to such descendant’s descendants, by right ofrepresentation.

(1) If, at the death of the survivor of Ron & Hermione,both Hugo and Rose are alive–> see through trustusing Hugo’s age as the measuring RMD lifeexpectancy.

(2) But what if Rose has predeceased and all of herchildren are under the age of 35 and none of themhave any children?

(a) You have to test the descendants’ trust butthere is no outright beneficiary alive... nowwhat? What does the contingent beneficiaryprovision say? Heirs at law?

i) Explain risk to clients and moveforward?

ii) Switch to outright distribution to Rose’schildren?

iii) Switch remainder beneficiary ofdescendant’s trust to siblings, outright?

3. The beneficiary designation form is critical here. It must directHugo’s share of the account directly to the SNT; not to Ron &Hermione’s “estate” or to their revocable trusts.

4. Assume the same basic facts re: Ron and Hermione, except thatthey want Hugo’s share to be distributed to their favorite charity.

a. See-Through Trust status is not an option.

b. Alternative planning ideas - see below.



C. Other Drafting Provisions

1. Include Definitions:a. Retirement Benefit means "an interest in one of the

following types of assets if payable to this trust as abeneficiary or owned by this trust: a qualified ornonqualified annuity; a benefit under a qualified ornonqualified plan of deferred compensation; any account inor benefit payable under any pension, profit-sharing, stockbonus, or other qualified retirement plan; any individualretirement account or trust; and any and all benefits underany plan or arrangement this established under §408, §408A,§457, §403, §401, or similar provisions of the InternalRevenue Code.

b. Retirement Account means "an account established or heldat a financial institution that holds Retirement Benefits"

2. Material Purpose Clause.

a. Why? Remember that Accumulation Trusts are simplydrafted to qualify as a See-Through Trust under the rulesand regulations pertaining to distributions from retirementaccounts. The phrase “Accumulation Trust” or “See-ThroughTrust” are really just terms of art used by practitioners andthose works do not generally appear anywhere in theprovisions of the trust itself. So why not consider adding aseparate provision in the SNT that clear

Example: “One of the material purposes of this trust is to allow itto qualify as a designated beneficiary of my retirement plan so thatthe life expectancy of my child, X, is used to calculate the minimumrequired distribution from the retirement plan under Treas. Reg.Section 1.401(a)(9)-9"

3. Explicitly state that the trust is Irrevocable.

a. Why? The irrevocability of a testamentary trust is assumedbecause the grantor/settlor of the trust has died, but itprobably doesn't hurt to simply state that the trust isirrevocable and make satisfying See-Through TrustRequirement #1 that much more obviously satisfied.



4. Prohibit the Use of Retirement Benefits to PayTaxes/Debts/Expenses of Owner’s Estate

a. Why? Most trusts (or state law) permit/require the trust tocontribute $ toward the payment of the decedent’s taxes,debts and expenses. However, if the “estate” is deemed tobe a potential beneficiary of the trust, this could cause thetrust to flunk See-Through Trust Requirement #5 (all trustbeneficiaries must be individuals).

Example: "The trustee may not, on or after September 30 of theyear following the year of my death, use or apply any retirementbenefit payable under any qualified retirement plan, individualretirement account or other retirement arrangement subject to the"minimum distribution rules" of Section 401(a)(9) of the InternalRevenue Code of 1986, as amended, for payment of my debts,taxes, expenses of administration or other claims against my estate,or for payment of estate, inheritance or similar transfer taxes dueon account of my death. It being my intent that all such retirementbenefits be distributed to or held only for individual beneficiaries. This section shall not apply to any distribution which is specificallydirected to be funded with retirement benefits by other provisionsof this Agreement".36

5. Exclude Older Adopted People

a. Why? If your document or your state law treats an adoptedperson as a legal "descendant", in theory, there is thepotential that a beneficiary of the trust could adoptsomeone older than the oldest identifiable beneficiary of thetrust. Thus, violating See-Through Trust Requirement #4 (alltrust beneficiaries must be identifiable).

Example: "A beneficiary's descendants shall not include anyindividual who is adopted after my death and is older than theoldest individual who is a beneficiary of this trust at my death."37

6. Limit Powers of Appointment

a. Why? Under most state laws, the power to appoint allowsthe powerholder to appoint in further trust among the class

36 See Choate, Appendix B, para 4.2 at p. 592.

37 See Choate, Appendix B, para 4.3 at p. 593.



of allowable appointees. This presents a potential problemsince we know that all trusts must pass the 5 See-ThroughTrust Requirements. The fact that some future trust maycome into existence but whose terms are not known at thetime of the owner's death could not be tested.

Example: "Notwithstanding any provision to the contrary, noretirement benefits may be appointed, distributed, or transferred toany other trust unless (1) the beneficiaries of the secondary trustare treated as having been designated as the direct beneficiaries ofsuch retirement benefit under Internal Revenue Code § 401(a)(9);and (2) the oldest beneficiary of such other trust was not born in ayear earlier than the year of birth of the oldest beneficiary of thistrust"38

7. Stand-Alone Trusts. Because of all the quirky drafting provisionssuggested above and the ease in which to satisfy See-ThroughTrust Requirement #3 (provide retirement plan provider with copyof trust by 10/30 of year following year of death), manypractitioners opt to have the accumulation trust as a separatestand-alone trust. This is not, however, required.

8. See Appendix ____ for sample Will which includes an SNT drafted asan Accumulation See-Through Trust containing these suggesteddrafting provisions.

VIII. The Beneficiary Designation Form

A. The beneficiary designation form ("BD Form") is an essential piece of thepuzzle in See-Through Trust status. You spend hours of time (and theclient's money) carefully crafting a trust that meets all of the requirementsof federal/state public benefits rules AND See-Through Trust minimumdistribution rules but if the beneficiary designation form is incorrect orsloppily drafted, all of the effort and money will have been wasted.

B. The SNT MUST be a DIRECT beneficiary of the retirement plan.

1. You cannot simply direct to the general estate planning vehicleEVEN if that entity only exists for a short period of time to fund theSNT. Do not use the short-cuts of "my estate" or the revocableliving trust and assume that because the assets will flow through

38 See Choate, Appendix B, para. 44 at p. 593.



the Will or Trust to the SNT, that the SNT is the beneficiary of theretirement plan; it is not.

a. Naming the "estate" will fail any chance of having the SNTdeemed as a See-Through Trust. The SNT will be required towithdraw the retirement funds out over the 5-Year Rule orthe remaining life expectancy of the owner, depending onthe age of the owner at death.

b. Naming the governing trust (i.e. the revocable living trust)will force the See-Through Trust Requirements to apply tothe RLT, not just the SNT. If the RLT has non-individualbeneficiaries (charities, or an argument that the settlor’sestate is a beneficiary (see VI, C, para 4 above), the RLT couldcause the SNT to fail.

C. The “Box” Problem

1. One of the most common problems with the BD form is that theforms are standardized and force the owner to translate hisbeneficiary designation intentions to fix into the boxes on the form. a. Some BD forms do not even anticipate that there could be a

testamentary trust as a beneficiary. They require the boxesfor Tax ID and date of trust to be completed and of course,this information is not yet available for a testamentary SNT. (See Appendix C for an example of this).

b. Other forms are more user friendly and either contemplatethe use of a testamentary trust and/or allow extra pages tobe filed with the form. If this option is available, Irecommend taking advantage of it. (See Appendix D for anexample with language)

c. Also, this is the time when an actively involved financialplanner can be your best friend. I often work directly withthe financial planners and explain the clients’ desires toincorporate the SNT as direct beneficiary. The financialplanner will then complete the forms and let me review. Further, it has often been the case that the financial advisorcan “push through” the form in a situation where thefinancial institution may otherwise reject because of the boxproblem.



D. Memorandum to Clients

1. The completion of the beneficiary designation forms is often left inthe client’s hands, either because the client does not want to payfor the attorney to fill out the forms or because it is not part of theattorney’s practice to complete the forms, or perhaps the client isshuffling through financial institutions and the beneficiarydesignation form is a future project. Whatever the case, I wouldencourage you to:

a. Think about building the cost of the BD Forms into theestimate of the engagement as if it is all part of the onepackage, rather than charging later for the completion of theBD Forms as this is when clients are more likely to balk. Remember, for some clients - the BD form can be the mostimportant part of their plan.

b. Provide the clients with a memorandum explaining thepotential tax consequences of naming the SNT as abeneficiary and the importance of the BD Form. I’veattached a sample memo that I often use at Exhibit E whichalso happens to address life insurance too)

IX. Alternative Estate Planning Ideas

A. Charitable Remainder Trust

1. If the client desires to direct the remainder of an SNT to charity, thetrust will fail as a See-Through Trust. This results in an accelerationof the income tax consequences. However, the income taxes couldbe mitigated by the use of a charitable remainder trust (“CRT”). Here’s how it would work:

a. The CRT is named as the direct beneficiary of the retirementplan. The lifetime beneficiary39 of the CRT is the SNT. TheCRT can be established upon the death of the client/owner.

b. The CRT is a trust but the CRT would fail as a See-ThroughTrust because of Trust Requirement #5 (all trust beneficiariesmust be individuals).

39 For ease of the discussion, I am using the terminology of “lifetime beneficiary” to refer to thebeneficiary receiving the annuity or unitrust interest of the CRT. Because CRTs can be established for aperiod of years, the duration of the CRT may not be based on an individual lifetime. However, when usedin conjunction with a SNT, the duration is almost always the lifetime of the SNT beneficiary.



c. The CRT must withdraw the retirement benefits over the 5-Year Period or the Remaining Life Expectancy (depending onage of Owner)40 but there is no immediate income taxconsequence because CRTs are tax-exempt entities.41

d. So, the CRT can withdraw all of the funds in the retirementplan without triggering an immediate income taxes.

e. However, CRTs must distribute out a portion of their assetseach year to the lifetime beneficiary. These annualdistributions carry out some of the income tax consequenceseach year to the lifetime beneficiary. But the income taxesare spread-out over many years, much in the same way asgetting the stretch payout of a See-Through Trust.

f. Usually, CRTs that have a non-individual as the lifetimebeneficiary are limited to a 20-year term; however, there is astatutory exception for a trust that is established for thebenefit of a person considered disabled under the SocialSecurity rules. The exception allows the unitrust paymentsto such a trust to continue for the lifetime of the disabledbeneficiary.42

B. Allocate Non-Retirement Assets to SNT

1. Sometimes the facts of the client’s situation does not fit into See-Through Trust status and a CRT is not an appealing solution. Inthose cases, I sometimes play with allocating specific assets to theSNT and other beneficiaries rather than simply dividing each assetproportionally between the beneficiaries.

Example: Petunia Dursley has a house worth $350,000; a bank accountworth $150,000 and an IRA worth $500,000. She has 2 children, ayounger son, Harry Potter (22 years) who she adopted several years agoand her older son, Dudley (50 years). Dudley has special needs and lives

40 See discussion at IV, C above.

41 See IRC 664 and related Treasury Regulations.

42 Rev. Rul 2002-20. There are a lot more details to naming a SNT as the beneficiary of a CRT andcomplying with this Rev. Rul. I would recommend that a review of an excellent article from Mass Mutualthat I came across online, “Charitable remainder and special needs trust combo: an example of a win-win-win situation for parent, child with a disability and charity.” I’ve attached a copy to these materials. SeeAppendix F.



with her. Petunia directs the house and bank account to the SNT forDudley and the IRA to Harry.

2. This can be slipperly slope if client is truly striving for equalitybetween the children though. Consider the example with Petuniaabove. While it appears that each child is receiving 50% of thevalue of Petunia’s estate, realistically it is very unlikely that eachchild will receive an equal share.

a. Because of the inherent income taxes built in, the IRA isworth substantially less than $500,000 to Harry.

b. Unless Petunia dies tomorrow, all of the values of theseassets will fluctuate. Petunia may be subject to withdrawingher RMD from the IRA and as she does, she adds it to herbank account, thereby pulling value from Harry and giving itto Dudley.

3. One solution to this problem is the philosophical client. The clientwho gives up on trying to control the details of the outcome anddecides “close enough” and whose kids hopefully share the sameview.

4. Another solution is trying to regain equality via an equalizationclause in the Will/Trust.

Example: Using the facts of Petunia above, assume that Petunia’s assetsare now:

house: $350,000bank accounts: $150,000investment account: $100,000IRA $500,000

Petunia would prefer to avoid naming the SNT as the beneficiary of theIRA because Petunia’s preferred contingent beneficiary is her church. Tothe extent possible, Petunia wants to ensure that her children shareequally in her estate. Petunia’s Will43 could contain an equalization gift toHarry:

“If I am survived by both my children, It is my desire that each of mychildren share substantially equally in the distribution of my overall estate,including probate and non-probate assets. I intend to direct my non-

43 This would work just as well in a revocable living trust except that you would substitute the term“probate assets” with “trust assets”.



probate assets to my son, Harry. To the extent that the value of thosenon-probate assets does not equal 50% of my net overall estate (aftertaxes and administration expenses have been paid), I hereby give apecuniary amount of my probate assets to my son, Harry, so that hereceives as close to an equal share of my overall estate as is possibleunder the circumstances.”44

a. It’s important to note that this equalization gift only works ifthe value of the probate/RLT assets exceed the value of thenon-probate assets.

b. If the value of the retirement benefits exceeded the value ofthe probate/RLT assets, the equalization gift would need tocome from the retirement funds. Retirement funds cannotbe controlled by a clause in the Will/Trust, the equalizationdirection would need to be incorporated into the beneficiarydesignation form. This author believes that such customdrafting of the form would be universally rejected by thefinancial institutions.

(1) If equalization in these circumstances were still thegoal, Petunia would need to:

(a) Get comfortable with SNT being a beneficiaryof the IRA (and the resulting potential of eitherusing Harrys age, or if still incorporatingchurch, the 5-year or Life Expectancy Payout)

(b) Periodically (and often) review her beneficiarydesignation form allocation with her financialplanner to adjust the SNT’s share up/down.

5. Sometimes the client’s desire for equalization is overshadowed bytheir concern that the SNT for their special needs child receives aminimum amount of funds. This “minimum value” concern is trickyto manage in the context of trying to allocate non-retirementassets to the SNT.

Example: Percival and Kendra Dumbledore have 3 children. Theirdaughter, Ariana’s share of their estate will be held in an SNT. The valueof Percival and Kendra’s estate fluctuates between $850,000 and $950,000depending on the real estate and investment markets. Their estate

44 I would also recommend defining the terms “overall estate”; “probate assets” and “non-probateassets”. For an example of this see the Will at Appendix G.



consists of both probate and non–probate (retirement plan and lifeinsurance) assets. They also believe that one or both of them will needlong-term care which could further deplete the estate value. Percival andKendra’s estate planning goals are: 1) to ensure that Ariana’s SNT receivesa minimum of $300,000; 2) equalize the distribution of the estate, ifpossible, among the 3 children; 3) minimize their children’s exposure tothe income taxes in the retirement plans; and 4) include their favoritecharity, “Art for Azkaban,” as an alternate contingent beneficiary.

a. This type of custom drafting is not for the faint at heart as itrequires a combination of equalization gifts, minimum valueclauses and periodic review/update of BD forms for non-probate/trust assets.

Example:

IF OVERALL ESTATE EXCEEDS $900,000. If my spouse does notsurvive me, and if the value of the Overall Estate (as herein defined)is Nine Hundred Thousand Dollars ($900,000.00) or more, thepersonal representative shall distribute the Probate Assets to andamong my sons, Albus Percival Wulfric Brian Dumbledore (“Albus”)and Aberforth Dumbledore (“Aberforth”), and the special needstrust created herein for the benefit of my daughter, ArianaDumbledore (hereinafter referred to as the “Ariana DumbledoreSNT”), so that each of them receives as close to an equal share ofthe Overall Estate assets as is possible under the circumstances.

IF OVERALL ESTATE IS LESS THAN $900,000. If the value of theoverall estate is less than Nine Hundred Thousand Dollars($900,000.00), the personal representative shall distribute theProbate Assets as follows:

(1) DISTRIBUTION OF OVER $300,000 TO SPECIAL NEEDSTRUST. If the Ariana Dumbledore SNT will receiveThree Hundred Thousand Dollars ($300,000.00) ormore of non-Probate Assets (as defined herein), thepersonal representative shall distribute the ProbateAssets in equal shares to Albus and Aberforth.

(2) DISTRIBUTION OF LESS THAN $300,000 TO SPECIALNEEDS TRUST. If the Ariana Dumbledore SNT willreceive less than Three Hundred Thousand Dollars($300,000.00) of non-Probate Assets, the personalrepresentative shall distribute as much of the ProbateAssets as is necessary for the Ariana Dumbledore SNT



to be funded with Three Hundred Thousand Dollars($300,000.00) (from both Probate and non-ProbateAssets). The balance of the Probate Assets shall bedistributed equally between Albus and Aberforth, sothat the children receive as close to an equal share ofthe Overall Estate as is possible under thecircumstances.

b. See Appendix G for a more complete same of this Will,including definitions and examples.

X. Take-Aways

A. An SNT must be drafted as See-Through Trust in order to qualify as aDesignated Beneficiary

B. Generally, the SNT must be drafted as See-Through Accumulation Trustunless the facts (lower value IRA; young beneficiary) support the ability forSee-Through Conduit Trust because the RMD is low enough to allow forspend-down.

C. See-Through Accumulation Trusts use the age of the oldest beneficiary tocalculate the payout of the required minimum distributions

D. Accumulation See-Through Trusts require careful drafting and a focus onremainder beneficiaries

E. The beneficiary designation form must show the SNT as the directbeneficiary

F. Client’s estate planning goals may make Accumulation See-Through Truststatus impossible. Consider whether any of the alternate estate planningideas may be helpful

1. Charitable Remainder Trust

2. Allocation of non-retirement assets to SNT



9/21/2016

1

What you need to know about minimum distribution rules

and special needs trusts.

Melanie MarmionFitzwater Meyer Hollis & MarmionPortland, ORwww.fitzwatermeyer.com

1. This area is expansive!

2. Topics not covered can be explained in Natalie Choate’s Life and Death Planning with Retirement Benefits.

3. What we will cover: Review of webinar A general primer on minimum distribution rules Naming a trust as a beneficiary of a retirement plan

Drafting special needs trusts as accumulation trusts Alternative estate planning ideas



9/21/2016

2

MRD after the death of the Owner will depend on whether the Owner died beforeor after her RBD. Before: If designated beneficiary (“DB”)Age of DB If no DB 5-year Rule Funds must be withdrawn by 5th anniversary of death

After If DB Age of DB If no DB Owner’s remaining life expectancy

Can always withdraw more

Designated Beneficiary Advantage

Tax-deferred benefits can continue past the lifetime of the Owner if a Designated Beneficiary is named on the account.

The “measuring life” of the MRD will switch to the life expectancy of the Designated Beneficiary; thus “stretching out” the distribution term to cover two lives.



9/21/2016

3

Who is a Designated Beneficiary? A Living Individual Surviving spouses have special DB privileges. Roll-over to spouse’s own IRA and Name their own DB to continue tax deferral into a

3rd lifespan.

A See-Through Trust No other entity (including an estate or a “opaque”

trust) can be a DB.

5 requirements for a See-Through Trust: 1st: Trust must be valid under state law

2nd. Trust must be irrevocable

3rd: A copy of the trust agreement must be provided to the retirement plan provider no later than October 30th of the year following Owners death

4th: Beneficiaries of the trust must be identifiable (by class is fine)

5th: All beneficiaries must be individuals

Trust Tested as of September 30th following year of Owner’s death



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Two types of See-Through Trusts:

1. Conduit Trusts Use age of lifetime beneficiary to determine MRD

2. Accumulation Trusts Use age of oldest beneficiary to determine MRD

Conduit Trusts: Trust must be drafted to require any withdrawals

from retirement plan/account to be immediately distributed to the lifetime beneficiary

IRS assumes that the “true” recipient of the MRD is the primary beneficiary.

The primary beneficiary’s age is used to calculate the MRD as he/she had been named as the direct beneficiary of the retirement account.

It is NOT enough for the trust to require “all income” to be paid to the beneficiary.

8



9/21/2016

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ADVANTAGES A Conduit Trust always qualifies as a DB Tax advantage of naming an individual

beneficiary with the protection of a trust Easy to draft

DISADVANTAGES: A Conduit Trust requires automatic distributions to

the beneficiary. BIG DISADVANTAGE: Because of the automatic

distributions to the beneficiary, a Conduit Trust will usually NOT work for special needs trusts.

Trusteed IRAs Corporate-managed conduit trust Allows for customization of distributions

that exceed the MRDWill usually NOT work for SNTs



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Accumulation Trusts:

Trust is drafted to allow MRDs to accumulate in the trust no automatic distribution like Conduit Trust

The age of the oldest beneficiary is used to calculate the MRDs

A Special Needs Trust has the potential to be treated as an Accumulation Trust if carefully drafted.



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1st Requirement: The trust must be valid under state law Easy

2nd Requirement: The trust must be irrevocable Easy

3rd Requirement: A copy of the trust document must be submitted to retirement plan provider by 10/30 of year following year of death Easy

4th Requirement: All trust beneficiaries must be identifiable Must be able to identify both current &

“countable” remainder beneficiaries to find “oldest”

Identifying by class (“my nieces who survive me”) is fine

5th Requirement: All trust beneficiaries must be individuals Which Beneficiaries Count?

Tested as of September 30th following year of Owner’s Death



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8

Natalie Choate’s Chain Test: Assume current beneficiary counts as first “link”

in countable beneficiary chain Analyze all future (i.e., remainder) beneficiaries

of the trust by counting all successive beneficiaries until you come to the beneficiary(ies) who will be entitled to receive the trust property immediate and outright upon the death of the prior beneficiaries.

That “immediate and outright beneficiary(ies)” is the last beneficiary “link” in the countable chain

Once you know your “links”, then test Are they identifiable? Are they individuals? Yes?Accumulation Trust MRD is age of oldest “link”

beneficiary No? No Accumulation Trust No DB MRD based on

5-Year Rule or Life Expectancy Rule

Embedded/Successor trusts create more beneficiaries to test

Powers of appointment all of the potential appointees as well as those who take in default must be analyzed in the chain



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9

Example: Sirius Black directed his IRA to a trust to benefit his nephew, Harry Potter: While Harry under 60, the trustee can

distribute for HEMS (health, education, support & maintenance)

If Harry dies prior to age 60, the trust would be distributed to Harry’s descendants, per stirpes.

Any share for a descendant under age 25 would continue in another trust for that descendant until age 25.

The contingent beneficiary of Harry’s and the descendant’s trust is Hogwarts School of Magic.

Sirius dies with $500,000 in his IRA Analysis: Note at the time the trust was drafted there is

no way to confirm whether or not the trust would qualify as a See-Through Trust

The presence of the charity creates potential for failing Requirement #5

The analysis depends on the facts as they exist on September 30th following the year of Sirius’ death



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Analysis Con’t If Harry is older than 60: See-Through Trust status is moot Harry is deemed to be the direct beneficiary DB status; MRD based on Harry’s life expectancy

If Harry is younger than 60 and… All of his children are over age 25 See-Through Trust The countable links are Harry and his children Harry’s age will be used

If Harry is younger than 60 and… He does not have any children OR any child is under

age 25 The countable links now include Hogwarts No See-Through Trust (Requirement #5 fails)



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Druella Black named her revocable living trust as the beneficiary of her $600,000 IRA. The relevant terms of Druella’s RLT provide: At Druella’s death, RLT splits into 2 shares One share distributed outright to Druella’s surviving

daughter, Narcissa Other share split into 3 lifetime trusts for the

benefit of Druella’s 3 grandchildren (the children of Laura’s predeceased daughter, Bellatrix).

Each GC’s trust allowed for HEMS during lifetime. At death, the remainder would be distributed to individuals appointed by the GC who must be younger than the GC.

If the GC failed to exercise power of appointment, default to Druella’s descendants, per stirpes.

Analysis Both the RLT and the GC trust must be tested See-Through Trust Requirements #1- valid under state law yes #2- irrevocable->yes #3 trust doc provided to IRA providerassume yes #4 trust beneficiaries are identifiableyes #5 trust beneficiaries are individualsyes

Oldest beneficiary of RLT is Narcissa



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Analysis cont’d Even if Narcissa and GC trusts established

separate accounts with their share of IRA Narcissa is still measuring age Separate Account Rule does not apply when direct

beneficiary is RLT (or other funding trust)

Note the attempt to draft POA to younger beneficiaries did not help

Analysis cont’d Financial Institution followed result of Separate

Account Rule wrong Even if you ignore RLT (which you can’t) and test

GC trust, Narcissa is STILL the oldest potential beneficiary of GC trust If fail to exercise POA, the trust defaulted to Druella’s

desc, the oldest of which is Narcissa

Not uncommon for financial institutions to reach incorrect result



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Goalto draft the SNT so the primary beneficiary (beneficiary with disabilities) is the OLDEST potential beneficiary and his/her age is used to calculate the MRD.

Remember: Must be drafted as Accumulation See-Through

Trust Drafting focus is on the payout of the trust assets

after the death of the primary beneficiary.

What are the client’s intentions after the primary beneficiary passes away? Charity? Charity will cause SNT to fail as See-Through Trust Consider alternative planning ideas’

Family & Friends? Can they receive distribution outright? Yes? easiest to draft; easy to check age of oldest No? harder; must analyze potential remainder

trusts



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Example: Ron and Hermoine Weasley have 2 adult children. Their daughter, Rose (35 yrs), is married with 3 children. Their son, Hugo (38 years), has special needs. Ron and Hermoine want to divide their estate equally between their children and direct Hugo’s share to an SNT. The largest asset of their estate is Ron’s $800k IRA account.

Under these basic facts, See-Through Trust using Hugo’s age could be drafted easily if: Rose is the remainder beneficiary of the SNT; AND If Rose is not then living, the GC are the outright

remainder beneficiaries

If Clients want to hold any GC share in further trust until the GC reaches a certain age… Trickier drafting Potential for failing See-Through Trust status increases



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Assume Ron and Hermoine want any share for a GC to be held in further trust until the GC reaches age 35; and if a GC dies prior to age 35, to the GC’s descendant’s per stirpes…

Note no guarantees here– See-Through Trust status tested upon “future” unknown facts

If Hugo and Rose survive the Clients See Through TrustDB oldest beneficiary

(Hugo)

If Hugo survives but Rose has predeceased leaving children All over 35? Same result as above Any child under age 35? Must test GC trust but no identifiable outright

beneficiary of GC trust if GC died prior to age 35. Now What? check contingent beneficiary provision



9/21/2016

16

Client’s must prioritize… Tax Savings? switch to outright distribution to Rose’s children Or…draft remainder beneficiary of GC’s trust to be to

GC’s siblings, outright

Control of $ over young descendants Explain risk and move forward

Beneficiary Designation Form is critical Must direct to Hugo’s SNT; not to “estate” or

client’s RLT “50% to the trustee of the SNT created for my

son Hugo under my revocable trust dated xx”

Assume Ron and Hermoine want to direct remainder of Hugo’s SNT Trust to charity See-Through Trust is not option for Hugo’s SNT 5-Year Rule or Life Expectancy Rule

Move forward anyway Consider alternative planning ideas



9/21/2016

17

Drafting Provisions to Consider Definitions Retirement Benefits? Retirement Accounts? Minimum required distribution?

Explicitly state that SNT is irrevocable upon death of [parent] and valid under X state law

Material Purpose Clause Why? Terms “See-Through Trust” or “Accumulation Trust”

are terms of art; not generally found in the terminology of the SNT

Clarifies any confusion about why you drafted remainder beneficiaries differently than expected

“One of the material purposes of this trust is to allow it to qualify as a designated beneficiary of my retirement plan so that the life expectancy of my child, ___, is used to calculate the minimum required distribution under Treas. Reg. 1.401(a)(9)-9”



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Prohibit use of retirement funds to pay taxes/debts/expenses Why? Most state laws allow allocation of debts and

taxes among the beneficiaries (including the SNT) If retirement funds are paid to the SNT and then

used to pay taxes/debts/expenses, the “estate” could be deemed to be a beneficiary of the SNT

Flunk See-Through Trust Requirement #5

Exclude older adoptees Why? If document or state law treats adoptees as legal

“descendants” and someone’s descendants are the potential beneficiaries of the SNT, the oldest potential beneficiary is now unidentifiable Potential for someone older than ‘oldest’ beneficiary

to be adopted later Flunks See-Through Trust Requirement #4



9/21/2016

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Limit Powers of Appointment Why? Most state laws allow POAs to be exercised to

appoint “in further trust” All trusts must be tested, but this is a future

potential trust that cannot be tested because terms are not yet known

Sample SNT with suggested drafting provisions included in outline materials

Stand- Alone Trust Not required Preferred by some attorneys because: Quirky drafting provisions that you don’t want applied

to other trusts Ease to satisfy See-Through Trust Requirement #3



9/21/2016

20

The “BD” form is critical to See-Through Trust status

Must name the SNT directly Naming the “Will” or “Estate” with

understanding that $ will flow from there to the SNT is not a good answer SNT will fail as See-Through Trust No DB status available Five-Year Rule or Life Expectancy Rule will apply

Naming the RLT The RLT must pass See-Through Trust requirements Any non-individual (even as contingent) will cause

problems

The “Box” problem Standardized forms do not allow for custom

drafting Some forms do not even allow for testamentary

trust to be considered as beneficiary Some forms are more user-friendly and allow for

extra language to be “attached” A good financial planner can be the “hammer” to

push through custom drafted form



9/21/2016

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Memorandum to Clients Reality is that completion of BD forms are often

left for client to fill out Consider building cost of completing the BD form

into initial estimate rather than “add-on” cost at end

Provide clients with memo explaining potential tax consequences of naming SNT as beneficiary of retirement plan and the importance of the BD form

Include sample language for BD Form See written materials for sample Memorandum

1St Alternate Planning Idea: Allocate Non-Retirement Assets to SNT

Client’s situation does not fit easily into drafting See-Through Trust

CRT is not appealing solution

Goal Allocate specific non-retirement assets to SNT and direct retirement to other beneficiaries



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Example:Petunia Dursley has a house worth $350k; a bank account worth $150k and an IRA worth $500k. She has 2 children: a younger son, Harry (who she adopted several years ago) and an older son, Dudley. Dudley has special needs and lives with her.

Petunia’s Will directs her estate to Dudley’s SNT.

Petunia names Harry as the 100% beneficiary of her IRA.

Not truly equal IRA is worth substantially less than $500k to

Harry because of the income taxes Values will continue to fluctuate As Petunia pulls out her MRDs, she’ll add them to

bank account, thereby reducing Harry’s share and adding to Dudley’s share

Solutions Philosophical Client- “that’s life” Another solution may be including an

Equalization Clause



9/21/2016

23

Similar facts as above, except Petunia has:House: $350kBank account: $150kstock account: $100kIRA: $500k

Petunia’s goals: Avoid naming Dudley’s SNT as beneficiary of her

IRA because she wants to name her Church as contingent beneficiary

Ensure that her children receive equal shares of her estate

Petunia names Harry as the 100% beneficiary of her IRA

Petunia’s Will directs the residue of her Estate to Dudley’s SNT

In her Will, Petunia gives Harry a specific pecuniary gift to equalize his share of her overall estate



9/21/2016

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“If I am survived by both of my children, it is my desire that each of children share equally in the distribution of my overall estate, including both my probate and non-probate assets. I intend to direct my non-probate assets to my son, Harry. To the extent that the overall value of those non-probate assets does not equal 50% of my net overall estate (after the payment of taxes and administration expenses), I herby give a pecuniary amount of my probate assets to my son, Harry, so that he receives as close to an equal share of my overall estate as is possible under the circumstances”

House: $350kBank account: $150kstock account: $100kIRA: $500k

Petunia’s overall estate = $1,100,000Harry would receive:

$500,000 IRA $50,000 under the Will

Dudley’s SNT would receive:$550 under the Will



9/21/2016

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Equalization gift only works when value of probate/RLT assets exceed value of retirement assets

If retirement account value is higher, than equalization amount would need to come from IRA How to incorporate equalization clause in BD form? Petunia would have to name SNT as beneficiary of

“excess” portion of IRA Get comfortable with 5-year/Life Expectancy rule

applying Periodically and often review her IRA account value and

adjust BD form accordingly

2nd Alternate Estate Planning IdeaDrafting for Minimum Value to SNT

Sometimes clients’ desire for equalization is overshadowed by their concern that the SNT receive a minimum amount of funds

This “minimum value” goal is tricky to manage when retirement accounts make up large part of estate

Not for the faint of heart: Combines equalization gifts with minimum value clauses and periodic review of estate values and update of BD Form



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Example: Percival and Kendra Dumbledore have 3 children. Their daughter, Ariana’s share of the estate will be directed to an SNT. The value of their estate fluctuates between $850k- $950k consisting of probate assets and non-probate assets (life insurance and retirement plans). They also believe that one or both of them will need long-term care which will further deplete the estate value.

Percival and Kendra’s estate planning goals are: To ensure that Ariana’s SNT receives a minimum

of $300,000 Equalize the distribution of the estate, if

possible, among the 3 children Minimize the exposure of income taxes in the

retirement plans Include their favorite charity “Art for Azkaban”

as a contingent beneficiary



9/21/2016

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Overall drafting of Will/Trust requires: Minimization Clause If overall estate equals less than $X, SNT receives first

$300,000

Equalization Clause If overall estate exceeds $X, than all 3 children get

equal shares with SNT being funded first from probate assets

Periodic Review/Update of BD Forms If SNT needs to be funded with retirement assets

(because probate asset values have been reduced), clients must add SNT as beneficiary to retirement account

Appendix in written materials has sample Will for Percival Dumbledore showing: Minimum Value Clause Equalization language Provides specific examples



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3rd Alternate Planning Idea: Charitable Remainder Trust “CRT”

Charity as remainder beneficiary will cause SNT to fail as See-Through Trust

Income taxes accelerated via the 5-Year Rule or Life Expectancy Rule

CRT provides ability to stretch-out income tax consequences to SNT

Charitable Remainder Trusts The CRT is named as the direct beneficiary of the

retirement account The lifetime beneficiary of the CRT is the SNT Must be structured as an annuity or unitrust interest Must satisfy requirements of IRC 664 and related

Treasury Regs

Because the CRT is a tax-exempt entity, the initial withdrawal of the retirement $ by the CRT does not trigger any immediate income tax consequences.



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The annual distributions to the SNT will carry out a portion of the income taxes each year

Generally, a CRT is limited to a 20-year term when the primary beneficiary is a trust Statutory exception for trust where beneficiary is

disabled under Social Security rules CRT can be structured to make distributions to

SNT for SNT beneficiary’s lifetime

Summary: Must be familiar with CRT rules and draft

carefully Good fit for clients who have charitable

inclinations and are willing to pay for complex drafting

Drafting can be easier than administering Does not work well with young beneficiares

because 10% charitable remainder test fails



9/21/2016

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SNTs must be drafted as Accumulation See-Through Trust to get DB status

Always uses age of “oldest” potential beneficiary

Requires careful drafting and focus on remainder beneficiaries

Pay particular attention to BD Form

Client’s estate planning intentions may make Accumulation See-Through Trust impossible

Consider Alternate estate planning techniques Charitable remainder trust Allocation of non-retirement to SNT

Charge accordingly!



LAST WILL AND TESTAMENT

OF

HARRY JAMES POTTER

I, HARRY JAMES POTTER, of Portland, Oregon, declare that this is my Will andrevoke all prior Wills and Codicils.

ARTICLE 1

1. FAMILY

1.1 SPOUSE. I am married to GINEVRA (“GINNY”) POTTER and all references to"my spouse" are to him.

1.2 DESCENDANTS. My children are JAMES POTTER, ALBUS POTTER, and LILYPOTTER. References in this Will to "my children" include any child later born to oradopted by me.

ARTICLE 2

2. LEGAL REPRESENTATIVES

2.1 PERSONAL REPRESENTATIVE. I name my spouse as my personalrepresentative. If my spouse fails to qualify or ceases to act as my personalrepresentative, I name HERMIONE GRANGER WEASLEY as my personal representative.

2.2 GUARDIAN. If a guardian is necessary for any child of mine, I name RONALDWEASLEY and HERMIONE GRANGER WEASLEY as guardian.

2.3 TRUSTEE. I name HERMIONE GRANGER WEASLEY as trustee of any trustcreated by this Will for the benefit of a descendant of mine. If HERMIONE GRANGERWEASLEY fails to qualify or ceases to act as trustee, I name NEVILLE LONGBOTTOM astrustee. If a conservator is necessary for the estate of any child of mine, I name thetrustee as conservator.

PAGE 1 - LAST WILL AND TESTAMENT OF HARRY JAMES POTTER



ARTICLE 3

3. SPECIFIC GIFTS AND SPECIAL DIRECTIONS

3.1 SPECIFIC GIFT. I give the sum of One Hundred Thousand Dollars($100,000.00) to HOGWART’S SCHOOL OF MAGIC, a non-profit organization locatednear the Village of Hogsmeade. If HOGWART’S SCHOOL OF MAGIC is no longer inexistence at the time of my death, this gift shall lapse.

3.2 TANGIBLE PERSONAL PROPERTY. If my spouse survives me, I give to myspouse any interest I have in household goods and furnishings, personal vehicles,recreational equipment, clothing, jewelry, personal effects, and other tangible personalproperty for personal or household use, together with any insurance on this property. Ifmy spouse does not survive me, I give this property in substantially equal shares to mysurviving children to be divided among them as they agree or, if they do not agree, asmy personal representative determines.

ARTICLE 4

4. RESIDUE

4.1 IF MY SPOUSE SURVIVES. If my spouse survives me, I give the residue of myestate to my spouse.

4.2 IF MY SPOUSE DOES NOT SURVIVE. If my spouse does not survive me, I givethe residue of my estate in equal shares to my children, one share for any child whosurvives me and one share by right of representation for the then surviving descendantsof each child who does not survive me; provided, however that if my son, JAMESPOTTER, survives me, his share shall be held in a special needs trust as provided inArticle 5.

4.3 CONTINGENT BENEFICIARIES. If neither my spouse nor any of mydescendants survive me, I give the residue of my estate to HOGWART’S SCHOOL OFMAGIC, a non-profit organization located near the Village of Hogsmeade.

4.4 DESCENDANT’S TRUST. If any surviving descendant of a deceased childof mine who is under the age of twenty-five (25) is entitled to a share of myestate or trust estate, the trustee shall retain that beneficiary's share in a separatetrust. The trustee shall distribute to or for the benefit of the beneficiary thoseamounts of income or principal which the trustee considers advisable for the




beneficiary's health, education, support, and maintenance. When the beneficiaryreaches the age of twenty-five (25), the separate trust shall terminate and thetrustee shall distribute the remainder of the trust to the beneficiary. If thebeneficiary dies before receiving full distribution of the share, the trustee shalldistribute the remainder of the trust to the beneficiary's estate.

ARTICLE 5

5. SPECIAL NEEDS TRUST

5.1 NAME OF TRUST. This is a third party special needs trust. This trust may becalled the James Potter Third Party Special Needs Trust. JAMES POTTER may be referredto as “James” throughout this Article.

5.2 DISABILITY OF BENEFICIARY. James is disabled. As a result of this disability,James requires financial assistance to meet his needs.

5.3 INTENT. My primary intentions for creating this trust for James’s benefit areas follows:

5.3(a) SUPPLEMENT PUBLIC RESOURCES. To provide a fully discretionaryspendthrift trust to supplement public resources and benefits when suchresources are unavailable or insufficient to provide for the special andsupplemental needs of the beneficiary. It is my purpose to create a fund forJames’ benefit; and

5.3(b) ENHANCE QUALITY OF LIFE. To enhance James’ health, comfort,happiness and dignity during his lifetime, subject to the sole and absolutediscretion of the trustee.

5.3(c) QUALIFY AS SEE-THROUGH TRUST. To allow this trust to qualify asa designated beneficiary (i.e. a “See-Through Trust”) of my retirement plan sothat the life expectancy of James is used to calculate the minimum requireddistribution under Treas. Reg. 1.401(a)(9)-9.

///

///

5.4 DISTRIBUTIONS.




5.4(a) NO RIGHT TO COMPEL. All distributions shall be within the solediscretion of the trustee. James does not have any authority to compel adistribution from this trust.

5.4(b) SPECIAL NEEDS. During James’ lifetime, the trustee shall have solediscretion to distribute for his benefit those amounts of income or principal thatthe trustee considers advisable to meet James’ special needs that are not met bygovernment assistance programs. "Special needs" shall include, but not belimited to, the following types of special needs, to the extent other funds frompublic sources are not available: clothing; personal attendant and personal careservices, respite care, advocacy, rehabilitation and therapy, social developmentservices, private case management; medical and dental care; health insurancepremiums; durable medical equipment; guardian and conservator fees; educationand training; transportation expenses; computer equipment and services;entertainment; telephone; and housekeeping.

5.4(c) CONSIDERATION OF OTHER RESOURCES. Despite any otherprovision of this instrument, the trustee shall consider any income, support, orproperty available to James from any source, including government assistanceprograms, before making any discretionary distributions under this trust. Thetrustee shall further consider the applicable resource and income limitationsunder any government assistance programs for which James may be eligible.

5.5 ELIGIBILITY FOR GOVERNMENT ASSISTANCE. If it is in James’ best interest,the trustee shall take any steps required to qualify James for government assistanceprograms and to ensure that James’ support needs are met through such programs.

5.6 DEFENSE OF TRUST. For purposes of determining James’ eligibility for suchbenefits, no part of the principal or income of the trust estate shall be consideredavailable to him. In the event the trustee is requested by any department or agency torelease principal or income of the trust to or on behalf of James to pay for equipment,medication, or services which other organizations or agencies are authorized to provide,or in the event the trustee is requested by any department or agency administeringsuch benefits to petition the court or any other administrative agency for the release oftrust principal or income for this purpose, the trustee shall deny such request and maydefend, at the expense of the trust estate, any contest or other attack which defeats thepurpose of this trust.

5.7 PREFERENTIAL RIGHTS OF BENEFICIARY. James’ rights and interests arepreferred over the rights of any remainder beneficiary who receives the trust property




after James’ death. The trustee is authorized to exercise discretion to spend all incomeand/or principal of the trust in order to accomplish the trust purposes.

5.8 SPENDTHRIFT. No interest in the principal or income of this trust shall beanticipated, assigned or encumbered, or shall be subject to any creditor’s claim or tolegal process, prior to its actual receipt by the beneficiary. Furthermore, I declare that itis my intent as expressed herein, that because this trust is to be conserved andmaintained primarily for James, that no part of the corpus thereof, nor principal norundistributed income, shall be subject to the claims of voluntary or involuntary creditorsfor the provision of care and services, including residential and institutional care, by anypublic entity, office, department or agency of the State of Oregon, or any other state, orof the United States, or any other governmental agency.

5.9 RETIREMENT PLANS.

5.9(a) DISTRIBUTION OF RETIREMENT BENEFITS. Notwithstandinganything to the contrary, any Retirement Benefits (as herein defined) directed toa trust created for a child of mine shall be subject to the following provisions:

5.9(b) DEFINITIONS.

5.9(b)(1) RETIREMENT BENEFIT(S). ‘Retirement Benefit’ or‘Retirement Benefits’ and other similar references mean any benefit oramount that is owned by or payable to this trust under: an individualretirement account (‘IRA’) as defined in §408; a Roth IRA as defined in§408A; a ‘deemed’ IRA or Roth IRA under §408(q); an annuity or mutualfund custodial account under §403(b); a pension, profit sharing, stockbonus or other retirement plan that is qualified under §401(a); any otherretirement plan or arrangement that is subject to the ‘minimumdistribution rules’ of §401(a)(9), or equivalent rules under any other Codesection; any annuity (specifically including any non-qualified annuity,regardless of whether it is part of a retirement plan); or any plan orarrangement of deferred compensation for services. The plan, trust,account or arrangement under which any Retirement Benefit is held for orpayable to this trust is referred to as a ‘Retirement Plan'.

///5.9(b)(2) ANY OTHER TERMS. Any other terms in this Article shall

be determined in accordance with section 401(a)(9) of the InternalRevenue Code of 1986, as amended, and Treasury regulations thereunder.




5.9(c) EXCLUSION OF OLDER ADOPTED DESCENDANTS. Notwithstandingany other provision herein or of state law, the class of ‘lineal descendants’ shallnot include an individual who is a ‘lineal descendant’ by virtue of legal adoptionif such individual (i) was so adopted after my death and (ii) is older than theoldest other beneficiary of this trust who was a living member of said class at mydeath.

5.9(d) PROHIBITION TO PAY TAXES AND EXPENSES. Notwithstanding anyother provision herein, the trustee may not, on or after September 30 of thecalendar year following the calendar year in which my death occurs, use or applyRetirement Benefits to pay debts, taxes, expenses of administration or otherclaims due on account of my death.

5.9(e) POWERS OF APPOINTMENT. Notwithstanding any provision to thecontrary, no retirement benefits may be appointed, distributed, or transferred toany other trust unless (1) the beneficiaries of the secondary trust are treated ashaving been designated as the direct beneficiaries of such retirement benefitunder Internal Revenue Code §401(a)(9); and (2) the oldest beneficiary of suchother trust was not born in a year earlier than the year of birth of the oldestbeneficiary of this trust.

5.10 POWER TO AMEND. The trustee of this trust may amend this trust so that itconforms with any laws or interpretations of law by any governing body or agencyrelating to government assistance received by James, and/or to better effectuate thepurposes of the trust.

5.11 OBTAIN PROFESSIONAL ADVICE. I strongly encourage the trustee toconsult with a knowledgeable attorney for professional advice regarding (1) thefiduciary duties of a trustee, (2) how to handle trust distributions in a manner that willnot jeopardize James’ eligibility for government assistance programs. The trustee is tobe reimbursed for the cost of this professional advice.

5.12 DEATH OF BENEFICIARY. Upon James’ death, the trustee may pay theexpenses of his funeral, and all administrative expenses relating to this trust, includingreasonable attorney and accountant's fees, if, in the trustee's sole discretion, othersatisfactory provisions have not been made for the payment of such expenses.

5.13 TERMINATION OF SPECIAL NEEDS TRUST. This trust shall cease andterminate on James’ death and thereupon the trustee shall distribute the remainingtrust property to my daughter, LILY POTTER, or if LILY POTTER is not then living, to her




descendants, by right of representation, subject to the provisions of section 4.4 of thisWill.

ARTICLE 6

6. TRUST ADMINISTRATION

6.1 NONASSIGNMENT. The interest of any beneficiary in income or principalmay not be voluntarily or involuntarily anticipated, alienated, or encumbered and shallnot be subject to claims of creditors or others or to legal process.

6.2 PRINCIPAL PLACE OF ADMINISTRATION. The principal place ofadministration of any trust established under this instrument is the State of Oregon. The trustee may transfer the principal place of administration to another jurisdictionthat is appropriate to the trust’s purposes, the trust’s administration, and the interests ofthe beneficiaries.

6.3 NOTICE, INFORMATION, AND REPORTS. The trustee shall have a duty tofurnish notice, information, and reports in accordance with Oregon law with respect tothis Trust and any trust established under this instrument. Any notice, information andreports for any person who is a minor or is financially incapable, shall be given insteadto his or her court-appointed conservator or guardian of the estate.

ARTICLE 7

7. TRUSTEE POWERS

Except as may be otherwise provided in this instrument, as to each trust createdherein, the trustee shall have all powers that are conferred on a trustee by Oregon lawas now existing or later amended. In addition, the trustee shall have the power:

7.1 MANAGE AND DISPOSE OF ASSETS. To manage, maintain, improve, lease,grant options on, encumber, sell, exchange, or otherwise dispose of part or all of thetrust estate in any manner and on any terms the trustee considers beneficial to the trustestate.

7.2 RETAIN ASSETS. To retain any property for so long as the trustee considersretention of probable benefit to the trust estate and the trust beneficiaries.




7.3 MAKE INVESTMENTS. To invest and reinvest the trust estate in common orpreferred stocks, bonds, mutual funds, common trust funds, secured and unsecuredobligations, mortgages, and other property, real or personal, which the trusteeconsiders advisable and in the best interest of the trust estate, whether or notauthorized by law for the investment of trust funds.

7.4 RECEIVE COMPENSATION. To receive reasonable compensation for thetrustee's own services and reimbursement for expenses incurred in administering thetrust estate.

7.5 ADVANCE FUNDS OR BORROW. To advance the trustee's own funds to thetrust for any trust purposes at prevailing rates of interest (with any advance to be a lienon the trust estate) and to borrow money for those purposes and upon those terms andconditions which the trustee considers to be in the best interest of the trust estate.

7.6 PURCHASE ASSETS AND MAKE LOANS. To purchase assets at their fairmarket value (as determined by the trustee) from my probate estate or my spouse'sprobate or trust estate, and to make secured or unsecured loans to my probate estateor my spouse's probate or trust estate, for any reason the trustee believes will benefitmy probate estate or my spouse's probate or trust estate.

7.7 COMBINE MANAGEMENT OF SEPARATE TRUSTS. To hold the trust estate asan undivided whole without separation into any separate trusts for as long as thetrustee considers suitable and to allot undivided interests in any asset to any separatetrusts, but no undivided holding shall defer vesting or distribution under the trusts.

7.8 DO OTHER ACTS. Except as otherwise provided in this instrument, to do allacts that might legally be done by an individual in absolute ownership and control ofproperty and which in the trustee's judgment are necessary or desirable for the properand advantageous management of the trust estate.

///

///

///

ARTICLE 8

8. TRUSTEE




8.1 RESIGNATION OF TRUSTEE. The trustee may resign the trusteeship at anytime. Any resignation shall be in writing and shall become effective only upon writtenacceptance of the trust by a successor trustee.

8.2 TRANSFER TO SUCCESSOR TRUSTEE. Upon acceptance, a successor trusteeshall succeed to all rights, powers, and duties of the trustee. All right, title, and interestin the trust property shall vest in the successor. The prior trustee shall, withoutwarranty, transfer the existing trust property to the successor trustee. A successortrustee shall not have any duty to examine the records or actions of any former trusteeand shall not be liable for the consequences of any act or failure to act of any formertrustee.

8.3 NO BOND REQUIRED. No bond or other undertaking shall be required ofany individual trustee of any trust.

ARTICLE 9

9. PERSONAL REPRESENTATIVE

9.1 NO BOND REQUIRED. No bond shall be required of any individual named inthis Will as my personal representative.

9.2 POWERS. I give my personal representative all powers conferred on apersonal representative by Oregon law as now existing or later amended, whether ornot those powers are exercised in Oregon.

9.3 TRANSFER TO CUSTODIAN. Except as otherwise provided herein, if anyinterest passes under this Will to a person under the age of twenty-five (25), I authorizemy personal representative to transfer that interest to a custodian for that person underthe Oregon Transfers to Minors Act. The custodian shall be chosen by my personalrepresentative.

9.4 VIRTUAL ASSETS. I direct my personal representative to take such actionsreasonably necessary and prudent to locate and gain control of all virtual assetsincluding, but not limited to, online financial accounts, email, social media accounts,access to vendors whose bills are paid electronically, online subscriptions and onlinestorage accounts; electronic information existing on the hard drive of any computer orlaptop or other storage device such as flash drives, CDs and DVDs. This power shallinclude the power to: hire and reasonably compensate computer or other technicalexperts to assist my personal representative with respect to any virtual asset; change




passwords or other means to access and/or control any virtual assets; take actionsnecessary to protect the security and continued accessibility of any virtual asset andcommunicate with any software licensor, internet service provider or other third party inconnection with the location, administration, transfer, or distribution of any virtual asset. A virtual asset shall mean any intangible personal property which is stored and/oraccessed by any electronic means whatsoever.

ARTICLE 10

10. GENERAL ADMINISTRATIVE PROVISIONS

10.1 SURVIVORSHIP. I shall be considered to survive my spouse if the order ofour deaths cannot be proven or if I survive my spouse for any period, no matter howshort. In addition, any beneficiary under my Will (including my spouse) shall beconsidered to survive me only if the beneficiary is living on the sixtieth (60th) day afterthe date of my death.

10.2 DEBTS AND EXPENSES. My personal representative shall pay any debts asthey come due, expenses of last illness and funeral, and expenses incurred inadministering or distributing my probate or trust estate.

10.3 TAXES. Except as provided below, I direct my personal representative topay out of the residue of my estate, without apportionment, all estate, inheritance, andother death taxes (including interest and penalties) payable by reason of my death onproperty passing under this Will or otherwise. If the residue is insufficient to pay allsuch death taxes, the excess shall be apportioned according to Oregon law.

10.4 SIMILAR WILLS. My spouse and I are executing substantially similar Wills. Our Wills are not joint and mutual nor made pursuant to a contract to make a Will ordevise. I have not made this Will in consideration of the execution of a similar Will bymy spouse. Any property received by my spouse under this Will should be my spouse'sabsolutely.

10.5 GOVERNING LAW. The validity and construction of my Will shall bedetermined under Oregon law in effect on the date my Will is signed.

10.6 CAPTIONS. The captions are inserted for convenience only. They are not apart of this instrument and do not limit the scope of the section to which each refers.

I have signed this Will on the _____ day of ____________________, 2016.




____________________________________HARRY JAMES POTTER

On the date of the foregoing Will of HARRY JAMES POTTER, I saw him sign it. Upon his declaration that it was his Will, I signed my name below as a witness.

______________________________________ at __________________________________________, Oregon

______________________________________ at __________________________________________, Oregon




5VFITSAAB001T

Fidelity Investments

403(b) Beneficiary Designation

1. general instructions

Please complete this form and sign it on the back. In the future, you may revoke the beneficiary designation and designate a different beneficiary by submitting a new Beneficiary Designation form to Fidelity.

Mailing instructions: Return this form in the enclosed postage-paid envelope or to

Fidelity Investments, P.O. Box 770002, Cincinnati, OH 45277-0090Questions? Call Fidelity Investments at 1-800-343-0860 Monday through Friday from 8 a.m. to midnight Eastern time, or visit us at www.netbenefits.com/atwork.

2. designating your beneficiary(ies)

You are not limited to three primary and three contingent beneficiaries. To assign additional beneficiaries, or to designate a more complex beneficiary designation, please attach, sign, and date a separate piece of paper.

When designating primary and contingent beneficiaries, please use whole percentages and be sure that the percentages for each group of beneficiaries total 100%. Your primary beneficiary cannot be your contingent beneficiary. If you designate a trust as a beneficiary, please include the date the trust was created, and the trustee’s name.

Unless otherwise specified by your plan, if more than one person is named and no percentages are indicated, payment will be made in equal shares to your primary beneficiary(ies) who survives you. If a percentage is indicated and a primary beneficiary(ies) does not survive you, the percentage of that beneficiary’s designated share shall be divided among the surviving primary beneficiary(ies) in proportion to the percentage selected for them.

Naming an estate: Letters of appointment issued by the court naming the executor or administrator of the estate must be provided when a claim is filed. Please consult your attorney for advice on the effect of this designation. No additional legal documentation is required at this time.

Naming a trust: Provide the name, date, and tax identification number of the trust (if available). If there has not been a tax identification number assigned to the trust, provide your Social Security number. The trust must be established prior to the date this form is submitted.

Do not send a copy of the trust agreement. If available, provide the name and address of one trustee.

Naming a charity: Please list name, address, and tax identification number. Please select “Estate/Charity” as the beneficiary type.

What happens if you designate a minor, a person who is not legally competent, or an estate as beneficiary? If you should choose a minor, a person who is not legally competent, or an estate as beneficiary, it may be necessary to have a guardian or administrator appointed before any proceeds can be paid. This may mean delay of payment and additional expense for your beneficiary.

What effect does divorce have on beneficiary designations? If a Beneficiary Designation form was completed leaving benefits to a spouse prior to divorce, this designation is not automatically revoked by your divorce from the former spouse. Unless otherwise required by applicable federal or state law, or the terms of your retirement plan document, your former spouse will remain your ben-eficiary until you designate a new one. This is the case even if you remarry, unless the terms of the retirement plan document require a different beneficiary. If you remarry, your new spouse will automatically be your beneficiary for at least 50% of your account unless (1) you designate another beneficiary (which could be your former spouse) and your new spouse consents to the designation, or (2) the death benefit has been assigned to your former spouse under a qualified domestic relations order (QDRO).

3. spousal consent

Spousal Consent: If you are married, your plan requires that you designate your spouse as primary beneficiary for 100% of your vested account balance. If you are married and you do not designate your spouse as your primary beneficiary for your account balances as described above, your spouse must sign the Spousal Consent portion of this form in the presence of a notary public or a representative of the plan.

Age 35 Requirement: Your spouse must be the primary beneficiary of your account as described above unless your spouse con-sents to a different primary beneficiary. If this designation occurs prior to the first day of the plan year in which you attain age 35, this designation is void on the earlier of (a) the first day of the plan year in which you attain age 35, or (b) the date of separation from service. When this designation is voided, your spouse will become the beneficiary for the amount described above. If you wish to designate a different primary beneficiary at that time you will need to complete a new Beneficiary Designation form.

4. authorization

Please provide your signature.

Fidelity Investments Institutional Operations Company, Inc.



Fidelity Investments

403(b) Beneficiary Designation

1. your information

Please use a black pen and print clearly in CAPITAL LETTERS.

Social Security #: Date of Birth:

First Name:

Last Name:

Mailing Address:

Address Line 2:

City: State:

Zip:

I am: Single OR Married

Daytime Phone: Evening Phone:

Name of Employer: Plan Number (if known):

Name of Site/Division:

City & State of Employer:

2. designating your beneficiary(ies)

Please check here if you have more than three primary or contingent beneficiaries.

Primary Beneficiary(ies)I hereby designate the person(s) named below as primary beneficiary(ies) to receive payment of the value of my account(s) under the plan upon my death.

1. Individual: OR Trust Name:

Social Security Number: OR Tax ID Number: Percentage:

%

Date of Birth or Trust Date: Relationship to Applicant:

Spouse OR Trust OR Other



%





2. designating your beneficiary(ies) (continued)

Primary Beneficiary(ies) continuedI hereby designate the person(s) named below as primary beneficiary(ies) to receive payment of the value of my account(s) under the plan upon my death.



%


Spouse OR Trust OR Other Total = 100%

Contingent Beneficiary(ies)If there is no primary beneficiary(ies) living at the time of my death, I hereby specify that the value of my account is to be distributed to my contingent beneficiary(ies) listed below. Please note: Your primary beneficiary cannot be your contingent beneficiary.



%





%





%


Spouse OR Trust OR Other Total = 100%

Payment to contingent beneficiary(ies) will be made according to the rules of succession described in the instructions.

5VFITSAAB002U



Your Signature: X Date:

3. spousal consent

By signing below, I hereby acknowledge that I understand: (1) that the effect of my consent may result in the forfeiture of benefits I would otherwise be entitled to receive upon my spouse’s death; (2) that my spouse’s waiver is not valid unless I consent to it; (3) that my consent is voluntary; (4) that my consent is irrevocable unless my spouse completes a new Beneficiary Designation; and (5) that my consent (signature) must be witnessed by a notary public or plan representative.

I understand that if this beneficiary designation is executed prior to the first day of the plan year in which the participant attains age 35, then my rights to receive the death benefit as determined by the retirement plan provisions will be restored to me on the earlier of (1) the first day of the plan year in which the participant attains age 35, or (b) the date the participant separates from service with the employer sponsoring the retirement plan.

Signature of Participant’s Spouse: Date:

X

Witnessed by Plan Representative:

Date:

X

4. authorization and signatureTo help the government fight money laundering and the funding of terrorism, federal law requires Fidelity to obtain your name, date of birth, address, and a government-issued ID number before opening your account. In certain circumstances, Fidelity may obtain and verify comparable information for you and any person authorized to make transactions in an account or beneficial owners of certain entities. Further documentation is required for certain entities, such as trusts, estates, corporations, partnerships, and other organiza-tions. Your account may be restricted or closed if Fidelity cannot obtain and verify this information. Fidelity will not be responsible for any losses or damages (including but not limited to lost opportunities) that may result if your account is restricted or closed.

Individual Authorization: By executing this form

• I certify under penalties of perjury that my Social Security number in Section 1 on this form is correct.• I understand that I may designate a beneficiary for my assets accumulated under the Plan and that if I choose not to

designate a beneficiary, distributions will be made according to the plan document.• I am aware that the beneficiary information included in this form becomes effective when delivered to Fidelity and will remain in

effect until I deliver another completed and signed Beneficiary Designation Form to Fidelity with a later date.• I am aware that the beneficiary information provided herein shall apply to all my Fidelity Accounts under the plan listed in Section 1

for which FMTC (or its affiliates and/or any successor appointed pursuant to the terms of such Accounts or trust agreement in effect between FMTC and my Employer, as applicable) acts as trustee or custodian, and shall replace all previous designation(s) I have made on any of my Accounts.

427490.11.0 Fidelity Investments Institutional Operations Company, Inc. 1.721882.108

Sworn before me this day

In the State of , County of

Notary Public Signature:

XMy Commission Expires: Notary stamp must be in the above box

To be completed by a notary public or representative of the plan:



1 of 4

Form R350

IRA Beneficiary Designation Form

1. Your information

Daytime phone area code, number, extension Evening phone area code, number, extension

Birth date mm/dd/yyyy

Name first, middle initial, last >Provide the full,

legal name.

>

If you’ve applied for an SSN or a TIN but

haven’t received it, enter the date on

which you applied.

Use this form to designate one or more beneficiaries who will inherit your IRA assets upon your death. In accordance with your designation, your assets will pass directly to your chosen beneficiaries.

When you submit this form, it will completely replace any prior designations for the IRA types you specify in Section 2. Therefore, it’s important that you list all the primary and secondary beneficiaries you want to designate, even if you’re only updating information for one beneficiary.

Provide the full, legal name for each person you designate.

Print in capital letters and use black ink.

All IRA types I currently hold at Vanguard New designations won’t apply to annuities held in IRAs.

2. Types of IRAs for which you want to designate beneficiaries

Your beneficiary designations on this form will apply to all of the holdings in the IRA types checked below that are registered under the SSN or TIN listed in Section 1.

Change beneficiaries only in these IRA types Check all that apply.

Change all my IRA beneficiaries

>

Your designations will apply to ALL Vanguard mutual

fund and brokerage accounts held within

the selected plan type(s).

If you check this box, skip to Section 3.

*Estates, trusts, or charities that inherit IRAs can’t designate beneficiaries.

Traditional IRA Rollover IRA Roth IRA

SIMPLE IRA SEP–IRA Inherited traditional IRA* Inherited Roth IRA*>

Last four digits of Social Security (SSN) number or taxpayer ID number (TIN) Zip code

Do this onlineLog on to your account at vanguard.com.

Questions? Call 800-662-2739.

David Smith

01/01/1945

XXXX

✔



2 of 4

Form R350

3. Beneficiaries you want to designate

Primary beneficiaries Check all that apply.

Those you designate as your primary beneficiaries will be first to inherit your IRA assets upon your death. Indicate the percentages of your assets to be distributed to the designated primary beneficiaries upon your death. The minimum percentage you can leave to a beneficiary is 1%, and the total to all beneficiaries must equal 100%.

Total

100%>If the percentages

don’t total 100%, we’ll allocate equal percentages

totaling 100%.

To the person I’m married to at the time of my death If you select this option, your assets will be distributed to whoever is your spouse at

that time. You don’t need to provide a name. %

To my descendants who survive me, per stirpes Your assets will be divided equally among your surviving children. If a child is deceased,

the entire portion due to that child will be divided equally among his or her children (if any). This designation excludes stepchildren and stepgrandchildren. %

Equally to my grandchildren who survive me %

My spouse If completing this section, check only one of these options.

OR>

>

Check only one option; don’t

check both boxes.

If you select one of these designations, don’t list the names

of your descendants/grandchildren below.

Descendants or individuals

>This applies to

existing trusts only; you can’t create a

trust with this form.

>

Provide the full, legal name for each

person. Attach a separate sheet if you

want to list more individuals.

>

Provide the proper name for each entity

you designate. Attach a separate

sheet if you want to list more names.

Name of individual first, middle initial, last Birth date mm/dd/yyyy

%Name of individual first, middle initial, last Birth date mm/dd/yyyy

%

Organization or charity Provide name.

%

Other

Name of trust Date of trust mm/dd/yyyy

%

Name of trust or section of will

%

Trusts To the trustee of an existing trust created under an agreement

To the trustee of a trust created under my last will

To the person named here Name first, middle initial, last Birth date mm/dd/yyyy

%

My estate

%

To the following named individual(s):

Return ALL pages of this form, even if some sections are left blank.

Laura Smith 12/12/1945 100



Form R350

3 of 4

Secondary beneficiaries Check all that apply.

Those you designate as your secondary beneficiaries will inherit your assets only if there are no surviving primary beneficiaries upon your death. Indicate the percentages of your assets to be distributed to the designated secondary beneficiaries upon your death. The minimum percentage you can leave to a beneficiary is 1%, and the total to all beneficiaries must equal 100%.

Total

100%>If the percentages

don’t total 100%, we’ll allocate equal percentages

totaling 100%.

To the person I’m married to at the time of my death If you select this option, your assets will be distributed to whoever is your spouse at

that time. You don’t need to provide a name. %

My spouse If completing this section, check only one of these options.

OR>Check only

one option; don’t check both boxes.

>This applies to

existing trusts only; you can’t create a

trust with this form.

>

Provide the proper name for each

entity you designate. Attach a separate

sheet if you want to list more names.

Organization or charity Provide name.

%

Other

Name of trust Date of trust mm/dd/yyyy

%

Name of trust or section of will

%

Trusts To the trustee of an existing trust created under an agreement

To the trustee of a trust created under my last will

To the person named here Name first, middle initial, last Birth date mm/dd/yyyy

%

My estate

%

To my descendants who survive me, per stirpes Your assets will be divided equally among your surviving children. If a child is deceased,

the entire portion due to that child will be divided equally among his or her children (if any). This designation excludes stepchildren and stepgrandchildren. %

Equally to my grandchildren who survive me %

>

If you select one of these designations, don’t list the names

of your descendants/grandchildren below.

Descendants or individuals

>

Provide the full, legal name for each

person. Attach a separate sheet if you

want to list more individuals.

Name of individual first, middle initial, last Birth date mm/dd/yyyy

%Name of individual first, middle initial, last Birth date mm/dd/yyyy

%

To the following named individual(s): ✔

Joan Smith 50

✔

See attached 50



© 2016 The Vanguard Group, Inc. All rights reserved.

R350 062016

4 of 4

Form R350

4. Signature of account owner Read carefully before signing.

I agree to be bound by the terms and conditions established by Vanguard Fiduciary Trust Company (VFTC), the custodian of my IRA, for an IRA beneficiary designation. I understand that this designation will supersede any previous designation I have made and will become effective upon receipt in good order as determined by VFTC.

If, for any reason, I do not have a beneficiary at the time of my death, my beneficiary will be what is stated as the default under the applicable Vanguard IRA Custodial Account Agreement in effect at the time of my death.

I acknowledge that VFTC may require additional information upon my death to determine the identity or interest of the beneficiary or beneficiaries. In such event, I acknowledge that VFTC shall have no independent duty to obtain or verify such information but may instead rely upon the representations of an authorized party such as the executor or administrator of my estate or, if a trust beneficiary, the trustee of that trust (my fiduciary). I agree that VFTC shall have no liability for, and shall be fully indemnified against, any cost or damage it incurs in connection with its good-faith reliance on such representations. If no such fiduciary is appointed or if my fiduciary is unable to provide the required information, VFTC reserves the right to request whatever documentation it deems appropriate before making distributions or transferring ownership to a beneficiary.

Signature of account owner

X

Date mm/dd/yyyy

>If the IRA owner

is a minor, a legal guardian or custodian

must sign.

Mailing information

Make a copy of your completed form for your records.

Mail your completed form and any attached information in the enclosed postage-paid envelope.

VanguardP.O. Box 1110Valley Forge, PA 19482-1110

Vanguard 455 Devon Park DriveWayne, PA 19087-1815

>If you don’t have

a postage-paid envelope, mail to:

>For overnight delivery, mail to:

Vanguard Brokerage Services is a division of Vanguard Marketing Corporation, member FINRA and SIPC.

Return ALL pages of this form, even if some sections are left blank.



MEMORANDUM

To: Harry and Ginny Potter

From: Melanie Marmion

Re: Beneficiary Designations

Date: ______________________, 2016

Your Wills establish a special needs trust for the benefit of your son, James. However,life insurance and/or retirement plans are controlled by a beneficiary designation formon file with the financial institution. For those assets to be directed to the special needstrust for James, you need to ensure that beneficiary designation form on file with thefinancial institution reflects your intentions. I have enclosed sample form letters (onefor life insurance and one for retirement plans) that you may use to complete yourbeneficiary designation forms.

For Life Insurance: Because life insurance does not carry the same income taximplications as retirement plans, the beneficiary designation forms can be much morestraight forward. I recommend that you name your spouse as the primary beneficiaryand your “Estate” as the secondary (contingent) beneficiary. By designating your Estateas the contingent beneficiary, the funds will flow through your Wills to the special needstrust.

For Retirement Plans: For income tax reasons, the language must be more specific forretirement plans. When you name a trust rather than an individual, the trust may berequired to withdraw the funds from the retirement plan (and pay the resulting incometaxes) in a shorter period of time (maybe as soon as five years) than an individualbeneficiary. However, for parents of a special needs child, the trust is still the bestoption to control the funds and protect James’ eligibility for his public benefits. I havedrafted the trust so that there’s a strong possibility that the retirement funds can bewithdrawn over James’ life expectancy (rather than the five years). However, becausethe determination of the withdrawal period does not occur at the death of the survivorof you, it is possible that the beneficiaries of the trust have changed and shifted thewithdrawal period. For example, the remainder beneficiaries of James’ special needstrust are his younger siblings, Albus and Lily. But it’s possible that both Albus and Lilymay have predeceased James without having children, in which case James’ trust would

1



be distributed to Hogwart’s School of Magic. This change in beneficiaries would alsocause the withdrawal period to switch to a shorter period.

Beneficiary designation forms are different depending on the financial institution. However, I recommend that you first try to simply attach the sample letter to the formand see if the company will accept it. You would write “see attached” in the section forcontingent beneficiary and then sign and attach the sample letter.

If a company does not accept this or proposes language different from the specificlanguage I have used in the sample form letter, please give me a call, and I will see if Ican work out some alternate language that is acceptable to the company. Let me knowif you have any questions or encounter any difficulty.

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[LIFE INSURANCE]

Insured: Harry James Potter

Policy No.: _____________________

Primary Beneficiary: My spouse, Ginevra (“Ginny”) Weasley Potter.

Contingent Beneficiary: My “Estate.”

__________ __________________________________Date HARRY JAMES POTTER

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[RETIREMENT ACCOUNT]

Owner: _________________________________

Account No.: _____________________

Primary Beneficiary: My spouse, ____________________.

Contingent Beneficiary: In equal shares to my children or their surviving descendantsby right of representation; however, if JAMES POTTERsurvives me, pay his share to the trustee of the special needstrust established for his benefit under my Last Will andTestament dated March 12, 2016.

__________ __________________________________Date Name

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Article Excerpt: Charitable Remainder and Special Needs Trust Combo: An Example of a Win-Win-Win Situation for Parent, Child with a Disability, and Charity

Say you're getting on in years and, anticipating the time when you're no longer able to do so, want to provide a lifetime of care for your adult child who has a serious disability. You'd also like to make a substantial financial gift to the charity that's been so helpful in providing advice and care for the child over the years. Is there any way you can achieve both goals, and do so in a tax-effective way?

One example, a Charitable Remainder Trust (CRT), when combined with a Special Needs Trust (SNT), creates a powerful combination that can result in a win-win-win situation for the child with special needs, the parent or other trust settlor, and the charity. If structured correctly, the CRT and SNT combo provides (1) the parent with a charitable contribution tax deduction and a reduced income and/or estate tax bill, (2) a steady funding stream to the SNT established for the child's benefit, and (3) a monetary donation to the charity or charities of the parent's choice.

Before you're able to enjoy the benefits gained by combining a CRT with a SNT, however, specific conditions imposed by the Internal Revenue Code and by the IRS must be satisfied.

. . . .

Conclusion

If the Charitable Remainder and Special Needs Trusts are designed as indicated in this article, and the adult child with a disability is financially disabled as required by the IRS, the CRT will be able to provide a steady stream of income to the Special Needs Trust for the child's life. The payments from the SNT to the child will supplement and not replace his or her SSI and Medicare benefits, and so will not jeopardize the child's eligibility for such benefits. And you, as the child's parents, will receive not only an immediate income tax deduction for the initial contribution to the CRT but, because appreciable assets are removed from your estate, you may enjoy a lower estate tax bill and will avoid capital gains tax on the sale of the assets. Finally, your favorite charity-often-times the charity that's helped your child-will receive a gift of the remainder interest in the CRT and perhaps in the SNT.

All in all, a win-win-win situation.

The article is available here: https://www.thefreelibrary.com/Charitable+remainder+and+ special+needs+trust%3A+combo%3A+an+example+of+a...-a0172829903

https://www.thefreelibrary.com/Charitable+remainder+and+special+needs+trust%3A+combo%3A+an+example+of+a...-a0172829903

https://www.thefreelibrary.com/Charitable+remainder+and+special+needs+trust%3A+combo%3A+an+example+of+a...-a0172829903



LAST WILL AND TESTAMENT OF PERCIVAL DUMBLEDORE

ARTICLE 4

1. RESIDUE

a. IF MY SPOUSE SURVIVES. If my spouse survives me, I give the residue ofmy estate to my spouse.

b. IF MY SPOUSE DOES NOT SURVIVE. If my spouse does not survive me, theProbate Assets (as herein defined) shall be distributed as follows:

i. GENERAL INTENT. It is my general intent that the special needstrust created for my daughter, Ariana, receive a minimum of ThreeHundred Thousand Dollars ($300,000.00), and, if possible, each ofmy children receive an equal share of my overall estate.

ii. IF OVERALL ESTATE EXCEEDS $900,000. If the value of the OverallEstate (as herein defined) is Nine Hundred Thousand Dollars($900,000.00) or more, the personal representative shall distributethe Probate Assets to and among my sons, ALBUS PERCIVALWULFRIC BRIAN DUMBLEDORE (“Albus”) and ABERFORTHDUMBLEDORE (“Aberforth”), and the special needs trust createdherein for the benefit of my daughter, ARIANA DUMBLEDORE(hereinafter referred to as the “Ariana Dumbledore SNT”), so thateach of them receives as close to an equal share of the OverallEstate assets as is possible under the circumstances. See examplesbelow.

iii. IF OVERALL ESTATE IS LESS THAN $900,000. If the value of theoverall estate is less than Nine Hundred Thousand Dollars($900,000.00), the personal representative shall distribute theProbate Assets as follows:

(1) DISTRIBUTION OF OVER $300,000 TO SPECIAL NEEDSTRUST. If the Ariana Dumbledore SNT will receive ThreeHundred Thousand Dollars ($300,000.00) or more of non-Probate Assets (as defined herein), the personalrepresentative shall distribute the Probate Assets in equalshares to Albus and Aberforth.

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(2) DISTRIBUTION OF LESS THAN $300,000 TO SPECIAL NEEDSTRUST. If the Ariana Dumbledore SNT will receive less thanThree Hundred Thousand Dollars ($300,000.00) of non-Probate Assets, the personal representative shall distributeas much of the Probate Assets as is necessary for the ArianaDumbledore SNT to be funded with Three HundredThousand Dollars ($300,000.00) (from both Probate andnon-Probate Assets). The balance of the Probate Assetsshall be distributed equally between Albus andAberforth, so that the children receive as close to anequal share of the Overall Estate as is possible under thecircumstances.

iv. DEFINITIONS. For purposes of this Article 4, the followingdefinitions shall apply:

(1) PROBATE ASSETS. “Probate Assets” shall mean anyassets that are distributed pursuant to the terms of thisWill (and not by virtue of a beneficiary designation orjoint ownership), and shall specifically include any assetsremaining in any Disclaimer Trust that was establishedat the death of my spouse.

(2) NON-PROBATE ASSETS. “Non-Probate Assets” shallmean any assets that are distributed to my children byvirtue of a beneficiary designation or joint ownership.

(3) OVERALL ESTATE. “Overall Estate” shall mean all theProbate Assets and non-Probate Assets passing to mychildren as the result of my death.

v. IF A CHILD DOES NOT SURVIVE. If either of my sons, Albus orAberforth, does not survive me, that son’s share of the ProbateAssets shall pass to his descendants by right of representation. If my daughter, Ariana Dumbledore, does not survive me, hisshare of the Probate Assets shall be distributed toHOGWART'S SCHOOL OF MAGIC.

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vi. EXAMPLES. In order to illustrate my intentions as expressedabove, the following assets will be distributed at my death as apart of the Overall Estate:

Life Insurance Policy $300,000.00Retirement Account $600,000.00Probate Assets $400,000.00

(1) EXAMPLE 1. If the life insurance policy was directed tothe Ariana Dumbledore SNT and the retirement plan wasdivided equally between Albus, Aberforth and the ArianaDumbledore SNT, the personal representative woulddistribute the Probate Assets to Albus and Aberforth. Inthis case, the distribution of the Probate Assets wouldnot achieve full equalization, but this would be as closeas could be achieved under these circumstances.

(2) EXAMPLE 2. If the life insurance policy were directed tothe Ariana Dumbledore SNT, and the retirement accountwas distributed to Albus and Aberforth, the personalrepresentative would distribute the Probate Assets inequal shares among Albus, Aberforth and the ArianaDumbledore SNT.

(3) EXAMPLE 3. If the life insurance policy had lapsed andthe retirement account was directed to Albus andAberforth, the personal representative would distributeThree Hundred Thousand Dollars ($300,000.00) of theProbate Assets to the Ariana Dumbledore SNT. Thebalance of the Probate Assets would be distributed inequal shares to Albus, Aberforth and the ArianaDumbledore SNT.

b. CONTINGENT BENEFICIARIES. If neither my spouse nor any of thebeneficiaries described above survive me, I give the residue of myestate to HOGWART'S SCHOOL OF MAGIC, a non-profit organizationlocated near the Village of Hogsmeade.

c. DESCENDANT'S SHARE. If any surviving descendant of a deceased

3



child of mine who is under the age of twenty-five (25) is entitled to ashare of my estate or trust estate, the trustee shall retain thatbeneficiary's share in a separate trust. The trustee shall distribute toor for the benefit of the beneficiary those amounts of income orprincipal which the trustee considers advisable for the beneficiary'shealth, education, support, and maintenance. When the beneficiaryreaches the age of twenty-five (25), the separate trust shall terminateand the trustee shall distribute the remainder of the trust to thebeneficiary. If the beneficiary dies before receiving full distributionof the share, the trustee shall distribute the remainder of the trust tothe beneficiary's estate.

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Chapter 2A

Changing Situations and Developing Conflicts—Scenarios

Wesley FitzWater

Fitzwater Meyer Hollis & Marmion LLPPortland, Oregon

Mark Fucile

Fucile & Reising LLPPortland, Oregon

Mark WilliaMs

Gaydos Churnside & Balthrop PCEugene, Oregon

Contents

I. Loss of Capacity to Retain and Direct Counsel: ORPC 1.14 . . . . . . . . . . . . . . . . . . . 2A–1

II. Representing a Client Subject to a Protective Proceeding . . . . . . . . . . . . . . . . . . . . 2A–2

III. Representing the Couple—When Does Estate Planning End and Adversity Begin . . . . . 2A–3Fact Scenario 1—Previous Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2A–3Fact Scenario 2—New Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2A–4

IV. Working with a Fiduciary for an Incapacitated Person . . . . . . . . . . . . . . . . . . . . . 2A–5Fact Scenario 3—Working with Fiduciary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2A–5

Chapter 2A—Changing Situations and Developing Conflicts—Scenarios

Elder Law 2016: Advanced Concepts 2A–ii


Elder Law 2016: Advanced Concepts 2A–1

I. LOSS OF CAPACITY TO RETAIN AND DIRECT COUNSEL: ORPC 1.14. You have represented Big Rancher for many years in his land, cattle and timber operation in Eastern Oregon. You do not, however, handle Big Rancher’s personal estate planning. That has been done by Big Rancher’s former college roommate, Friend. While meeting with Big Rancher on ranch business, Big Rancher told you that he recently changed his will to disinherit his only child, Child, with whom you thought he had a good relationship. (Big Rancher is a widower.) Big Rancher, who seems to be increasingly confused, says that the new beneficiary of his will is a foundation called the Friends of Friend, the trustee of which is Friend. Big Rancher also tells you that his doctor thinks he has Alzheimer’s. While pondering all of this when you get back to your office, Child calls you and asks if you can represent her in seeking a guardianship and conservatorship over Big Rancher. Questions:

• “Starting with the assumption that client is competent” - does the attorney have to personally assess his client’s actual mental capacity?

• How does the attorney maintain a “normal relationship” with the client? Does this require a heightened degree of communication with the client? What if the client desires to do something the attorney believes is against the client’s best interest? “Substituted judgment” versus “best interest standard”.

• What type of protective action should the attorney take? How does “least restrictive alternative” apply? Limitations to the protective action?

• Who petitions for the protective action? Can attorney represent the petitioner? Can the attorney divulge confidential information to the petitioner?

• When a fiduciary has been appointed by the court, can be attorney represent the fiduciary? Can the attorney continue to represent his client, Big Rancher? Should attorney obtain court approval to continue representation? If the attorney continues to represent his client, is the attorney required to take direction from the fiduciary? What if the attorney believes that fiduciary is acting improperly or contrary to his client’s best interest?

• Can attorney withdraw from representation of his client, Big Rancher? Are there circumstances in which withdrawal will not be allowed? Are there circumstances where the attorney can no longer effectively represent his client and must withdraw? Should the attorney seek court approval to withdraw?



II. REPRESENTING A CLIENT SUBJECT TO A PROTECTIVE PROCEEDING. New Attorney is appointed by the Court to represent Big Rancher? (“Bailout cases”)

• Are New Attorney’s duties to his client any different than those of previous attorney?

• How does New Attorney maintain a “normal relationship” with the client?

• What if the client’s cognitive impairment is so extreme that the client is unable to make his wishes known or to determine what is or is not in his best interests?

• What does the Court expect from New Attorney?



III. REPRESENTING THE COUPLE- WHEN DOES ESTATE PLANNING END AND ADVERSITY BEGIN FACT SCENARIO 1 – Previous Clients: Healthy couple (married for 50 years, all assets held jointly during that time, 3 children all supportive and appropriate) come in to meet with attorney for traditional estate planning, including disability/long-term care planning. 10 years later, well spouse returns needing assistance for long-term care planning, which would include transferring home and other assets out of ill spouse’s name into well spouse’s name and/or creating new estate planning documents in her own name with or without ill spouse as A beneficiary.

v1. Original estate planning included basic OSB-type forms for Revocable Living Trust, Will and Power Of Attorney, but no disability planning provisions. v2. Original estate planning includes disability planning provisions in RLT and POA for gifting and transfer of assets to the well spouse upon the incapacity of the ill spouse. v3. 2nd marriage for 8 years. Children from previous marriages do not get along and/or spouse’s desire that, upon death, their assets are left to their respective children. v4. Ill spouse has legal capacity but is physically disabled. v5. Ill spouse no longer has legal capacity. v6. 10 years ago both spouses signed an informed consent document (“advanced waiver”) expressly waving any conflict of interest and expressing their desire that the attorney assist the well spouse with long-term care planning when the time came.



FACT SCENARIO 2 - New Clients: Well spouse and ill spouse come to attorney for the first time to do long-term care planning. Ill spouse has a very early diagnosis of dementia. Ill spouse expresses his desire to transfer assets into the name of well spouse so that she can be financially- protected .

v1. Attorney believes that ill spouse has sufficient legal capacity. Can attorney prepared deed transferring jointly held home into the name of well spouse solely and can attorney prepare a power of attorney for ill spouse including full gifting and transfer provisions? v2. Attorney believes that ill spouse lacks sufficient legal capacity. Same questions as v1. If no, what other options does attorney have to facilitate clients’ wishes?



IV. WORKING WITH A FIDUCIARY FOR AN INCAPACITATED PERSON

FACT SCENARIO 3 – Working with Fiduciary: Attorney receives a call from daughter for couple above. Well spouse has died in a car accident. Ill spouse will need care, placement and financial management. Good daughter is named as fiduciary for ill spouse in an advance directive, power of attorney or as successor trustee of his trust. Questions:

• Can attorney represent daughter in her capacity as fiduciary? Does it matter in what fiduciary capacity she is named?

• What if daughter takes an action which attorney believes is contrary to ill spouse’s previously stated intentions or wishes, for example, placing father in nursing facility when fathers express wishes were to live at home for as long as possible?

• What if daughter is breaching her duties as a fiduciary, for example: co-mingling funds, making gifts or transfers to others, etc.? Must father now withdraw as attorney for fiduciary? Does attorney have a duty to report “elder abuse”?

Chapter 2B

The Contours of RPC 1.14Mark Fucile

Fucile & Reising LLPPortland, Oregon

Contents

Helping Those in Need: Clients with Diminished Capacity . . . . . . . . . . . . . . . . . . . . . . 2B–1

Advance Waivers: Effective Tool If Used Wisely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2B–3

Contextual and Resource Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2B–5

Chapter 2B—The Contours of RPC 1.14

Elder Law 2016: Advanced Concepts 2B–ii


Elder Law 2016: Advanced Concepts 2B–1

Helping Those in Need: Clients with Diminished Capacity

Mark J. Fucile, December 2009 Multnomah Lawyer Reprinted with Permission of the Multnomah Bar Association

As lawyers, we are often called on to evaluate others. Opposing counsel we are negotiating against, witnesses we will be cross-examining or juries to whom we will be presenting a case are all ready examples. One of the most difficult situations a lawyer can face, however, is determining whether a client has the requisite capacity to make decisions. Lawyers who practice elder law or estate planning face this issue more frequently than the rest of us. But, even a business lawyer can unexpectedly encounter this situation if a long-time client, due to age or infirmity, no longer seems have the capacity to make decisions in the client’s interest.

RPC 1.14 addresses clients with diminished capacity from two related perspectives. First, it outlines the duty a lawyer has to a client in that situation to maintain as normal a professional relationship as possible. Second, it deals with the difficult circumstance when a lawyer concludes that a client may be in need of a guardian or similar fiduciary to protect the client. In this column, we’ll look at both elements of the rule. General Duty. RPC 1.14(a) counsels that when a lawyer has a client whose “capacity to make adequately considered decisions in connection with a representation is diminished . . . the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.” The comments to ABA Model Rule 1.14 upon which Oregon’s corresponding rule is based note that even a client with some diminished capacity may be capable of making a wide range of routine decisions. The comments also stress maintaining both direct communication with the client and as normal a relationship as possible within the constraints involved. Protecting the Client. RPC 1.14(b) and (c) address the very difficult circumstance when a lawyer concludes that due to a client’s diminished capacity, the client “is at risk of substantial physical, financial or other harm unless action is taken[.]” In that situation, RPC 1.14(b) allows a lawyer to “take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian.” RPC 1.14(c), in turn, finds that the lawyer in that situation is impliedly authorized to reveal sufficient otherwise confidential information necessary to protect the client’s interests. Comment 6 to ABA Model Rule 1.14 outlines the factors the lawyer should consider in balancing the extent of the client’s diminished capacity against the possible actions necessary to protect the client: “the client’s ability to articulate reasoning leading to a decision, variability of state of mind and ability to appreciate consequences of a decision; the substantive fairness of a decision; and the consistency of a decision with the known long-term commitments and values of the client.” OSB Formal Ethics Opinion 2005-41, which addresses the Oregon rule specifically, also counsels that if the lawyer concludes that protective action is necessary, the action should be tailored to the particular circumstances, using the following example: “If . . . Lawyer expects that Client’s questionable behavior can be addressed by Lawyer raising the issue with Client’s



spouse or child, a more extreme course of action, such as seeking appointment of a guardian, would be inappropriate.” ABA Formal Ethics Opinion 96-404, which discusses Model Rule 1.14 in detail, highlights three important qualifiers. The first relates to the lawyer’s assessment of the client’s capacity. The opinion notes that the focus is on whether the client can act in the client’s own interest. In other words, the fact that a client simply makes different decisions than ones the lawyer would make or, for the client’s own reasons, makes what the lawyer considers “bad” decisions, doesn’t necessarily mean that the client’s capacity to make decisions is compromised. The second concerns seeking the assistance of family members. The opinion encourages this oftentimes critical channel of consultation. At the same time, it also counsels that although Model Rule 1.14(b) allows the lawyer to seek protective action for the client’s benefit, the lawyer should not generally represent a third party seeking formal protective action (even if a family member) due to the potential conflict between the interests of the client and the third party. The third involves the guardian sought. As the opinion puts it: “Seeking the appointment of a guardian for a client is to be distinguished from seeking to be the guardian, and the Committee cautions that a lawyer who files a guardianship petition under Rule 1.14(b) should not act as or seek to have himself appointed guardian except in the most exigent of circumstances, that is, where immediate and irreparable harm will result from the slightest delay.”



Advance Waivers: Effective Tool if Used Wisely

Mark J. Fucile, March 2016 Multnomah Lawyer Reprinted with Permission of the Multnomah Bar Association

Advance waivers can be an effective practice management tool with benefits for both lawyers and their clients—if used wisely. As the name implies, an “advance waiver” is an agreement by a client waiving a particular set of conflicts before the specific circumstances giving rise to a conflict occur. They can be tailored narrowly or can be relatively broad. They offer firms the ability to take on clients who might otherwise present conflicts. They offer clients access to firms that might not be available without the assurance of an advance agreement on conflicts. For example, a firm with highly specialized expertise that represents primarily high tech start-ups that often negotiate with an industry leader might not otherwise be willing to take on a discrete project for that industry leader without an advance waiver in place.

In this column, we’ll look first at the mechanics of advance waivers and then the

limitations.

Mechanics As noted earlier, advance waivers address future conflicts. They are generally permitted under Comment 22 to ABA Model Rule 1.7 (on which Oregon’s current client conflict rule is patterned). Although Oregon’s RPCs do not include accompanying comments, the Oregon State Bar has recognized the viability of advance waivers in Formal Ethics Opinion 2005-122. Because a client is being asked to waive a conflict that has not yet occurred, the key to an effective advance waiver is the client’s “informed consent.” Comment 22 to ABA Model Rule 1.7 puts it this way: “The more comprehensive the explanation of the types of future representations that might arise and the actual and reasonably foreseeable adverse consequences of those representations, the greater the likelihood that the client will have the requisite understanding.” OSB Formal Ethics Opinion 2005-122 echoes the ABA Model Rule comment (at 324): “Nothing in Oregon RPC 1.7 prohibits a blanket or advance waiver from . . . a . . . client as long as Lawyer adequately explains the material risks and available alternatives.” Limitations There are five principal limitations on the use of advance waivers. First, both the ABA Model Rule comment and the OSB ethics opinion stress that an advance agreement cannot waive a nonwaivable conflict. In other words, a firm couldn’t use an advance waiver to represent both sides of the same case or transaction. Second, both the ABA Model Rule comment and the OSB ethics opinion highlight that the waiver must meet the other requirements specified in the rules. In Oregon, that means that the client’s informed consent must be confirmed in writing (under Oregon RPC 1.7(b)) and the



process leading to the waiver must include a recommendation that the client seek review by independent counsel (under Oregon RPC 1.0(g)). When using an advance waiver, firms also need to remember that they still need to obtain a waiver (under Oregon RPC 1.7(b)) from the client whom the firm will be representing adverse to the client that granted the advance waiver. Third, an accompanying ABA ethics opinion on which the Oregon opinion relies (ABA Formal Opinion 05-436) notes (at 5) that an advance waiver, “without more, does not constitute the client’s informed consent to the disclosure or use of the client’s confidential information against the client.” To lessen client concern on this score, firms may wish to consider voluntary internal screening of the respective teams handling the matters on each side of an advance waiver. Fourth, the waiver will be limited to its terms. Therefore, if a conflict arises that is beyond the scope of the written agreement, that conflict must be analyzed separately and addressed by its own waiver (if the conflict is waivable and the clients involved consent). Finally, and in many respects most fundamentally, an advance waiver will only be as good as the disclosure and informed consent on which it is based. This can effectively turn on the relative sophistication of the client involved. In short, what may work for a Fortune 500 corporation represented by in-house counsel may not be appropriate for “mom and pop.” Comment 22 to ABA Model Rule 1.7 succinctly summarizes these respective poles:

“The effectiveness of such waivers is generally determined by the extent to which the client reasonably understands the material risks that the waiver entails. The more comprehensive the explanation of the types of future representations that might arise and the actual and reasonably foreseeable adverse consequences of those representations, the greater the likelihood that the client will have the requisite understanding. Thus, if the client agrees to consent to a particular type of conflict with which the client is already familiar, then the consent ordinarily will be effective with regard to that type of conflict. If the consent is general and open-ended, then the consent ordinarily will be ineffective, because it is not reasonably likely that the client will have understood the material risks involved. On the other hand, if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent is more likely to be effective, particularly if, e.g., the client is independently represented by other counsel in giving consent and the consent is limited to future conflicts unrelated to the subject of the representation.”



Contextual and Resource Summary

Contextual Materials Former Oregon DR 7-101(C) Adopted effective January 2, 1990 Replaced by Oregon RPC 1.14 effective January 1, 2005 Oregon RPC 1.14 Based on ABA Model Rule 1.14 Note: Oregon’s RPCs do not include the accompanying ABA Model Rule comments. ABA Model Rule 1.14 and Accompanying Comments (“Client with Diminished Capacity”) Adopted by the ABA in 1983 and amended in 2002 Available on the ABA Center for Professional Responsibility’s web site at:

http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/model_rules_of_professional_conduct_table_of_contents.html

Restatement (Third) of the Law Governing Lawyers (2000), § 24 (“A Client with Diminished Capacity”) ORS 9.330 (“Scope of Attorney’s Authority”) Oregon RPC 1.7 Based on ABA Model Rule 1.7 ABA Model Rule 1.7 and Accompanying Comments (“Conflicts of Interest: Current Clients”) Note: Comment 22 addresses advance waivers. Resources ABA Formal Ethics Opinion 96-404 (1996)

(“Client under a Disability”) Available on the ABA Center for Professional Responsibility’s web site

OSB Formal Ethics Op. 2005-41 (2005) (“Competence and Diligence: Client with Diminished Capacity”) Available on the Oregon State Bar web site OSB Formal Ethics Op. 2005-159 (2005)

(“Competence and Diligence: Requesting a Guardian ad Litem in a Juvenile Dependency Case”) Available on the Oregon State Bar web site



Ethical Oregon Lawyer, Chapter 18, Revised 2015 (“Representing Clients with Diminished Capacity and Disability”) Available in the “Bar Books” section of the members-only OSB web site OSB Formal Ethics Op. 2005-122 (2005)

(“Conflicts of Interest, Current Clients: Multiple Government Clients, Future Conflict Waivers”) Available on the Oregon State Bar web site

ABA Formal Ethics Opinion 05-436 (2005) (“Informed Consent to Future Conflicts of Interest”) Available on the ABA Center for Professional Responsibility’s web site

Oregon State Bar Professional Liability Fund Conflict Waiver Forms Available on the PLF web site under the “forms” tab

Chapter 3

Complex Issues in Medicaid PlanningDarin Dooley

Law Offices of Nay & FriedenbergPortland, Oregon

Julie Meyer roWett

Yazzolino Rowett & Edgel LLPPortland, Oregon

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–1

I. Increasing the Community Spouse Resource Allowance . . . . . . . . . . . . . . . . . . . . . 3–1

II. Nondisqualifying Planning Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–2A. Creative Spend Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–2B. Transfer of Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–3

III. Intentional Disqualifying Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–7A. Five Year Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–7B. Less Than Five Year Plan/Two Application Plan. . . . . . . . . . . . . . . . . . . . . . 3–8C. Transfer to Irrevocable Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–9

IV. Annuities and Medicaid Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–10A. Federal and State Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–10B. Is an Annuity Appropriate?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–14

V. Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–15A. Federal and State Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–15

VI. Post Eligibility Sale of Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–17A. Community Spouse Retains Net Sale Proceeds. . . . . . . . . . . . . . . . . . . . . . 3–17B. Community Spouse Purchases a Medicaid Compliant Annuity . . . . . . . . . . . . 3–18C. Community Spouse Establishes a Sole Benefit Trust . . . . . . . . . . . . . . . . . . . 3–18

Appendix A—State Medicaid Manual 3257-3259 “Transmittal 64” . . . . . . . . . . . . . . . . . . 3–19

Chapter 3—Complex Issues in Medicaid Planning




INTRODUCTION

This chapter covers several advanced Medicaid planning techniques. It is not intended to cover all possible strategies, but instead focuses on common planning techniques and how they can benefit our clients. Since the passage of the Deficit Reduction Act of 2005 (DRA), PL 109-171, the planning techniques used by Oregon elder law attorneys have changed dramatically. However, it is still possible to achieve positive results for individuals needing assistance with long-term care and their spouses by developing planning strategies to fit the clients’ specific situation and goals. I. Increasing The Community Spouse Resource Allowance Increasing the community spouse resource allowance (CSRA) if often a preferable strategy because it does not involve the need to gift or restructure the assets. OAR 461-160-0580(2)(c)(D) directs the Department to increase the CSRA if necessary to generate additional monthly income for the community spouse so his or her income reaches the minimum monthly maintenance needs allowance (MMMNA), currently at $2,003. If the community spouse’s MMMNA is over the minimum the Department is mandated to increase the MMMNA up to the current maximum of $2,980.50, as needed.

Traditionally, if income was insufficient to meet the MMMNA, the Department would take the amount of resources needed to generate the deficit of income and add that to the established community spouse resource allowance. It was common to use interest rates of conservative financial investments such as certificates of deposit to make this calculation. With low interest rates in recent years, this resulted in large increases to the community spouse resource allowance. In 2015, the Department amended OAR 461-160-0580(2)(c)(D) to state that Department should only increase the community spouse resource allowance by “an amount which, if invested, would raise the community spouse’s income to the monthly maintenance needs allowance. The amount described in this paragraph is the amount required to purchase a single premium immediate annuity to make up the shortfall.” This new restriction has dramatically decreased the amount which can be transferred to the community spouse. When first changed, the OSIPM worker guide contained a link to a website that would run the calculation to determine the amount that would be needed for the increase. That link has since been removed. Instead, the attorney must now seek quotes or use internet calculators to determine how much would need to be invested to generate the income shortfall. A calculator can be found at https://gie.fidelity.com/estimator/jsp/IncomeDuration.jsp?cola=false.

• Example. Wife has income of $900 per month and is in memory care. Husband resides in the home with income of $1,000 per month. The couple has combined available resources of $80,000. Husband is 82 years old with a 7.19 year life expectancy according to the Social Security actuarial tables. Husband has monthly property taxes of $200 per month, plus a mortgage of $400 per month. Husband’s MMMNA is calculated as follows:



$200 Monthly property taxes $400 Mortgage and home insurance $445 Food stamp allowance ($601) Excess shelter allowance $444 $2003 Minimum monthly maintenance needs allowance $2,447 Husband’s MMMNA ($1000) Less Husband’s income

($167) Less Wife’s available income ($900 less $570 for room and board and $164 PIF)

$1,280 Deficit of income Using the Fidelity guaranteed income estimator, the Husband would need to invest $102,954 in order to generate $1,280 of income over 7 years. Since this is over the combined resources, there is no spend-down.

If the community spouse needs to increase the MMMNA beyond the maximum of

$2,980.50, the Department will need to find that the not granting the allowance in excess of the maximum would create an undue hardship. OAR 461-160-0580(4). Undue hardship is not defined in the rule. Although there are no standards set forth in the rule, things to consider when requesting a waiver include:

1) The age of the community spouse; 2) A source of income that end with the death of the Medicaid applicant; and, 3) High monthly household expenses.

In addition to the administrative increase, OAR 461-160-0580 allows the client to

increase the community spouse resource allowance through use of a court order. In recent years, the Department has challenged the use of court order under the theory that the applicant must exhaust administrative remedies by request an increase under the undue hardship standard. However, the Department’s position on exhaustion of administrative remedies has not been tested. Many attorneys interpret the law to allow either a request for an administrative increase or use of a court order. II. Non-disqualifying Planning Options

Clients who are over the resource limits for Medicaid eligibility have a number of viable options. Elder Law attorneys can offer guidance on effective ways to deal with resources above the Medicaid limits, including a creative spend down or transferring resources one of the exceptions. A. Creative Spend Down. The Medicaid resource limits allow for a Community Spouse Resource Allowance (CSRA)1, excluded resources (a home2, car, personal belongings, etc.),

1 OAR 461-160-0580 2 OAR 461-145-0220(2)(B)(ii)



$2,000 for the Medicaid recipient3, and either a separate account with up to $1,500 as a burial fund or an irrevocable prepaid burial plan.4 Resources above these amounts must be spent down before the applicant will be eligible for Medicaid. However, assets above the resource limits do not need to be spent on the applicant’s care costs. Attorneys can advise their clients on how to spend resources in ways to achieve an outcome that benefits the client long term. In addition to paying for the institutionalized spouse’s care, other spend down options include:

• Investing in excluded resources by – o Purchasing a newer, more reliable car o Paying down/paying off a mortgage on the residence o Repairing and/or remodeling the residence o Paying deferred property taxes on the residence

• Paying off bills and debts, including credit card debt • Purchasing irrevocable prepaid burial plans for both the institutionalized spouse and

community spouse • Purchasing other goods and/or services for both the institutionalized spouse and

community spouse It is important to first carefully calculate the CSRA amount based on a snapshot of resources at the beginning of a continuous period of care5 so as not to spend down too much. Further, clients should be cautioned against beginning the spend down until a continuous period of care has begun. The client will not benefit from the spend down of resources prior to that time. Instead, they will unintentionally reduce the amount of the CSRA. Care should also be given to ensuring the client lets you know prior to completing the spend down so you can guide them in properly completing the plan. B. Transfer of Resources. Clients often ask about giving resources away to family members for Medicaid eligibility purposes. Resources cannot be given away for less than fair market value in order to qualify for Medicaid.6 Under the DRA, there is a sixty (60) month look back period for transfers on or after July 1, 2006.7 The application for Medicaid benefits was updated in May 2006 to reflect the DRA look back period. The form asks about all transfers by the applicant or spouse within sixty months of the application.8 If a disqualifying transfer has been made, the State will assess a penalty period based on a divisor of $7,663.9 This divisor is supposed to represent the average nursing home rate in Oregon.10 The DRA also changed when the penalty period begins to run. The penalty period does not begin to run until the later of (a) the date the resource was transferred or (b) the date the person applies for Medicaid and is otherwise eligible.11

3 OAR 461-160- 0015 4 OAR 461-145-0040(2)(C) AND 3(a)(D) 5 OAR 461-001-0030 6 OAR 461-140-0210 and 461-140-0242 7 OAR 461-140-0210(5), 42 USC §1396p(c) 8 OAR 461-140-0210(5) 9 OAR 461-140-0296. Note - This amount may change in October 2016 to $8,425. 10 OAR 461-140-0296 11 OAR 461-140-0296(4)(c)



• Example. Jack transfers $100,000 to his daughter on April 1, 2014, moves to a nursing home on April 1, 2015, and spends down to Medicaid eligibility and applies for benefits on April 1, 2016. Assuming Jack is otherwise eligible for Medicaid, the 13.04 month ($100,000/$7,663 = 13.04) penalty period begins to run on April 1, 2016.

• Example. Jill gave $121,000 to her sister on September 1, 2016. She submits a Medicaid application on October 1, 2016 disclosing the transfer. She is assessed a penalty period of $121,000/$7,663 = 15.79 months. If she is otherwise eligible for Medicaid, the 15.79 month penalty period will begin to run on October 1, 2016.

• Example. Dorothy gave $35,000 to her son, who is not blind or disabled, on September

1, 2011. She submits a Medicaid application on September 2, 2016. She does not have to disclose the transfer on the application because it is beyond the 5 year look back period. No penalty is assessed.12

Transfers to certain recipients are not disqualifying and thus will not trigger a period of

Medicaid ineligibility. These exempt recipients/transfers include the following:

a. Transfers between spouses; OAR 461-140-0242(2)(b). b. Transfers of any resource to a blind or disabled child; OAR 461-140-0242(2)(b). c. Transfers to another for the sole benefit of the spouse or blind or disabled child; OAR

461-140-0242(2)(b). d. Transfer of the home to a sibling who has an equity interest in the home and who was

residing in the home for one year immediately prior to the person’s admission to long-term care; OAR 461-140-0242(3)(b).

e. Transfer of home to a child under age 21; OAR 461-140-0242(3)(a). f. Transfer of home to a child providing care to parent; OAR 461-140-0242(3)(c).

Two of these exceptions, (1) transfers to a disabled child, and (2) transfers to a care giving child, are discussed in more detail below.

1. Transfer to a Disabled Child. A parent may transfer an asset (including a home) to the parent’s child who is blind or disabled under the Social Security Administration (SSA) criteria or another for the sole benefit of a child who is blind or disabled under the SSA criteria. 13

Practice Tip: In some cases there is no SSA determination of disability. The child may not be receiving SSI, SSDI, or Disabled Adult Child (DAC)/Childhood Disability Benefit (CDB). For example, the child may be receiving a Veteran’s Administration (VA) disability benefit or perhaps is not currently receiving any disability benefit. Advise your client that there are measures to either use an administrative medical examination to complete a medical evaluation,14 or provide medical documentation of the disability.15

12 See 5 year plan discussion below 13 OAR 461-140-0242(2)(b), 42 U.S.C. § 1396p(c)(2)(B), POMS SI 01150.122(A)(1) 14 OAR 461-125-0810 15 OAR 461-125-0830



The rule prohibits the child from benefiting any other person with transferred resources, and requires a spend-down of the resource during the recipient’s lifetime. The transfer must be arranged so that it is for the sole benefit of the child. No individual or entity except the child can benefit from the asset transferred in any way, whether at the time of transfer or any time in the future. A direct transfer, transfer instrument, or trust that provides for funds or property to pass to a beneficiary who is not the child who is blind or has a disability under the SSA criteria is not considered to be established for the sole benefit of the child. For a transfer or a trust to be considered for the sole benefit of the child, the instrument or document must provide for the spending of the funds involved for the benefit of the child based on the child’s life expectancy.16

Practice Tip: If a trust is used, the attorney will want to include a provision regarding distribution of trust principal to meet the sole benefit requirement. DHS has approved the use of the following: “Trustee shall distribute trust principal . . . in such amounts that all trust principal will be distributed within the actuarial life expectancy of _________.”17

Practice Tip: DHS is aware that if a home is being transferred under this exception the home cannot reasonably be expected to be ‘spent’ for the sole benefit of the child over the child’s life expectancy.

Transfers to a blind or disabled child need to be carefully planned to maintain the child’s eligibility for means tested benefits. The two goals of benefiting a disabled child and maintaining the child’s means tested benefits can sometimes conflict.

2. Transfer of Home to Care Giving Child.18 A parent may transfer the parent’s home to a natural or adoptive adult son or daughter providing care to the parent. 19 The child must meet the following requirements:

a. reside in the parent’s home for at least two (2) years immediately before the parent’s admission to long term care; and

b. provide care to the parent that permitted the parent to reside at home for at least two years rather than in long term care; and

c. have not received payment from DHS for the care provided; and d. provide convincing evidence that he or she provided the care required as described in

both of the following subparagraphs for a total of at least 20 hours per week:

i. On a daily basis, one or a combination of any of the following activities of daily living –

• Eating • Dressing/grooming • Bathing/personal hygiene • Mobility

16 Id. 17 Although this language has been reviewed and approved by DHS staff, there is no OAR authorizing its use. DHS is not bound by the use of this language and may change its policy at any time. 18 See also 42 USC 1396p(c)2(A)(iv), POMS SI 01150.122(A)(3) 19 OAR 461-140-0242(3)(c)



• Elimination • Cognitive/behavior

ii. (On a weekly basis) one or a combination of any of the following activities of daily living –

• Housekeeping • Laundry • Meal preparation • Medical management • Shopping • Transportation

The level of care that enabled the parent to stay at home instead of going into care is substantial but not necessarily full time. The care described under (i) above is ‘hands on’ as compared with the cared described under (ii) above. Not every child is able or willing to provide the care described under (i).

When determining if this exception applies, the home must be transferred to a child who resided in the home. That is, the home must be the transferee’s primary place of residence.

• Example. Sarah moves into her mother’s home on March 1, 2014, and provides care so that her mother, June, can remain at home. Ultimately, June’s care needs increase and she goes into an assisted living facility on March 2, 2016. During a spend down period June signs a deed conveying her home to Sarah. June applies for Medicaid on September 1, 2016. Assuming that Sarah can document living in June’s home as her primary residence and providing the level of care required, the transfer of the home from June to Sarah does not result in a penalty period.

• Example. Andrea’s mother, Pat, was diagnosed with early stage Alzheimer’s in 2011.

She immediately signed a Power of Attorney naming Andrea as her agent. Pat’s dementia increased to the point that Andrea’s sister, Angela, moved into Pat’s home on June 1, 2014 to help Pat with her care needs. Pat finally went into care on July 15, 2016. Andrea signed a deed as Pat’s attorney-in-fact conveying Pat’s home to Angela. Andrea subsequently applies for Medicaid for Pat and discloses the transfer. Assuming Angela can document living in Pat’s home as her primary residence and providing the required level of care, the transfer of the home from June to Angela does not result in a penalty period. Practice Tip: The home cannot be transferred from the parent to the care giving child prior to the parent going into care. However, the home may be transferred at any time thereafter. Example. Grace is a widow with an adult daughter, Jan. Jan has lived in Grace’s home for the previous five years and provided care to Grace in exchange for living in the home rent free. Grace’s mobility deteriorates and she has to go into an assisted living facility on September 9, 2014. Grace signs a deed transferring the home to Jan on September 25,



2016 and simultaneously applies for Medicaid. Assuming the care giving child transfer requirements are met and Grace is otherwise eligible for Medicaid, the Medicaid application will be approved and no penalty period assessed.

Practice Tip: The attorney drafting the deed transferring the home under this exception may want to include reference to the administrative rule. E.g., “consideration for this conveyance is $-0- plus other good and valuable consideration, pursuant to OAR 461-140-0242(3)(c).” Practice Tip: In some circumstances DHS may have filed a request for notice of transfer or encumbrance of the home in county deed records. The attorney should proactively notify DHS of the transfer under this rule and provide a copy of the deed.

Finally, any transfer made for purposes other than to establish or maintain eligibility for Medicaid is not a disqualifying transfer.20 However, any transfer for less than fair market value is presumed to be for the purpose of establishing or maintaining eligibility.21 The burden is on the applicant/client to provide information to DHS showing the purpose of the transfer was for another, approved, reason.22 III. Intentional Disqualifying Transfers

As outlined above, there is a period of ineligibility for transfers of resources for less than fair market value for the purpose of becoming eligible for Medicaid. In certain circumstances it may be advantageous to the client to consider an intentional disqualifying transfer of resources. Based on the client’s circumstances, the transfers can be part of a five year plan or less than five year plan.

A. Five Year Plan. The look back period for the transfer of resource for less than fair market value is sixty (60) months. In certain circumstances the client may be able to benefit from transferring resources in order to protect them from long term care costs and wait out the five year period. Consideration must be given to (1) the value and nature of the resources and potential tax consequences of a transfer, (2) the likelihood that the client will need long term care at the end of the five years, or soon thereafter, and (3) the ability of the client to pay for expenses, including potential long term care costs, during the five year period.

1. Resources. If the penalty period resulting from a transfer of resources will be greater than five years, it would be better to transfer the resources and wait through the entire look back period of 60 months before applying for Medicaid. Once the 60 months from the date of the disqualifying transfer(s) has run the transfers no longer need to be disclosed on a subsequent Medicaid application.

20 OAR 461-140-0242(2)(a) 21 OAR 461-140-0242(5) 22 OAR 461-140-0242(6) and (7)



The nature of the client’s resources may lend itself to certain types of planning options over others. Retirement accounts contain pre-tax dollars and the income tax consequences of liquidating a retirement account can be significant.

Practice Tip: If a retirement account needs to be liquidated for planning purposes the client should request back up income tax withholdings to reduce the amount of income tax due on a subsequent income tax filing.

Capital assets like a home, stocks, or bonds, have capital gains tax concerns that should be carefully considered. A lifetime transfer of a capital asset carries over the cost basis of the donor to the donee. If the asset is sold post transfer then capital gains will be triggered and reportable on the donee’s income tax returns. However, if it is very likely the client will need long term care, the tax consequences of a transfer may be considerably less than the cost of care over time.

2. Need for Long Term Care. The attorney needs to consider whether there is a presentneed for long term care or a reasonable expectation of needing long term care at the end of the 60 month look back period when presenting planning options. This type of planning requires extreme, irrevocable, steps be taken and should not be entered into lightly.

• Example. Edna is 92 years old and lives alone in her home. Besides her home (noencumbrances, valued at $450,000), Edna has an IRA with $50,000 and a brokerageaccount with $100,000. Edna is in relatively good health and does not have a diagnosisof dementia or other progressive illness.

Alternatively, if there is a clear diagnosis or other indication that long term care planning is needed the downside to some of these strategies are far outweighed by the risk to resources from long term care costs.

• Example. Denise and Tom are 65 years old and live in a small condo. Denise wasrecently diagnosed with early stage dementia. Denise is still able to manage her dailyactivities herself and Tom is able to help Denise as needed. They both are concerned thatDenise’s care needs will increase beyond the point that Tom can manage by himselfsometime in the future. Besides their home ($250,000 with $140,000 mortgage), theyeach have the following resources: (1) Tom’s IRA $129,000, (2) Denise’s IRA $93,000,(2) brokerage account $197,000, bank accounts/CDs $42,000.

3. Paying Expenses During the Five Year Period. Consideration must be given to the clients income, expenses, and remaining resources when planning the transfer of resources under this option. The attorney should ensure adequate funds are left in the client’s name to pay for foreseeable expenses during the five year waiting period. That is, the attorney should consider the size and nature of assets when recommending how much should be transferred and how much will be retained to spend down over the five years.

B. Less Than Five Year Plan / Two Application Plan. When a client has a present need for long term care and has resources that, if transferred, would generate a penalty period of less than 60 months, a two application plan should be considered. There are two key points for this plan



to be viable. First, there needs to be a strong expectation that the applicant will qualify for Medicaid long term care benefits under (1) income (perhaps through a required Income Cap Trust23), (2) resources, and (3) the disability requirements of the service priority rules.24 That is, as discussed above, it is very likely the client will be determined to be eligible for Medicaid ‘but for’ the disqualifying transfer and thus the penalty period assessed will actually begin to run from the date of the first application. Second, and more importantly, the estimated out of pocket care costs over the penalty period need to be low enough to leverage against the divisor of $7,663/month. This situation comes up when the monthly private pay rate for care is relatively low and the applicant’s net monthly income is relatively high. The difference between the monthly care costs and income is the monthly out of pocket expense.

• Example. Bill is 82 and living in a care facility. He suffered a stroke two years ago that has left him in a wheelchair. He has a home worth about $230,000 with a $140,000 mortgage. He has credit card debt of about $12,000. He qualified for Aid & Attendance a year ago and also receives SSA retirement benefit. His net monthly income is $2,700 and his care costs are $3,200/month. Bill has used up his other resources paying for the monthly $500 out of pocket expenses. Bill’s children are currently making up the $500 expense.

If the client’s situation fits the conditions above then a two application plan may be viable. It is important that the client understand the process and complete the transfer(s) and spend down prior to making the first Medicaid application. The client also needs to understand that the first application will be denied and a transfer penalty assessed. The Department of Human Services (DHS) expects that some people will make disqualifying transfers and apply for benefits to begin the period of ineligibility. DHS has instructed offices to process applications, including service priority assessments, issue denials (Notice of Disqualification for Transfer of Assets, form SDS 540T) and code on DHS computer records all information necessary to establish the beginning period of ineligibility. This allows DHS and the client to know when the penalty begins and ends.

Practice tip: Advise your client to keep a copy of the first Medicaid application and supporting documents. This will make the second Medicaid application simpler.

It is important to review the denial notice carefully with the client so the client knows when the penalty period ends and when the second Medicaid application should be submitted. C. Transfer to Irrevocable Trust. For either a Five Year Plan or Two Application Plan, managing and protecting the resources that were intentionally transferred from the client should be considered. Smaller amounts may be managed in a recipient’s checking account. However, the account funds are subject to the account owner’s creditor problems, divorce, or death. To avoid these concerns, particularly when larger sums are involved, an irrevocable trust may be used. As long as the funds in the irrevocable trust are unavailable to the transferor and the trust

23 OAR 461-145-0540(10)(c) 24 OAR 411-015-0100 et seq.



does not allow for payments to or for the benefit of the transferor, the trust is not an available resource.25 IV. Annuities And Medicaid Planning

Annuities can be a very effective planning tool to provide for sufficient resources and income for the community spouse to maintain himself or herself in the home. They are generally used as a way to spend the community spouse down to his or her community spouse resource allowance. The purchase of the annuity converts an available resource into exempt income of the community spouse. 42 §USC 1396r-5(b) provides for separate treatment of income and states that “no income of the community spouse shall be deemed available to the institutionalized spouse.” Annuities have been widely used as a planning tool for many years and despite recent restrictions can still be a good planning option for community spouses.

The DRA is the most recent major amendment to the Medicaid Act. Among many changes, Congress created a safe harbor for annuities that comply with specific requirements outlined in the DRA. Since the passage of the DRA, annuities have continued to be an important planning tool. A. Federal and State Law. The DRA’s treatment of annuities is found at USC 1396p(c)(1)(F)-(G). These sections state as follows:

(F) For purposes of this paragraph, the purchase of an annuity shall be treated as the disposal

of an asset for less than fair market value unless – (i) the State is named as the remainder beneficiary in the first position for at least the total

amount of medical assistance paid on behalf of the institutionalized individual under this subchapter; or

(ii) the State is named as such a beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or a representative of such child disposes of any such remainder for less than fair market value.

(G) For purposes of this paragraph with respect to a transfer of assets, the term “assets” includes an annuity purchased by or on behalf of an annuitant who has applied for medical assistance with respect to nursing facility services or other long-term care services under this subchapter unless –

(i) the annuity is - (I) the annuity described in subsection (b) or (q) of section 408 of the Internal

Revenue Code of 1986; or (II) purchased with proceeds from – (aa) an account or trust described in subsection (a), (c), or (p) of section 408 of such Code; (bb) a simplified employee pension (within the meaning of section 408(k) of such Code); or (cc) a Roth IRA described in section 408A of such Code; or (ii) the annuity –

25 See OAR 461-145-0540 in general and OAR 461-145-0540(9)(a) in particular.



(I) is irrevocable and nonassignable; (II) is actuarially sound (as determined in accordance with actuarial

publications of the Office of the Chief Actuary of the Social Security Administration); and

(III) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made.

Since the passage of the federal law, the state of Oregon has updated its rules on annuities on several occasions. The current Oregon Administrative Rule on annuities is found at OAR 461-145-0022 and states as follows: 461-145-0022 Annuities; OSIPM In the OSIPM program: (1) For the purposes of this rule: (a) "Actuarially sound" means a commercial annuity which pays principal and interest out in equal monthly installments over the actuarial life expectancy of the annuitant. For purposes of this definition, the actuarial life expectancy is established by the Periodic Life Table of the Office of the Chief Actuary of the Social Security Administration, and, for transactions (including the purchase of an annuity) occurring on or after July 1, 2008, the payout period must be within 12 months of the actuarial life expectancy. (b) For a client, an annuity does not include benefits that are set up and accrued in a regularly funded retirement account while an individual is working, whether maintained in the original account or used to purchase an annuity, if the Internal Revenue Service recognizes the account as dedicated to retirement or pension purposes. (The treatment of pension and retirement plans is covered in OAR 461-145-0380.) (c) The definition of "child" in OAR 461-001-0000 does not apply. (d) "Child" means a biological or adoptive child who is: (A) Under age 21; or (B) Any age and meets the Social Security Administration criteria for blindness or disability. (e) "Commercial annuity" means a contract or agreement (not related to employment) by which an individual receives annuitized payments on an investment for a lifetime or specified number of years. (2) An annuity that does not make regular payments for a lifetime or specified number of years is a resource. (3) When a client applies for medical benefits, both initially and at periodic redetermination (see OAR 461-115-0050 and 461-115-0430), the client must report any annuity owned by the client or a spouse of the client. (4) By signing the application for assistance, a client and the spouse of a client agree that the Department, by virtue of providing medical assistance, becomes a remainder beneficiary as described in sections (8) and (10) of this rule, under any commercial annuity purchased on or after February 8, 2006, unless the annuity is included in the community spouse's resource allowance under OAR 461-160-0580(2)(c). (5) If the Department is notified about a commercial annuity, the Department will notify the issuer of the annuity about the right of the Department as a preferred remainder beneficiary, as



described in sections (8) and (10) of this rule, in the amount of medical assistance provided to the client. (6) If a client or a spouse of a client purchases or transfers a commercial annuity prior to January 1, 2006, the following applies: (a) If the client is in a nonstandard living arrangement (see OAR 461-001-0000), the transaction may be subject to the rules on asset transfers at OAR 461-140-0210 and following. For an annuity that is not disqualifying or the disqualification period has already been served, the annuity payments are counted as unearned income to the payee. (b) If the client is in a standard living arrangement, the annuity payments are counted as unearned income to the payee. (7) Sections 8 and 9 of this rule apply to a commercial annuity if: (a) The client is in a nonstandard living arrangement, and the client or the spouse of the client purchases an annuity from January 1, 2006 through June 30, 2006; or (b) The client is in a standard living arrangement (see OAR 461-001-0000), and the client or the spouse of a client purchase an annuity on or after January 1, 2006. (8) A commercial annuity covered by section (7) of this rule is counted a resource unless the annuity is excluded by meeting the following requirements: (a) If an unmarried client is an annuitant, the annuity must meet the requirements of subsection (8)(c) of this rule, and the annuity must specify that upon the death of the client, the first remainder beneficiary is either of the following: (A) The Department, for all funds remaining in the annuity up to the amount of medical benefits provided on behalf of the client. (B) The child of the client, if the Department is the next remainder beneficiary (after this child), up to the amount of medical benefits provided on behalf of the client, in the event that the child does not survive the client. (b) If a spouse of a client is the annuitant, the annuity must meet the requirements of subsection (8)(c) of this rule, and the annuity must specify that, upon the death of the spouse of the client, the first remainder beneficiaries are either of the following: (A) The client, in the event that the client survives the spouse; and the Department, in the event that the client does not survive the spouse, for all funds remaining in the annuity up to the amount of medical benefits provided on behalf of the client. (B) A child of the spouse; and the client in the event that this child does not survive the spouse. (c) An annuity covered by section (7) of this rule may not be excluded unless the annuity meets all of the following requirements: (A) The annuity is irrevocable. (B) The annuity must be actuarially sound. (C) The annuity is issued by a business that is licensed and approved to issue a commercial annuity by the state in which the annuity is purchased. (9) If an annuity is excluded as a resource under section (8) of this rule, the annuity payments are counted as unearned income to the payee. If an annuity is a countable resource under section (8) of this rule, the cash value is equal to the amount of money used to establish the annuity, plus any additional payments used to fund the annuity, plus any earnings, minus any regular monthly payments already received, minus early withdrawals, and minus any surrender fees. (10) This section lists the requirements for a commercial annuity purchased by the client or the spouse of the client on or after July 1, 2006, when a client is in a nonstandard living arrangement, and the annuity names the client or the community spouse as the annuitant.



Annuities that meet all of the requirements of this section are counted as unearned income to the payee. The treatment of annuities that do not meet all requirements of this section is covered in sections (11) and (12) of this rule. (a) The annuity must comply with one of the following paragraphs: (A) The first remainder beneficiary is the spouse of the client, and in the event that the spouse transfers any of the remainder of the annuity for less than fair market value (see OAR 461-001-0000), the Department is the second remainder beneficiary for up to the total amount of medical benefits paid on behalf of the client. (B) The first remainder beneficiary is the annuitant's child, and in the event that the child or a representative on behalf of the child transfers any of the remainder of the annuity for less than fair market value, the Department is the second remainder beneficiary for up to the total amount of medical benefits paid on behalf of the client. (C) The first remainder beneficiary is the Department for up to the total amount of medical benefits paid on behalf of the client. (b) The annuity must be irrevocable and nonassignable. (c) The annuity must be actuarially sound. (d) The annuity is issued by a business that is licensed and approved to issue a commercial annuity by the state in which the annuity is purchased. (11) If the client is the annuitant and a commercial annuity does not meet all of the requirements of section (10) of this rule, or the spouse of the client is the annuitant and a commercial annuity does not meet the requirements of subsection (10)(a) of this rule, there is a disqualifying transfer of assets under OAR 461-140-0210 and following. See OAR 461-140-0296(6) and (7) for calculation of the disqualification period. (12) Regardless of whether a commercial annuity is a disqualifying transfer of assets, if the annuity does not meet all of the requirements of section (10) of this rule, the annuity is counted as a resource with cash value equal to the amount of money used to establish the annuity, plus any additional payments used to fund the annuity, plus any earnings, minus any regular monthly payments already received, minus early withdrawals, and minus any surrender fees. Oregon’s rule concerning annuities expands the definition of “actuarially sound” by requiring that the annuity pay out within one year of the annuitant’s life expectancy as defined by the Periodic Life Table of the Office of Chief Actuary of the Social Security Administration. This stands in sharp contrast to Centers for Medicare and Medicaid Services (CMS) guidance on this matter. The portion of CMS’ State Medicaid Manual that speaks to the definition of actuarial sound is found in “Transmittal 64.”26 That manual states that “if the expected return on the annuity is commensurate with the reasonable estimate of life expectancy of the beneficiary, the annuity can be deemed actuarially sound.” A recent case from the third circuit specifically addressed whether annuities shorter than the life expectancy published by the Social Security actuarial tables were considered to be actuarially sound. In Zahner v. Secretary Pennsylvania Department of Human Services27 the court held that the two contracts at issue, one for 14 months and one for 12 months, had the required term of years as required by Transmittal 64 and were therefore, actuarially sound. The court states: 26 See attached in Appendix A. 27 802 F.3d 497 (3rd Cir., 2015)



DHS and the dissent seek to impose a kind of floating floor for the minimum term for an annuity to be actuarially sound. However, neither the DRA nor Transmittal 64 imposes one. Transmittal 64 merely refers to actuarially sound in a manner that ensures that the term of any annuity will not exceed the annuitant’s life expectancy. Accordingly, we conclude that any attempt to fashion a rule that would create some minimum ration between duration of an annuity and life expectancy would constitute an improper judicial amendment of the applicant statutes and regulation. It would be an additional requirement to those that Congress has already prescribed and result in very practical difficulties that can best be addressed by policy choices made by elected representatives and their appointees.28

This case suggests that Oregon’s restriction on the duration of annuities may violate principals of preemption. However, given the restrictions on the annuities, challenge of Oregon’s administrative rules is problematic. Since the annuities must be irrevocable, any purchase of an annuity with a term shorter than one year cannot be challenged before the annuity becomes irrevocable and the planning cannot be reversed. B. Is an Annuity Appropriate? The purchase of a Medicaid compliant annuity is an intrusive planning technique and all other planning options should be considered before dramatically restructuring your client’s assets. The annuity must be irrevocable and therefore, the purchase cannot be undone, unless you fall within a rescission deadline set by the contract (usually 30 to 60 days). In addition, once purchased the annuitant can no longer access principal and is only entitled to his or her monthly set payment. Prior to purchasing an annuity it is important to evaluate other planning techniques such as an administrative increase of the community spouse resource allowance, transfers to disabled children or even an intentionally disqualifying transfer. Remember that annuity income is included in the community spouse’s income calculation. Therefore, it is possible that the annuity income can result in a dollar for dollar reduction in income diverted from the Medicaid spouse’s income. In this instance, it may be more appropriate to spend-down through other means, like payment of debts or a home mortgage. Also be aware of the tax implications of purchasing a Medicaid compliant annuity. If you have to sell an asset with a low cost basis to purchase the annuity, you may have to pay capital gains upon the sale. Keep in mind that it is possible to roll-over a qualified plan into a qualified Medicaid compliant annuity. This avoids the liquidation of the taxable account and only the monthly payments are taxable income to the annuitant. If you have a combination of taxable and non-taxable funds to purchase an annuity, it is best to purchase two separate annuities, one annuity with the non-qualified funds and a second with the qualified funds. Be aware of the minimum distribution requirements for IRA plans that are separate from the term of annuity that Medicaid requires. Make sure that your qualified Medicaid annuity is paying out the required minimum distributions.

28 Zahner at 506



• Example. Husband is ill and moving into a skilled nursing facility. Wife resides in the couple’s residence, an exempt resource. Husband has income of $1,000 per month. Wife has Social Security and a PERS pension with an income of $3,000 per month. The couples’ combined countable resources total $200,000 on the first date of continuous care. Wife is 80 years old and in excellent health. She has a small mortgage of the property. Most of the couple’s countable resources are in the Wife’s IRA account with a balance of $160,000. The other $40,000 is made up of checking and savings.

Wife’s spend-down is $100,000. Her life expectancy according to the Social Security actuarial tables is 9.64 years. If she purchases an annuity totaling $100,000 that pays out over nine years, she will generate approximately $925 per month of additional income. Wife will purchase two annuities to avoid the liquidation of her IRA account. One will be a qualified annuity of $70,000, bringing her IRA balance down to $90,000, and the other will be $30,000 of her cash savings, leaving $10,000 liquid.

• Example. Same facts as above, except that Wife decides to pay down her mortgage with her cash savings and only annuitize $65,000 of her IRA account. This will generate approximately $602 in additional income per month.

Practice Tip: Overall, if the annuity complies with the requirements of OAR 461-145-0022, it is now a well-tested and effective planning tool. The attorney should draft the beneficiary designation to confirm that it complies with the requirement to name the state as a remainder beneficiary. Clients should be well advised that the product is not an estate planning tool to pass assets to the next generation, but a tool that is intended to provide for the community spouse.

V. Promissory Notes Unlike annuities, the use of promissory notes has not achieved the same clarity and remains a high-risk planning tool. Although the DRA carved out clear rules for the treatment of promissory notes, the Oregon Administrative rules implementing the federal law have essentially gutted the use of loans in Medicaid planning. A. Federal and State Law. 42 USC 1396p(c)(1)(I) addresses notes and loans as follows:

(I) For purposes of this paragraph with respect to a transfer of assets, the term “assets” includes funds used to purchase a promissory note, loan, or mortgage unless such note, loan, or mortgage – (i) has a repayment term that is actuarially sound (as determined in accordance

with actuarial publications of the Office of the Chief Actuary of the Social Security Administration);

(ii) provides for payments to be made in equal amounts during the term of the loan, with no deferral and no balloon payments made; and

(iii) prohibits the cancellation of the balance upon the death of the lender.



Although the federal law is relatively straightforward, the Oregon Administrative Rule has gone through many revisions, making it almost unrecognizable when compared next to the federal law. The current Oregon administrative rule for promissory notes is found at OAR 461-145-0330 and the relevant portion states as follows: 461-145-0330 Loans and Interest on Loans (6) In the OSIPM program, if a client or a spouse of a client uses funds to purchase a mortgage or to purchase or lend money for a promissory note or loan: (a) In a transaction occurring on or after July 1, 2006: (A) The balance of the payments owing to the client or spouse of the client is a transfer of assets for less than fair market value (see OAR 461-001-0000), unless all of the following requirements are met: (i) The total value of the transaction is being repaid to the client or spouse of the client within three months of the client's life expectancy per that person's actuarial life expectancy as established by the Period Life Table of the Office of the Chief Actuary of the Social Security Administration. (ii) Payments are made in equal amounts over the term of the transaction without any deferrals or balloon payments. (iii) The contract is not cancelled upon the death of the individual receiving the payments under this transaction. (B) If the loan results in a disqualification and the disqualification period has been served, payments against the principal and interest are treated as unearned income. (b) In a transaction occurring before July 1, 2006, or for a transaction occurring on or after July 1, 2006, that does not result in a disqualification in subsection (a) of this section, the loan is treated as follows: (A) Interest income is treated as unearned income. (B) The loan is counted as a resource if: (i) The financial group includes a client in a nonstandard living arrangement (see OAR 461-001-0000) and the client's spouse; (ii) The transaction is on or after the date of the first continuous period of care (see OAR 461-001-0030); and (iii) The amount of the loan plus other resources transferred exceeds the largest amount in OAR 461-160-0580(2)(f). A careful reading of the rule reveals that even if you are in compliance with the federal law, the balance of the promissory note may be treated as a resource. OAR 461-145-0330(6)(A)(a) states that the note is treated a disqualifying transfer of assets unless 1) repayment is actuarially sound, 2) payments are made in equal amounts with no balloon payments; and, 3) the note cannot be canceled upon the death of the lender. Thus, it is implied, that if you meet all these requirements, then the note would be considered a valid transfer of assets and the unpaid principal balance would not be counted as an available resource. This matches federal law. Unfortunately, OAR 461-145-0030(6)(B) imposes yet another requirement for the note to be considered unavailable. Even if you meet all the requirements set forth in federal law, the note is



still considered an available resource if a member of the financial group resides in a non-standard living arrangement (e.g. any community based care or nursing facility), the transaction occurs after the first date of continuous care and the amount transferred exceeds the amount of the community spouse resource allowance. In practice, these requirements essentially make the use of promissory notes impractical. Like annuities, promissory notes are often not considered until one spouse is receiving care. Since the first date of continuous care has commended the transaction would be treated as a disqualifying transfer of assets. Arguably, the state has far exceeded its authority in enacting the additional requirements. States are prohibited from imposing requirements that are more restrictive than federal laws in implementing state programs. However, the rule presently stands and any use of promissory notes as a planning tool needs to be undertaken with caution. VI. Post Eligibility Sale Of Home

The home is treated as an excluded resource for Medicaid eligibility determination purposes.29 This means the home is not part of the CSRA. It is not uncommon for the community spouse (CS) to want or need to sell the home at some point after the institutionalized spouse (IS) is determined eligible for Medicaid assistance. However, the net sale proceeds of the home are deemed as an available resource unless they are reinvested in another home.30 Because the home is an excluded resource, it does not fall within the protection of the separate treatment of the CS resources after the IS’s eligibility is established, which is sometimes referred to as the one snapshot rule.31 Any portion of the net sale proceeds from the home that the CS does not reinvest in another home will cause the IS to be over the resource limit because DHS takes the position that one-half of the now available resource is attributable to the IS, although the law is unclear in this area. If nothing is done with the IS’s share, the IS will either be ineligible for Medicaid until the IS spends down the funds and then reapplies or the IS can decide to reimburse the State for up to the amount of benefits the State has provided and thus maintain Medicaid eligibility and avoid having to reapply for Medicaid later. If the IS decides to not reimburse the State, DHS would issue a Notification of Planned Action32 telling the IS when Medicaid benefits would be end and explaining the reason for the action (having excess resources). Planning options, based on the amount of resources in question, are outlined below. A. Community Spouse Retains Net Sale Proceeds. If the net sale proceeds are a small sum, DHS may simply allow the CS to keep the funds in the CS’s account. This would be an option when DHS can clearly determine that the funds will be spent down by the CS based on the CS’s living expenses.33

29 42 USC § 1382b 30 OAR 461-145-0460(4)(c) and (d) 31 42 USC 1396r-5(c)(4) and (5) 32 Form SDS 0540 33 This example is based on anecdotal information. DHS is not bound by previous decisions in specific cases.



B. Community Spouse Purchases a Medicaid Compliant Annuity. The IS can transfer the IS’s share of the net sale proceeds to the CS.34 The IS has the right to transfer assets to the CS without incurring a penalty. However, for larger amounts, DHS wants assurance that the funds transferred from the IS to the CS are for the CS’s sole benefit. A Medicaid compliant annuity35 purchased with the transferred funds is one option to provide this assurance while benefiting the CS. A Medicaid compliant annuity has the benefit of not requiring a Trustee, as is the case for the trust described below. C. Community Spouse Establishes a Sole Benefit Trust. As in the second option above, the IS can transfer the IS’s share of the net sale proceeds to the CS. To assure DHS that the funds transferred from the IS to the CS are for the CS’s sole benefit, a sole benefit trust36 for the CS can be established and funded with the transferred funds. As noted in the discussion of transfers to a disabled child, the sole benefit trust for the CS should include a provision for the trust corpus to be paid out over the CS’s life expectancy. The benefit of a trust over an annuity is establishing and funding a trust is usually less expensive than the upfront fees paid to a financial planner to purchase an annuity.

34 42 USC § 1396p(c), OAR 461-140-0242(2)(b) 35 See discussion of annuities in the materials 36 OAR 461-140-0242(2)(b)



Appendix A

STATE MEDICAID MANUAL 3257-3259 "Transmittal 64"

B. Annuities.--Section 1917(d)(6) of the Act provides that the term "trust" includes an annuity to the extent and in such manner as the Secretary specifies. This subsection describes how annuities are treated under the trust/transfer provisions. When an individual purchases an annuity, he or she generally pays to the entity issuing the annuity (e.g., a bank or insurance company) a lump sum of money, in return for which he or she is promised regular payments of income in certain amounts. These payments may continue for a fixed period of time (for example, 10 years) or for as long as the individual (or another designated beneficiary) lives, thus creating an ongoing income stream. The annuity may or may not include a remainder clause under which, if the annuitant dies, the contracting entity converts whatever is remaining in the annuity into a lump sum and pays it to a designated beneficiary. Annuities, although usually purchased in order to provide a source of income for retirement, are occasionally used to shelter assets so that individuals purchasing them can become eligible for Medicaid. In order to avoid penalizing annuities validly purchased as part of a retirement plan but to capture those annuities which abusively shelter assets, a determination must be made with regard to the ultimate purpose of the annuity (i.e., whether the purchase of the annuity constitutes a transfer of assets for less than fair market value). If the expected return on the annuity is commensurate with a reasonable estimate of the life expectancy of the beneficiary, the annuity can be deemed actuarially sound. 3-3-109.15 Rev. 64 ============================================================== GENERAL AND CATEGORICAL 11-94 ELIGIBILITY REQUIREMENTS 3258.9 (Cont.) To make this determination, use the following life expectancy tables, compiled from information published by the Office of the Actuary of the Social Security Administration. The average number of years of expected life remaining for the individual must coincide with the life of the annuity. If the individual is not reasonably expected to live longer than the guarantee period of the annuity, the individual will not receive fair market value for the annuity based on the projected return. In this case, the annuity is not actuarially sound and a transfer of assets for less than fair market value has taken place, subjecting the individual to a penalty. The penalty is assessed based on a transfer of assets for less than fair market value that is considered to have occurred at the time the annuity was purchased. For example, if a male at age 65 purchases a $10,000 annuity to be paid over the course of 10 years, his life expectancy according to the table is 14.96 years. Thus, the annuity is actuarially sound. However, if a male at age 80 purchases the same annuity for $10,000 to be paid over the course of 10 years, his life expectancy is only 6.98 years. Thus, a payout of the annuity for approximately 3 years is considered a transfer of assets for less than fair market value and that amount is subject to penalty.

Chapter 4A

Staying at Home Options: Technology for Remaining at Home—Gerontechnology

clauDe GooDMan

CareWheels CorporationLake Oswego, Oregon

Contents

Types of Monitoring Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–1

Criteria for Informed Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–1

Factors for Evaluating Monitoring Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–1

Gerontechnology Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–2

Technologies (Products/Services) for Aging in Place . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–4

Testimonial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–5

Attribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–5

Presentation Slides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A–7

Chapter 4A—Staying at Home Options: Technology for Remaining at Home—Gerontechnology

Elder Law 2016: Advanced Concepts 4A–ii



Staying at Home Options: Technology for remaining at home — Gerontechnology Claude A. Goodman, President, CareWheels Corporation, Lake Oswego [email protected]

Given current demographic and economic trends, most people will be aging in their homes by choice or necessity. Elders, aging in place and living in isolation within our communities, are one of the largest and fastest-growing underserved populations. Technology has played an important role in increasing our life expectancy. New technologies, such as smartphones and the Internet of Things sensors, are expanding the range of services available to support people who wish to remain at home and aging in place.

Types of Monitoring Technologies: a variety of systems are available for elders who are aging in place to monitor activities, detect problems and respond to emergencies.

Personal Emergency Response System: the classic ‘Medical Alert’ buttons worn by elders thatlink them to a central dispatcher who contacts them when the button is pushed, or with newaccelerometer-based sensors if a fall is detected, and send a responder in case of emergency.Video Monitoring System: video cameras installed in the elder’s home through which caregiversare able to monitor residents from remote locations through Web-based systems and interveneif unsafe behaviors are observed.Sensor–based Monitoring System: a variety of sensors strategically placed around the home,linked to a computer system that collects and analyzes activity data, to detect habitual activitypatterns and deviations from normal behavioral patterns that may indicate a problem or crisis.

Criteria for Informed Decision Making: a fundamental tenet of informed decision making is that individuals should be able to participate in decisions about their own lives and voluntarily accept or decline the offered technological intervention.

Information about costs, lack of insurance reimbursement, privacy issues and confidentiality ofprotected health information, which may not be understood by the elder or family caregiver.Comprehension to understand the purpose, benefits and limitations of the technology, whichmay be complicated, for example, in case of an elder’s compromised cognitive abilities.Voluntariness in choosing technological interventions which may reasonably be perceived asintrusive, stigmatizing and disempowering to the elder.

Factors for Evaluating Monitoring Technologies: given that the criteria to make an informed decision have been established, three factors should be evaluated when selecting the most appropriate system for a specific individual.

Effectiveness of technological intervention should be evaluated in terms that are meaningful tothe elder and family, including system reliability, functional limitations and data integrity.Obtrusiveness of the technology, whether it is perceived to be objectionable, difficult to use orundermining of personal privacy should be minimized.Quality of Life considerations, based in an individual’s values and objectives, should includeassessment of effectiveness and obtrusiveness as well as the impact of monitoring technologyon their sense of self-esteem and independence.



Gerontechnology Resources: REPORT TO THE PRESIDENT: Independence, Technology, and Connection in Older Age, March 2016 https://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST/pcast_independence_tech__aging_report_final_0.pdf Informed Decision Making for In-home Use of Motion Sensor-based Monitoring Technologies-The Gerontologist-2012-Bruce-317-24.pdf; Courtenay R. Bruce, JD, MA, 2011 http://gerontologist.oxfordjournals.org/content/52/3/317.full.pdf+html Older People’s Perspectives Regarding the Use of Sensor Monitoring in Their Home-The Gerontologist-2014-Pol-geront_gnu104.pdf; Margriet Pol, MSc, Fenna van Nes, PhD, et. al., 2014 http://gerontologist.oxfordjournals.org/content/early/2014/11/10/geront.gnu104.full.pdf+html Aging and the Digital Life Course, David Prendergast & Chiara Garattini, editors; Berghahn Books, 2015 https://books.google.com/books?id=1sXZCQAAQBAJ&pg=PP4&lpg=PP4&dq=ISBN++978-1-78238-691-9 CAST-Functional_Assessment_and_Activity_Monitoring_Technology.pdf; The LeadingAge Center for Aging Services Technologies (CAST), 2016 http://www.leadingage.org/uploadedFiles/Content/Centers/CAST/Technology_Selection_Tools/Functional_Assessment_and_Activity_Monitoring_Technology.pdf Technology for Aging in Place 2016, Laurie M. Orlov, Principal Analyst, Aging in Place Technology Watch https://www.ageinplacetech.com/files/aip/Market%20Overview%20Feb-2016-Final_1.pdf Home Sweet Smart Home, Claude A. Goodman, Biomedical Engineer and Gerontechnologist, 2015 http://carewheels.org/home-sweet-smart-home Given the choice, most of us would prefer to live in our own homes, rooted in our own communities, as we grow older. We desire to continue living safely, independently and comfortably, regardless of age, income or ability level. As we age-in-place, we and our families may want some extra peace of mind. We want to feel safe at home. Our family may want to know that we are OK – up and about enjoying our day. We don’t want to become a burden on our family and they don’t want to neglect our wellbeing. People have invented many clever ways to cope with their concerns about aging alone at home. For example, my neighbor uses her porch light as a simple security signal. We can check on her well-being by seeing if her porch light is turned on in the evening and off in the morning. Any break in her normal routine signals a potential problem and results in a phone call to enquire if she’s OK. A simple, do-it-yourself, low-tech solution for our healthy aging neighbor. Dr. Patrick Roden clearly defines aging-in-place-technology as “technology that’s used to assist people in maintaining: safety, independence, health/wellness, social connections and support systems”. Just as people install burglar alarm systems to alert them to a possible intrusion from the outside, as we age alone at home, it makes sense to have a system that detects problems inside the home and connects us to someone who is able to respond with assistance.

https://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST/pcast_independence_tech__aging_report_final_0.pdf

https://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST/pcast_independence_tech__aging_report_final_0.pdf

http://www.leadingage.org/uploadedFiles/Content/Centers/CAST/Technology_Selection_Tools/Functional_Assessment_and_Activity_Monitoring_Technology.pdf

http://www.leadingage.org/uploadedFiles/Content/Centers/CAST/Technology_Selection_Tools/Functional_Assessment_and_Activity_Monitoring_Technology.pdf

http://aginginplace.com/aging-in-place/aging-in-place-technology/



My friend’s recent experience provides a great example of this kind of high-tech assistance. He and his wife invited her 92 year old mother to move from Los Angeles to an apartment near them in Lake Oswego, Oregon. They asked me to recommend smart home technology that would support her desire to keep living independently while providing some assurance that she was safe and well at home. I recommended a sensor system that would give them a sense of her daily activity patterns and alert them to significant changes on their smartphones. She was living independently, close to her family, enjoying her grandchildren, getting help with supports like driving – and thriving – until one day when my friend detected that she was not following her normal daily activities. When he called her and got no answer, they drove to her home to find her completely “out of it” – non-responsive, incoherent and very weak. He called 911 and got her to the hospital where she was found to be suffering from kidney shutdown and a serious UTI (urinary tract infection). She is out of the hospital now, but my friend wrote: “We're pretty sure if we had not gone to her place, she would not have made it through the night.” The sensor system provided crucial information that may well have helped save her life. She also had a Personal Emergency Response System (PERS) – a call-for-help button – but she never pressed it. PERS are very popular and valuable because older adults who receive help within 1 hour of a fall are nearly 6 times more likely to survive than those who wait longer for aid. PERS can bring help fast after a fall, but they are not fool-proof. If for any reason the help button is not pressed, help may not arrive in time. For this reason, smart home sensor systems offer added security for people living alone because sensors can detect changes in activity patterns that may indicate a crisis, while also providing a daily sense of connection and peace-of-mind when all is well. For example, a sensor placed on the refrigerator indicates that a person is accessing food and drink; a sensor on the medicine cabinet indicates whether medications are being taken on schedule. This information provides an extra sense of connection that can improve communication by providing essential cues about daily activities. It can also help to transform the tenor of check-up phone calls from intrusive interrogations to pleasant conversations. These smart home sensor systems use wireless technology which simplifies installation. No cameras, microphones or intrusive surveillance systems are needed to detect activity changes that may indicate an incipient problem or an immediate crisis. With the addition of more specialized sensors and vital sign monitors, in-home monitoring systems may provide assessments of Activities of Daily Living and connect with Telehealth Services to deliver in-home care for chronic health conditions. These support systems may improve the quality of life and reduce the risk of preventable hospitalizations or institutionalization of older adults, while also reducing the anxiety of their loved ones. There’s no simple one-size-fits-all smart home technology for everyone facing the personal challenges of aging-in-place. The choice depends on the level of service required to meet each person’s need and risk, as depicted in this graph:



IADLs: Instrumental Activities of Daily Living including: housework, taking medications as prescribed, shopping and managing money that are necessary for an individual to live independently at home in their community. ADLs: Activities of Daily Living including: bathing, feeding, dressing, grooming and homemaking that provide a measure of the individual’s basic functional status. Notice that the level of service increases with the level of need, along with the cost. Privacy tends to decrease with increasing level of service – a necessary compromise between risk and independence. Cost and privacy should be considered when comparing the options between continuing to live at home and moving to a facility. Long Term Care Associates reports that in 2014, the Oregon State median cost for an Assisted Living private, one bedroom was $48,000 per year. Smart Home systems vary in price depending on complexity, monitoring and response service options, ranging in price from $400 to over $1,000 per year. In addition to cost, the choice to stay home with a sensor system should be guided by the current level of need, with the understanding that needs may change over time. As a Gerontechnologist, I am often asked: “How does one determine which smart home system is right?” The best answer considers the whole person – from their personal goals and home environment to their family circumstances, social circles and community. I share this holistic approach with Certified Aging-in-Place Specialists, Occupational and Physical Therapy practitioners, who can assess your home environment and unique personal needs to develop effective strategies for accommodating individual aging factors. Gerontechnology complements these practices with new tools for personal empowerment and methods to connect and coordinate care. For example, I have partnered with a Certified Aging-in-Place Specialist to help a family design their “forever home” with recommendations based on principles of universal design, that has enabled the clients to preserve their current lifestyle with maximum independence, dignity and privacy, while ensuring their comfort, safety and security.

http://www.ltc-associates.com/content/GenworthCostofCare.aspx?sec=basics



There are many options for aging-in-place and many innovative technologies to help people achieve their personal goals for remaining in their own home by addressing their current needs while anticipating and preparing for future changes. With proper selection, installation, training and support, these technologies can offer an enhanced sense of security, prolonged independence and improved quality of life while also detecting small changes in activity patterns before they become big problems. TESTIMONIAL: As an Aging Life Care Manager, I recently learned the value of adding TeleCare monitoring as additional support for a client. The court was looking at a possible conservatorship for this client, who wished to remain independently in her own home. I felt I had to put as many safety measures in place in order to ensure my clients independence and well-being. Having never used technology to monitor client activity, I worried that it might be too invasive or that my client would reject the idea. Fortunately, after meeting Claude at our initial consultation, it felt like a great fit, with this being an economical, non-intrusive and easy to implement option to track my clients daily routine including: sleep patterns, eating schedule, television, and even the amount of steps taken each day to measure exercise. I received daily emails and quickly learned when my client woke for the day, had her meals and how often she was watching her television. As a care manager, the Sen.Se technology really gave me peace of mind. If there was a sudden change in routine I was able to identify it immediately and take action. On numerous occasions, messages were being sent from the television remote sensor throughout the night or very early in the morning. I knew that my client was having trouble sleeping and we were able to discuss these patterns together and with her primary care doctor. This client continues to live independently in her own home with minimal outside supports. The TeleCare monitoring made this possible. We are so grateful to Claude for spending the time to help us understand which system would be the most accurate and informative. He really knows his stuff and is passionate about helping people age in place. I will definitely be using and recommending this technology to other clients! Jennifer Litwin, Aging Life Care Manager, Portland, Oregon, July 12, 2016 ATTRIBUTION: This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License by Claude A. Goodman, President, CareWheels Corporation [email protected] (503) 697-5032 Claude A. Goodman, CareWheels Founder, is a Biomedical Engineer and Inventor with 7 US patents and experience in health sciences research, development and technology transfer as a guest scientist at the University of California, Lawrence Berkeley National Laboratory and the National Institute of Standards and Technology. CareWheels is a §501(c)(3) Public Benefit Corporation (EIN: 93-1313709 CareWheels.org) developing technology empowered services to help people live safely with utmost independence by keeping elders, their families and professional care teams connected and informed of their well-being. Founded in 2001, with research grant funding from the Intel Research Council and additional grants from the National Institutes of Health, CareWheels has participated in founding the OHSU Oregon Center for Aging & Technology and the LeadingAge Center for Aging Services Technologies.

http://creativecommons.org/licenses/by-sa/4.0/deed.en_US



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Claude A. Goodman, FounderCareWheels

an Oregon §501(c)(3) Public Benefit Corporation

Attribution: All product names and trademarks appearing in this presentation are property of their respective owners.This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License by [email protected]

Claude Goodman, Founder, CareWheels Corp.I am a Biomedical Engineer & Gerontechnologist, with experience in technology transfer at the National Institute of Standards & Technology and the Lawrence Berkeley National Laboratory.

CareWheels, an Oregon §501(c)(3) nonprofit Public Benefit Corporation, founded in 2001 to:

Perform R&D in Gerontechnology to provide TeleCare Services for people of all ages living with disabilities and particularly the growing population of frail elders.



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Disruptive Demographics – Aging in OregonOregon Aging Tech Innovation – ORCATECHReport to the President – TeleHealthTypes of Monitoring TechnologiesCriteria for Informed Decision MakingFactors for Evaluating Monitoring TechnologiesExamples:

QuietCare: the Promise of Peace-of-MindSen.se: Mother Knows BestCareWheels CareBank

Q&A



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Portland Aging Demographics 2010 Censushttp://censusviewer.com/city/OR/Portland

Millennials Boomers

6

Source: Robert Wood Johnson Foundation Source: MIT Age Lab; U.S. Census data

Tomorrow's elders will be dramatically older, needing the most costly care.



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Older Population by Age: 1900 - 2050Source: US Bureau of the Census



Q&A



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*Global Aging is no less urgent or impactful than Global Warming...Longevity is a societal “success catastrophe”- Eric Dishman, Intel Fellow, Director of Intel's Digital Health Group,

CareWheels Director Emeritus

*Oregon Roybal Center for Aging and Technology, metro-Portland Council Members



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The same tech infrastructure connects through all quadrants of the healthcare continuum.

CareWheels I-Care

Subjective

Cultural

Objective

Social

Individual - Intentional Organism - Behavioral

Collective - Care giving Ecosystem - Public health

Technology forPersonal Empowerment

Technology forMedical Intervention

Technology forInterpersonal Interaction

Technology forEpidemiological Intervention

{ ORCATECH at OHSU}

PHR Personal Health RecordsEHR Electronic Health Records

PHR EHR



Q&A



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Independence, Technology, and Connection in Older Age

The President’s Council of Advisors on Science and Technology, March 2016

Technology has played an important role in increasing life expectancy, but it also has an important role to play in increasing the quality of life, by maximizing Americans’ ability to function in their later years.

Telehealth, the process of providing health care by telephone, videoconference, email, monitoring technologies, or web interfaces, provides many services.

Monitoring holds great promise for predicting problems and enhancing safety of people at risk.

It’s aNetwork! It’s a…

It’s aCashCow?

No-it’s aLiability!

The Parable of The Blind Men & The Elephant



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TeleMedicine: Biometric Monitoring for Chronic Disease Management

TeleCare: Behavioral Monitoringfor Embedded Assessment & Support

Digital HomeConvergence

CareWheels research Sponsors: Intel Research Council & National Institutes of Health



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Q&A

A variety of systems are available for elders who are aging in place to monitor activities, detect problems and respond to emergencies, including:

Personal Emergency Response SystemsVideo Monitoring SystemsSensor–based Monitoring Systems



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Personal Emergency Response System: The classic ‘Medical Alert’ buttons worn by elders that link them to a central dispatcher who contacts them when the button is pushed, or with new accelerometer-based sensors if a fall is detected, and send a responder in case of emergency.

Video Monitoring System: Video cameras installed in the elder’s home through which caregivers are able to monitor residents from remote locations through Web-based systems and intervene if unsafe behaviors are observed.



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Sensor–based Monitoring System: A variety of sensors strategically placed around the home, linked to a computer system that collects and analyzes activity data, to detect habitual activity patterns and deviations from normal behavioral patterns that may indicate a problem or crisis.

Breakfast Lunch Dinner

Late Start >



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Mom makes tea

i-Pot sends data to network.

Data to Daughter Mom is just fine!

I feel safe

Peaceof Mind

Light & Motion Sensors

EUREKA! The fridge light does go out when the door is closed!



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Q&A

A fundamental tenet of informed decision making is that individuals should be able to participate in decisions about their own lives and voluntarily accept or decline the offered technological intervention.Necessary elements include:

InformationComprehensionVoluntariness



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Information about costs, lack of insurance reimbursement, privacy issues and confidentiality of protected health information, which may not be understood by the elder or family caregiver. Comprehension to understand the purpose, benefits and limitations of the technology, which may be complicated, for example, in case of an elder’s compromised cognitive abilities.

Voluntariness in choosing technological interventions which may reasonably be perceived as intrusive, stigmatizing and disempowering to the elder.

IADLs: Instrumental activities of daily living are not necessary for fundamental functioning, but they let an individual live independentlyin a community. Examples: housework, taking medications as prescribed, shopping, managing money.

ADLs: Activities of daily living is a term used by healthcare professionals as a measurement of the basic functional status of a person. Examples: bathing, feeding, dressing, grooming, homemaking. [http://en.wikipedia.org/wiki/Activities_of_daily_living]



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Source:Technologies for Heart and Mind: New Directions in Embedded Assessment by Margaret Morris, Ph.D., Clinical Psychologist, Intel Digital Health Group



Q&A



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Given that the criteria to make an informed decision have been established, three factors should be evaluated when selecting the most appropriate system for a specific individual.

Effectiveness Obtrusiveness Quality of Life

Effectiveness of technological intervention should be evaluated in terms that are meaningful to the elder and family, including system reliability, functional limitations and data integrity.

Obtrusiveness of the technology should be minimized, whether it is perceived to be objectionable, difficult to use or undermining of personal privacy.

Quality of Life considerations, based in an individual’s values and objectives, should include assessment of effectiveness and obtrusiveness as well as the impact of monitoring technology on their sense of self-esteem and independence.



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QuietCare: the Promise of Peace-of-MindLive!y Sensors and Smart WatchCareWheels CareBank

Q&A

In 2003, Living Independently.com developed the QuietCare System:

Attributes:1. Wellness Monitoring

2. Early Warning System

3. Web-based Interface

4. Low Cost POTS Based Com Link

5. Email/Pager/Text-message warnings sent to caregivers



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Elder Analysis &Archiving

ADT ServiceMonitor

FamilyCaregiver

Data

Services

Improved Communication

Blue light meansstill in bed.

Green light means everything is normal.

Yellow light means keep an eye on this.

Red light means check in with the client now!

Gray means lawyers said don’t report this.



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Date: 11/30/05 9:06 am Message: From: [email protected] Subject: Call Nancy XxxxxxxAt 503-000-0000. Re: Activity yesterday was significantly lower than usual.

Text Message ↓

Email Report →



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QuietCare motion sensors circled. All others are CareWheels.

Livingroom

Bedroom Bathroom

Kitchen

Strategically placed sensors detect Activities of Daily Living.

Meds-Drawer BathroomKitchen



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– Disclaimer:

Gray→Indicator

Alert History by Type Feb 04 ~ Nov 05

0

1

2

3

4

5

6

7

8

Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05

Date

Alert Type

Bedroom>10 am Exit

Base StationNot Connecting

Alert Type

High AmbientTemperature

PossibleBathroom Fall

BathroomNite-time Visits

MealPreparation

ActivityIndex

QuietCare externalized the cost of response on the Family.



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Q&A



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As an Aging Life Care Manager, I recently learned the value of adding TeleCare monitoring as additional support for a client. The court was looking at a possible conservatorship for this client, who wished to remain independently in her own home. I felt I had to put as many safety measures in place in order to ensure my client’s independence and well-being.

As a care manager, the Sen.Se technology really gave me peace of mind. If there was a sudden change in routine I was able to identify it immediately and take action. …I knew that my client was having trouble sleeping and we were able to discuss these patterns together and with her primary care doctor. …This client continues to live independently in her own home with minimal outside supports. The TeleCare monitoring made this possible.

Jennifer Litwin, Aging Life Care Manager, Portland, Oregon, July 12, 2016



Q&A



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Independence, Technology, and Connection in Older Age

The President’s Council of Advisors on Science and Technology, March 2016

Excerpt (pg.11) “A few examples illustrate technology’s usefulness. ...Remote monitoring, wearables, and sensors can help seniors age in place while ensuring their safety and maintaining their health. …Online “time banks” can allow seniors to donate services now in order to access help from others when they need it.”

The CareBank project integrates TeleCare remote sensor monitoring and TimeBanking to convert our surplus human capital into shared social capital, empowering people to live interdependently, take better care of each other, and uphold the social determinants of health.

TeleCare• Elder circle of peers• Engage in co-production • Provide mutual care• Support aging-in-place• Color = current state of

each peer in the circle

TimeBanking• Values peers as assets• Human to social capital• Monetizes care services• Rebuilds core economy• Automates accounting

and big data collection



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TeleCare Screen Main Screen TimeBank Screen

Method for Social Care Networking – US 62/383,565; Claude A. Goodman, President, CareWheels

Live long and prosper.

The miracle is this: The more we share the more we have.



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Claude A. Goodman, [email protected]

an Oregon §501(c)(3) Public Benefit Corporation

Chapter 4B

Benefits for the Home: Additional Resources to Consider for the Client

rebecca kueny

Rice | Kueny LLCSalem, Oregon

Contents

Health Care and/or Long Term Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–11. Medicaid—Oregon Health Plan (OHP) . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–12. Medicaid—Oregon Project Independence (OPI) . . . . . . . . . . . . . . . . . . . . . 4B–13. Veteran’s Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–14. Family Caregiver Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–15. Medical Supplies and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–26. Qualified Medicare Beneficiaries (QMB) . . . . . . . . . . . . . . . . . . . . . . . . . 4B–27. Health and Wellness Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–2

Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–21. Oregon Homeownership Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–22. Villages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–3

Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–31. Weatherization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–32. Energy Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–4

Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–4a. Meals on Wheels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–4b. Shopping Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–4c. Religious Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–4d. SNAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–4

Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–4a. Oregon Money Management Program . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–5b. Conservatorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–5

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4B–5

Chapter 4B—Benefits for the Home: Additional Resources to Consider for the Client

Elder Law 2016: Advanced Concepts 4B–ii



It is common for clients to want to reside at home for as long as possible. While staying at home is not always feasible or possible, it is important for attorneys to know the wide range of resources that are available for the client to try to achieve this goal. There are many resources that can assist clients with staying at home, beyond the health care and long term care services that we often discuss in the elder law community. Health Care and/or Long Term Care. As the elder law community most commonly discusses, care or assistance in the house may be an option. This may be achieved by a few different programs or resources, such as family providing care, private payment for in-home care, or Medicaid, also known as the Oregon Supplemental Income Program – Medical (OSIPM) program. As this 2016 Elder Law CLE is specifically addressing OSIPM, it will not be discussed at any length in this presentation. However, there are other health care or long term care resources that are available.

1. Medicaid – Oregon Health Plan (OHP). For clients needing health care insurance, the OHP offers various insurance options, including dental, hearing, home health, hospice, hospital care, immunizations, lab work, medical equipment, medical transportation, mental health care, physical therapy, occupational therapy, speech therapy, prescriptions, and vision care. For more information, visit http://www.oregon.gov/oha.

2. Medicaid – Oregon Project Independence (OPI). For clients who do not yet

qualify for OSIPM, Oregon Project Independence (OPI) may be a valuable resource. OPI includes services for clients who are not requiring high levels of care, but require some assistance to remain at home. The services OPI offers include meal delivery, transportation, respite care, home chores, technology assistance, and even support for the primary caregiver (including counseling). The Oregon Administrative Rules for OPI can be found in OAR 411-032-0000 through 411-032-0050. There may be fees associated with these services, depending on the financial eligibility of the client. For more information on OPI, contact the local Department of Human Services (DHS) or Aging and Disability Resource Connection (ADRC). NOTE: Due to budget constraints on funding OPI, some counties are not able to provide services currently.

3. Veteran’s Benefits. Clients who are either a Veteran, Veteran’s spouse, or a

surviving spouse of a Veteran, may be eligible for a benefit from the Veteran’s Administration (VA). There are various programs with the VA that could increase the income to the household to pay for care services. These programs alone are often a CLE topic. The VA requires that any attorney assisting a client with VA Benefits be accredited with the VA. Clients who may be eligible should meet with an accredited attorney, a Veteran Service Organization (VSO), or the VA to discuss eligibility. Similar to Medicaid, it is important that clients also meet with an accredited attorney to discuss long term care planning options. For more information, visit http://www.benefits.va.gov/pension.

4. Family Caregiver Support. The goal of this program is to provide support for

family caregivers so that clients can stay at home longer. If the family caregivers are supported, the caregivers are able to stay healthy, happy, and are better equipped to assist the client. For more information, contact the local DHS or ADRC.



5. Medical Supplies and Equipment. Medical supplies, devices, and equipment may be purchased through Medicaid and/or Medicare. If clients are trying to purchase such products, refer clients to Medicaid and/or Medicare to see if the products are covered.

6. QMB. Qualified Medicare Beneficiaries (QMB) is a program through the State of

Oregon that assists clients who are receiving Medicare Part A coverage. The program pays for Medicare premiums, allowing clients to save on insurance costs. For more information, contact the local DHS or ADRC.

7. Health and Wellness Programs. A large reason that many elderly clients cannot

stay at home is due to the threat of falls or due to a previous fall. Oregon has created several programs to assist clients with fall prevention.

a. Otago. Otago is a wellness program for clients to increase balance and

strength. It can be performed at home and has been shown to reduce fall risks or injuries. The program may be covered by Medicare. For more information, contact the local DHS or ADRC.

b. Tai Chi. The Oregon Health Authority offers Tai Chi: Moving for Better

Balance classes. Studies have shown that Tai Chi decreases fall risks and is a good form of balance and exercise for aging adults. For more information, contact the local DHS or ADRC.

c. Stepping On: Falls Prevention Program. This community-based course

provides education and habit forming changes with the aging community members. The classes include balance exercises and education on home hazards, vision, mobility, safety, footwear, sleep, bone health, and medication management. For more information, contact the local DHS or ADRC.

Housing. According to the National Council on Aging, over 25 million Americans over the age of 60 are considered low-income. If the client has limited income or limited assets, the client may be eligible for certain housing programs or upgrades. These programs can assist the client with staying at home for as long as possible without paying as much cost for housing and/or repair expenses.

1. Oregon Homeownership Initiative. For some clients, it is difficult to pay for the current mortgage or property taxes. The Oregon Homeownership Stabilization Initiative (OHSI) administers various programs for housing issues.

a. RAHAPP. For clients that are current on the home mortgage, but owe more on the mortgage than the home is worth, Rebuilding American Homeownership Assistance Pilot Program (RAHAPP) may be a resource to assist the client with refinancing the home mortgage. For more information, visit the RAHAPP website:

http://www.oregonhomeownerhelp.org/en/homeowner-education-program/raha-program



b. LRAPP. An alternative program for clients in the same situation may be the Loan Refinancing Assistance Pilot Project (LRAPP). For more information, visit the LRAPP website:

http://www.oregonhomeownerhelp.org/en/homeowner-education-program/lrapp-program

c. Home Rescue Program. The Home Rescue Program assists clients by paying up to 12 months of the client’s mortgage payments. This includes clients who are not current on the mortgage. For more information, visit the Home Rescue Program website:

http://www.oregonhomeownerhelp.org/en/homeowner-education-program/home-rescue-program

d. Hardest Hit Program. In October 2016, OHSI will be rolling out three

new programs for clients who are delinquent in payments but can afford to pay current monthly payments.

I. Preservation Benefit. Homeowners who are delinquent on their first lien mortgage may qualify.

II. Property Tax Benefit. Homeowners who own their homes

outright, but are delinquent on their property taxes may qualify.

III. Reverse Mortgage Benefit. Homeowners with a Home Equity Conversion Mortgage (HECM) may qualify.

2. Villages. Communities around Oregon and the country are creating villages

specifically for residents to age in place. Here in Oregon, multiple villages have been created or are in the process of being created in the Portland area. These villages include the following:

• Eastside Village PDX – Currently open in Portland • Ashland at Home – Currently open in Ashland, Oregon • High Desert Village – Currently open in Bend, Oregon • Village without Walls – Opening soon in Washington County • Three Rivers Village – Opening soon in Clackamas County • Viva Village – Early development stage for Washington County • North Star Village – Early development stage for North Portland • NE Village PDX – Early development stage for Central NE Portland • River West Village – Early development stage for SW Portland • Villages for Milwaukie – Planning stage for Milwaukie, Oregon

More information may be found at http://villagesnw.org/.

Utilities. Another large cost to clients living at home may be utility expenses on the residence.

1. Weatherization. Low-income clients may qualify for weatherization updates on their residence. For instance, if there is no heat in the residence due to issues with the furnace, the client may be able to receive a free furnace immediately. For more information on these programs, contact the local Community Action. For more information, visit http://www.caporegon.org.



2. Energy Assistance Programs. If clients are having difficulty paying for utility bills, there are programs that are able to assist clients with payments.

a. Utility Company. One option is to contact the utility company directly to

see if the utility company offers a program or grant. b. LIHEAP. The Oregon Low-Income Home Energy Assistance Program

(LIHEAP) provides low-income clients assistance with home energy costs, such as bill payment assistance, energy education, case management, and home weatherization services. For more information, visit http://www.oregon.gov/ohcs.

c. OEAP. The Oregon Energy Assistance Program (OEAP) is a program that

assists low-income clients who may have disconnected electricity service due to the expense of heating the residence. For more information, visit http://www.oregon.gov/ohcs.

Food. A reason that many elderly clients leave home for residential care is due to poor nutrition, which creates other health issues, or because it is too difficult to shop or make meals.

a. Meals on Wheels. This nationwide program can assist clients with preparing meals and bringing them to the homes of clients. The meals provide nutrition. Additionally, recipients of Meals on Wheels have reported that they feel less isolated since someone is coming to the home each day. For more information, contact the local Meals on Wheels.

b. Shopping Services. For some clients, grocery shopping is too difficult due

to fatigue, mobility, or transportation. It also may be too difficult to leave an ailing spouse at home. With technology and the internet, many companies have started online grocery shopping. For instance, Amazon Fresh, Fred Meyer, and Instacart have an online presence that allows the client (or loved one) to purchase the groceries and have the groceries delivered to the client’s home.

c. Religious Institutions. Clients with a religious affiliation may be able to

receive assistance from the religious institution. Many religious institutions offer sponsors or members of the community to assist members in the community. This includes visiting with the client, preparing meals with the client, providing transportation, or assisting with grocery shopping.

d. SNAP. For low-income clients, Oregon’s Supplemental Nutrition

Assistance Program (SNAP) may assist the client with purchasing groceries and food for the home. For more information, contact the local DHS or ADRC.

Financials. For clients who are living at home, but are having difficulty paying bills and/or managing funds, Oregon has some new programs that may assist the client. Of course, it is very



important to make sure that the client has discussed an estate plan with an estate planning attorney, if the client still has the mental capacity to create a plan. An estate plan allows for the client to name who the client would like to handle the financials. The estate plan also allows the client to state what type of authority the agent may have to carry out the finances and business affairs.

a. Oregon Money Management Program. This free program is offered by local DHS or ADRC organizations to provide assistance with money management for a client with limited income and assets. The service includes assistance with financial filing and organization, budgeting, bill pay, banking, form completion, debt management, and insurance claims. For more information, contact your local DHS.

b. Conservatorship. When a client is able to remain at home, but does not

have the capacity to handle the finances, a conservatorship may be necessary if an appropriate estate plan was not in place.

I. Indigent Guardianship Program. For low-income clients, the

client may qualify for the Indigent Guardianship Program (IGP), if offered in the county. IGP allows a third-party agency to sponsor a guardianship for the client to receive a Guardian and/or Conservator. Depending on the county, the agency either pays for the court costs or the court waives the fee. Participating attorneys and court visitors may also get a set stipend (flat fee) to assist with the proceeding. For more information on this program, contact the local county Circuit Court.

II. Public Guardian. For clients who do not have anyone willing or

able to be a Guardian or Conservator, the Oregon Public Guardian offers these services. The program has recently begun and is still in early development, so services are currently limited. For more information, visit http://www.oregon.gov/LTCO.

Conclusion. There are many resources here in Oregon that we do not regularly discuss in the elder law community. It is essential for our clients to know that these additional resources exist as it can help our clients achieve the goal of staying at home for as long as possible. If a client discloses an issue that potentially prevents the client from staying at home, I suggest you reach out to state and community services, attorneys, and other aging resources mentioned today that can assist the client with the ability to stay at home.

Chapter 5

End-of-Life Options and Medical Aid in Dying—Presentation Slides

Matt Whitaker

Compassion and ChoicesPortland, Oregon

Chapter 5—End-of-Life Options and Medical Aid in Dying—Presentation Slides




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End-of-Life Options and Medical Aid in DyingMatt Whitaker- Oregon State Director

C&C is the nation’s oldest, largest and most active nonprofit organization committed to improving care and

expanding choice at the end of life.

C&C supports, educates and advocates.

About Compassion & Choices



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By Show of Hands …

• At home with loved ones• With their pain and

discomfort managed• Having their spiritual needs

respected• Without being a devastating

burden on loved ones

How People Want Their Lives to End~Journal of the American Society on Aging, June 2015



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End-of-Life Options

• All Treatment Interventions• Declining or Refusing Medical Treatment• Palliative Care & Palliative Sedation • Voluntary Stopping of Eating and

Drinking (VSED)• Medical Aid in Dying: OR Death with

Dignity Act

What Is Medical Aid in Dying?

A safe and trusted medical practice in which a terminally ill, mentally capable person with a prognosis of six months or less to live has the option to request from their doctor a prescription for medication which they can choose to self-ingest to end unbearable suffering and die peacefully.

This medical practice is also known as death with dignity.



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Eligibility Requirements

• 18 years or older • Terminally ill with a six-month prognosis• Capable of making medical decisions

● Physician must inform person about all end-of-life care options

● Two verbal requests and one written request

● Two physicians must confirm eligibility● Two witnesses must attest to the voluntary

nature of individual’s request● Person must be able to take and ingest the

medication themselves

Other requirements include:



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Statistics From Oregon

• 1,327 prescriptions written, 65% took medication

• Most were over age 65 and had a diagnosis of cancer

• 90% were enrolled in hospice• Primary reason for choosing aid in dying was

loss of autonomy• Not one instance of abuse in 18 years

Other Provisions

• Wills, contracts, insurance and annuity policies are not affected by a person choosing aid in dying

• Aid in dying is notconsidered suicide or assisted suicide



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Be Proactive

• Talk to your doctor now!

• Do not wait until it’s too late ...

How Can You Help?

• Volunteer with us!• Connect us with groups or organizations

that would like a speaker.• Connect us with medical professionals who

want to learn more.• If you are a medical professional, become a

champion within your organization for medical aid in dying.



9/21/2016

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Compassion & Choices Resources

✓ End-of-Life Information Center: www.compassionandchoices.com/InformationCenter

✓ Doc2Doc consultation service for physicians

Chapter 6

Guardianship and Conservatorship: Beyond the Statutes

the honorable katherine tennyson

Multnomah County Circuit CourtPortland, Oregon

sibylle baer

Cartwright Baer Johansson PCPortland, Oregon

Contents

I. Conservatorships and Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–1

II. Marriage and Protective Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–1

III. Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–1

Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–2ORS130.120(1), (2), and (5)—Appointment of Special Representative . . . . . . . . . . . . . . 6–2ORS 125.650 Other Protective Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–2ORS125.470—Filing of Inventory Required; Supplemental Inventory. . . . . . . . . . . . . . 6–3ORS125.475—Conservator’s Account to Court; Contents . . . . . . . . . . . . . . . . . . . . . 6–4ORS125.425—Powers of Conservator to Pay Expense of Protected Person and Dependents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–4ORS125.460—Consideration of Estate Plan of Protected Person . . . . . . . . . . . . . . . . . 6–5ORS116.133—Distribution; Order in Which Assets Appropriated; Abatement . . . . . . . . . 6–5ORCP27A, B(3)(4), C, and I—Minor or Incapacitated Parties . . . . . . . . . . . . . . . . . . . 6–6ORS124.010—Petition for Relief; Time Limitation; Information to Be Provided Petition; Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–7ORS124.060—Duty of Officials to Report; Exception . . . . . . . . . . . . . . . . . . . . . . . 6–8

Helmig v. Farley, Piazza & Associates, 180 P.3d 749, 218 Or. App. 622 (Or. App., 2008). . . . . . . . . . 6–9

Strain v. Rossman, 47 Or.App. 57, 614 P.2d 102 (Or. App., 1980) . . . . . . . . . . . . . . . . . . . . . 6–13

Elardo v. Carr, 847 P.2d 892, 118 Or.App. 407 (Or. App., 1993) . . . . . . . . . . . . . . . . . . . . . . 6–19

Chapter 6—Guardianship and Conservatorship: Beyond the Statutes




I. Conservatorships and Trusts A. Trust assets and non-Trust assets in need of management.

1. Trustee and conservator the same. 2. Trustee and conservator different.

B. Monitoring of trustee. 1. Conservator monitors trustee [Helmig v. Farley, Piazza & Associates, 218 Or

App 622, 180 P3d 749 (2008)]. 2. Appointment of Special Representative [ORS130.120 (1), (2), and (5) ] 3. Use of ORS 125.650 Other Protective Orders.

C. When to seek court approval.

II. Marriage and Protective Proceedings A. Both spouses subject to protective proceeding.

1. Inventorying [ORS125.470], managing, and accounting [ORS125.475] for joint assets.

2. Subsequent marriage, warring step-children as fiduciaries. Is divorce an appropriate option?

3. Preserving estate plan [ORS125.425(2); ORS125.460; ORS116.133; Strain v. Rossman, 47 Or App 57, 614 P2d 102 (1980); Elardo v. Carr, 118 OrApp 407, 847 P2d 892 (1993)]

B. One spouse subject to indefinite protective proceeding. 1. Spouse as fiduciary. 2. Third party as fiduciary. 3. Transfer of assets for Medicaid eligibility. 4. Inventorying, management, and accounting of joint assets. 5. Preserving estate plan.

C. One spouse subject to protective proceeding for limited purpose. 1. GAL vs. conservator vs. other protective order [ORCP27(A), (B), (C), and (I)]

D. When to seek court approval.

III. Other. A. Elder Abuse Prevention Act Restraining Orders [ORS124.005-124.040]. B. Mandatory Reporting requirements [ORS124.060].



STATUTES

ORS130.120(1), (2) and (5) Appointment of special representative.

(1) If the Court determines that the interest of a person is not represented under ORS 130.100 (UTC 301. Representation) to 130.120 (UTC 305. Appointment of special representative), or that the otherwise available representative might be inadequate, the court may appoint a special representative to receive notice, give consent and otherwise represent, bind and act on behalf of a minor, financially incapable individual or unborn individual, or a person whose identity or location is unknown and not reasonably ascertainable. A special representative may be appointed to represent several persons or interests, if the interests of the persons represented do not conflict.

(2) A special representative may act on behalf of the individual represented with respect to any matter that the court has authorized, whether or not a judicial proceeding concerning the trust is pending.

(5) A person requesting the appointment of a special representative much file a petition with the court describing the proposed special representative, the need for a special representative, the qualifications of the special representative, the person or persons who will be represented, the actions that the special representative will take and the approximate date or event when the authority of the special representative will terminate. The person seeking to serve as special representative must file a consent to serve.

ORS 125.650 Other Protective Orders.

(1) The court may enter protective orders without the appointment of a fiduciary or in addition to appointment of a fiduciary. A petition for a protective order that does not seek the appointment of a fiduciary is subject to all requirements prescribed for petitions for appointment of a fiduciary. A court may enter a protective order other that appointment of a fiduciary only upon a determination that grounds exist for the appointment of a fiduciary.

(2) In issuing protective orders under this section, the court may exercise any power that could be exercised by a guardian or conservator in a protective proceeding, or any power that could be exercised by the court in a protective proceeding in which a fiduciary is appointed.

(3) Before entering a protective order under this section, the court shall consider the interests of creditors and dependents of the protected person and whether the protected person needs the continuing protection of a fiduciary.



(4) The court may appoint a fiduciary whose authority is limited to a specified time and whose power is limited to certain acts needed to implement the protective order. A fiduciary appointed under this subsection need only make such report to the court as the court may require.

(5) In addition to any other protective order that may be entered under this section, the court may authorize, direct or ratify:

a) Any transaction necessary or desirable to achieve any security, service or care arrangement meeting the foreseeable needs of the protected person, including but not limited to payment, delivery, deposit or retention of funds or property, sale, mortgage, lease or other transfer of property, entry in to an annuity contract, a contract for life care, a deposit contract, a contract for training and education, or addition to or establishment of a suitable trust.

b) Any contract, trust or other transaction relating to the protected persons financial affairs or involving the estate of the person if the court determines that the transaction is in the best interest of the protected person.

ORS125.470 Filing of inventory required; supplemental inventory.

(1) Within 90 days after the date of appointment, unless a longer time is granted by the court, a conservator must file in the protective proceeding an inventory of all the property of the estate of the protected person that has come into the possession or knowledge of the conservator. The inventory must show the estimates by the conservator of the respective true cash values of of the date of the protective order. If the protected person has attained 14 years of age, a copy of the inventory must be served on the protected person personally or by mail.

(2) Whenever any property of the estate of the protected person not included in the inventory or any subsequent accounting and not derived from any asset included in a prior inventory or any subsequent accounting comes into the possession or knowledge of the conservator, the conservator must file a supplemental inventory in the protective proceeding. The supplemental inventory must be filed within 30 days after the date of receiving possession or knowledge of the property.



ORS125.475 Conservator’s account to court; contents.

(2)Each accounting must include the following information:

a) The period of time covered by the accounting. b) The total value of the property with which the conservator is

chargeable according to the inventory, or, if there was a prior accounting, the amount of the balance of the prior accounting.

c) All money and property received during the period covered by the accounting.

d) All disbursements made during the period covered by the accounting.

e) The amount of bond posted by the conservator during the period covered by the investment advisers or brokers.

f) With respect to conservators who are professional fiduciaries, the total amount of compensation that investment advisers or brokers other that the professional fiduciary charged or received in charges for investments managed or transacted by the investment advisers or brokers.

Such other information as the conservator considers necessary, or that the court might require, for the purpose of disclosing the condition of the estate.

ORS125.425 Powers of conservator to pay expense of protected person and dependents.

(2)A conservator may expend or distribute income or principal of the estate without prior court authorization or confirmation for the support, education, care or benefit of the protected person and the dependents of the protected person if those amounts are reasonably necessary for the support, education, care or benefit of the protected person with due regard to:

a) The size of the estate, the probable duration of the conservatorship and the likelihood that the protected person, at some future time, may be fully able to manage the affairs of the protected person and the estate that has been conserved for the protected person;

b) The accustomed standard of living of the protected person and members of the household of the protected person; and

c) Other funds or sources used for the support of the protected person.



ORS125.460 Consideration of estate plan of protected person.

In investing the estate, selecting assets of the estate for distribution and utilizing powers of revocation or withdrawal available for the support of the protected person and exercisable by the conservator or the court, the conservator and the court shall take into account any known estate plan of the protected person, including the will of the protected person, any revocable trust of which the protected person is settlor, and any contract, transfer or joint ownership arrangement with provisions for payment or transfer of benefits or interests at the death of the protected person to another or others that the protected person may have originated. The conservator may examine the will of the protected person.

ORS116.133 Distribution; order in which assets appropriated; abatement.

1) If the will expresses an order of abatement, or the testamentary plan or the express or implied purpose of the devise would be defeated by the order of abatement stated in subsection (2) of this section, the shares of the distributes abate as may be found necessary to give effect to the intention of the testator.

2) Except as provided in ORS 112.405 ( Children born, adopted or conceived after execution of will) as to the shares of pretermitted children, and in ORS 114.600 (Elective share generally) to 114.725 (Effect of separation) relating to the elective share of the surviving spouse, shares of distributes abate without any preference or priority as between real and personal property in the following order: a) Property not disposed of by the will. b) Residuary devises. c) General devises. d) Specific devises.

3) A general devise charged on any specific property or fund is considered, for purposed of abatement, property specifically devised to the extent of the value of the thing on which it is charged. Upon the failure or insufficiency of the thing on which it is charged, it is considered a general devise to the extent of the failure or insufficiency.

4) Abatement within each classification is in proportion to the amounts of property each of the distributees would have received had a full distribution of the property been made in accordance with the terms of the will.

5) Persons to whom the will gives tangible personal property not used in trade, agriculture or other business are not required to contribute from that property unless the particular devise forms a substantial amount of the total estate and the court specifically orders contribution because of the devise.



6) When the subject matter of a preferred devise is sold or used incident to administration, abatement shall be achieved by appropriate adjustments in, or contribution from, other interests in the remaining assets.

ORCP27A, B(3)(4), C, and I Minor or incapacitated parties.

A. Appearance of parties by guardian or conservator. When a person who has a conservator of that person’s estate or a guardian is a party to any action, the person shall appear by the conservator or guardian as may be appropriate or, if the court so orders, by a guardian ad litem appointed by the court in which the action is brought. The appointment of a guardian ad litem shall be pursuant to this rule unless the appointment is made on the court’s motion or a statute provides for a procedure that varies from the procedure specified in this rule.

B. Appointment of a guardian ad litem for minors; incapacitated or financially incapable parties. When a minor or a person who is incapacitated or financially incapable, as those terms are defined in ORS 125.005, is a party to an action and does not have a guardian or conservator, the person shall appear by a guardian ad litem appointed by the court in which the action is brought and pursuant to this rule, as follows:

B(3) when the plaintiff or petitioner is a person who is incapacitated or financially incapable, as those terms are defined in ORS 125.005, upon application of a relative or friend or the person, or other interested person; B(4) when the defendant or respondent is a person who is incapacitated or is financially incapable, as those terms are defined in ORS 124.005 upon application of a relative or friend of the person, or other interested person, filed within the period of time specified by these rules or any other rule or statute for appearance and answer after service of a summons or, if the application is not so filed, upon application of any party other than the person.

C. Discretionary appointment of guardian ad litem for a party with a disability. When a person with a disability, as defined in ORS 124.005, is a party to an action, the person may appear by a guardian ad litem appointed by the court in which the action, the person may appear by a guardian ad litem appointed by the court in which the action is brought and pursuant to this rule upon motion and one or more supporting affidavits or declarations establishing that the appointment would assist the person in prosecuting or defending the action.



I. Settlement. Except as permitted by ORS 126.725, in cases where settlement of the action will result in the receipt of property or money by a party for whom a guardian ad litem was appointed under section B of this rule, court approval of any settlement must be sought and obtained by a conservator unless the court, for good cause shown and on any terms that the court may require, expressly authorizes the guardian ad litem to enter into a settlement agreement.

ORS124.010 Petition for Relief; time limitation; information to be provided petition; exception.

(1)(a) Except as provided in subsection (8) of this section, an elderly person or a person with a disability who has been the victim of abuse within the preceding 180 days or a guardian or guardian ad litem of an elderly person or a person with a disability who has been the victim of abuse within the preceding 180 days may petition the circuit court for relief under ORS 124.005 to 124.040, if the person is in immediate and present danger of further abuse from the abuser. (b) The elderly person or person with a disability or the guardian or guardian ad litem of the person may seek relief by filing a petition with the circuit court alleging that the person is in immediate and present danger of further abuse from the respondent, alleging that the person has been the victim of abuse committed by the respondent within the 180 days preceding the filing of the petition and describing the nature of the abuse and the approximate dates thereof. The abuse must have occurred not more than 180 days before the filing of the petition. (c) A petitioner or guardian petitioner is not required to provide in the petition information regarding the relationship between the elderly person or person with a disability and the respondent. (d) The petition must include allegations made under oath or affirmation or a declaration under penalty of perjury. The circuit court has jurisdiction over all proceedings under ORS 124.005 to 124.040. (2) The petitioner or guardian petitioner has the burden of proving a claim under ORS 124.005 to 124.040 by a preponderance of the evidence. (3) The right to petition for relief under ORS 124.005 to 124.040 is not affected by the fact that the elderly person or person with a disability has left the residence or household to avoid abuse. (4) A petition filed under ORS 124.005 to 124.040 must disclose the existence of any Elderly Persons and Persons With Disabilities Abuse Prevention Act proceedings, any Abuse Prevention Act proceedings, any marital annulment, dissolution or separation proceedings pending between the parties or any protective proceedings under ORS chapter 125. (5) Upon the filing of a petition under ORS 124.005 to 124.040, the clerk of the court shall give the petitioner or guardian petitioner information provided by the Department of Human Services about local adult protective services, domestic violence shelters and local legal services available. (6) For purposes of computing the 180-day period in this section and ORS 124.020, any time during which the respondent is incarcerated or has a principal residence more than 100 miles



from the principal residence of the elderly person or person with a disability is not counted as part of the 180-day period. (7) If a guardian or guardian ad litem files a petition under this section on behalf of an elderly person or a person with a disability, the elderly person or person with a disability retains the right to: (a) Contact and retain counsel; (b) Have access to personal records; (c) File objections to the restraining order; (d) Request a hearing; and (e) Present evidence and cross-examine witnesses at any hearing. (8) An elderly person or a person with a disability may not file a petition under ORS 124.005 to 124.040 against a guardian or conservator for the person. ORS124.060 Duty of officials to report; exception.

Any public or private official having reasonable cause to believe that any person 65 years of age or older with whom the official comes in contact has suffered abuse, or that any person with whom the official comes in contact has abused a person 65 years of age or older, shall report or cause a report to be made in the manner required in ORS 124.065 (Method of reporting). Nothing contained in ORS 40.225 (Rule 503. Lawyer-client privilege) to 40.295 (rule 514. Effect on existing privileges) affects the duty to report imposed by this section, except that a psychiatrist, psychologist, member of the clergy or attorney is not required to report such information communicated by a person if the communication is privileged under ORS 40.225 (Rule 503. Lawyer-client privilege) to 40.295 (Rule 514. Effect on Existing privileges). An attorney is not required to make a report under this section by reason of information communicated to the attorney in the course of representing a client if disclosure of the information would be detrimental to the client.



180 P.3d 749 218 Or. App. 622

In the Conservatorship of Lea Helmig, Protected Person.

Lester HELMIG, Appellant,

v.

FARLEY, PIAZZA & ASSOCIATES, Respondent. P041208; A128014.

Court of Appeals of Oregon.

Argued and Submitted August 3, 2007. On Respondent’s Motion to Strike Supplemental Brief and Supplemental Excerpt of

Record September 4, 2007. Appellant’s Response to Respondent’s Motion to Strike September 14, 2007.

Decided March 19, 2008.

M. Elizabeth Duncan, Portland, argued the cause for appellant. With her on the briefs was Green & Markley, P.C.

Brooks F. Cooper argued the cause for respondent. On the brief were James R. Cartwright, Portland, and Matthew Whitman.

Before EDMONDS, Presiding Judge, and WOLLHEIM and SERCOMBE, Judges.

WOLLHEIM, J.

In this proceeding for the appointment of a conservator under ORS 125.400, appellant Lester Helmig appeals from the probate court’s appointment of respondent Farley, Piazza & Associates as professional conservator for appellant’s mother, Lea Helmig. On de novo review, ORS 19.415, we affirm.

In 1991, Lea created and placed all her assets in a revocable trust. She appointed herself as trustee and appellant as alternate trustee. She and both of her children, including appellant, are the beneficiaries of the trust. Lea had the right to receive income from the trust as she requested it and as needed for her care. She received social security income outside of the trust.

In 2004, Lea, who was then age 89, was a resident of a care facility in Clackamas County, Oregon. Appellant maintained Lea’s checkbook and was responsible for paying her bills. Appellant was repeatedly delinquent in payment of care facility rent and incurred late fees. Lea’s telephone was disconnected for nonpayment of bills. Concerned that Lea’s financial matters were



being neglected, the care facility consulted with Clackamas County Adult Protective Services regarding the possibility of the appointment of a conservator. An investigator for Clackamas County Adult Protective Services’ long-term care ombudsman visited with Lea and determined that Lea was delusional and unable to manage her own finances. After being contacted by Clackamas County’s long-term care ombudsman, respondent, a professional fiduciary, contracted with a registered nurse who provides consulting services and client assessments and who, with the permission of Lea’s attorney, conducted an evaluation of Lea for cognitive function. In the nurse’s opinion, Lea was severely impaired and unable to manage her finances.

Respondent filed a petition seeking its appointment as conservator for Lea. After a January 2005 hearing, the probate court found, pursuant to ORS 125.400, that Lea was financially incapable and that she had money or property in need of management or protection. The court appointed respondent as conservator. Appellant filed this appeal, asserting that the probate court erred in appointing a conservator, because the revocable trust controls how trust assets are to be handled in the event of Lea’s incapacity.

In September 2006, respondent notified this court that Lea had died after the filing of the notice of appeal. On our own motion, we dismissed the appeal as moot. On appellant’s request, we reconsidered our ruling and reinstated the appeal. At oral argument, the parties and the court revisited the question whether the death of Lea rendered the appeal moot. We asked the parties for supplemental briefing on the questions whether the appeal was moot and, if not, whether respondent had standing to file a petition for the appointment of a conservator.

Appellant filed a supplemental brief and excerpt of record, which respondent moved to strike as nonresponsive and as providing materials outside the record. We deny respondent’s motion, but have disregarded those portions of the brief and excerpt of record that are nonresponsive to our request and that include information outside the record.

On reconsideration of the question of mootness, we adhere to our ruling that the appeal is not moot. Although the death of a protected person terminates the authority of the conservator to act as a fiduciary, ORS 125.230(1), the conservator still has responsibilities under the statutes to pay claims against the estate, ORS 125.495, account to the court for the administration of the protected estate, ORS 125.475 (2003),1 and deliver the assets of the protected person to the personal representative or other persons entitled to the estate of the decedent. ORS 125.530. The conservator may be discharged only by order of the court, after a final report or accounting has been approved by the court. ORS 125.230(2). We conclude, for those reasons, that Lea’s death did not render moot the question whether the probate court erred in appointing respondent as conservator.

1 ORS 125.475 was amended by Oregon Laws 2005, chapter 123.



We also readily conclude that the petition and the record show that respondent, having been requested to file a petition by the Clackamas County Adult Protective Services’ long-term care ombudsman, was a person “interested in the affairs or welfare” of Lea, with standing under ORS 125.010 to seek the appointment of a conservator. ORS 125.010 provides that “any person who is interested in the affairs or welfare of a respondent” may file a petition for appointment of a fiduciary. The word “interested” is not defined in the statutes. The common meaning of the term, as defined in Webster’s Third New Int’l Dictionary 1178 (unabridged ed. 2002), is “having a share or concern in some affair or project[.] * * * INVOLVED.”

We note, further, that ORS 125.240 expressly authorizes the appointment as conservator of a “professional” fiduciary, which is defined as “any person nominated as a fiduciary or serving as a fiduciary who is acting at the same time as a fiduciary for three or more protected persons who are not related to the fiduciary.” ORS 125.240(5). The petition must state the professional fiduciary’s qualifications and the circumstances that led to the involvement of the professional fiduciary. ORS 125.240(1).

The hearing record reveals that a staff member of Lea’s care facility contacted Clackamas County Adult Protective Services when she developed concerns that appellant was not properly managing Lea’s finances. After Clackamas County’s investigation revealed that Lea was not able to manage her own finances, Clackamas County contacted respondent, who then determined through an independent evaluation that Lea lacked the ability to manage her own finances. The petition alleged that respondent filed the petition at the request of Clackamas County Adult Protective Services. We conclude that the record is sufficient to show that respondent became “involved” in this matter by virtue of the request of Clackamas County Adult Protective Services, and was therefore a “person interested in the affairs and welfare” of Lea and authorized by ORS 125.010 to seek its appointment as a conservator.

On the merits of the petition, we find, on de novo review, that the evidence is clear and convincing that, at the time of the hearing, Lea was unable to manage her own finances and that she had money or property in need of management. ORS 125.400.2

At oral argument, appellant conceded that Lea was unable to effectively manage her financial resources. That concession is appropriate. Several witnesses evaluated Lea, and all agreed that Lea was unable to manage her finances.

2 ORS 125.400 provides:

“Upon the filing of a petition seeking the appointment of a conservator, the court may appoint a conservator and make other appropriate protective orders if the court finds by clear and convincing evidence that the respondent is a minor or financially incapable, and that the respondent has money or property that requires management or protection.”



ORS 125.400 also requires that Lea have property in need of management. Appellant argues that Lea had “no property outside of the trust that requires management or protection.” Appellant’s argument is not persuasive. First, Lea received social security income, which was not part of the trust. Second, she was the owner of the trust and a beneficiary. It is true, as appellant points out, that the trust defined “incapacity” and described how that determination was to be made. It is also true that the trust designated appellant as successor trustee if Lea became incapacitated. However, the provisions of the trust regarding Lea’s capacity as trustee cannot preclude a statutory proceeding under ORS chapter 125 for the protection of Lea as an individual. There is clear and convincing evidence that Lea’s beneficiary interest in the trust was not being properly managed. The trust was responsible for paying Lea’s rent and telephone bill. Those bills were not paid timely, resulting in the assessment of late fees and the disconnection of Lea’s telephone.

Finally, appellant argues that Lea was a private person who would have objected to strangers making decisions for her welfare in the event of her incapacity, as evidenced by the fact that she made express provisions in her trust for such circumstances. The court is sensitive to appellant’s point that the wishes of the protected person must be considered. See, e.g., Grimmett v. Brooks, 193 Or.App. 427, 89 P.3d 1238 (2004) (considering protected person’s wishes but upholding probate court’s appointment of conservator). We agree that there is evidence that Lea was a private person. However, the evidence also establishes that Lea needed a conservator to manage her property. Contrary to the appellant’s suggestion, appointment of a conservator did not affect the terms of Lea’s revocable trust, which remains intact, or her estate plan. We therefore affirm the trial court’s appointment of respondent as conservator.

Motion to strike supplemental brief denied; affirmed.



614 P.2d 102 47 Or.App. 57

Helen STRAIN, Appellant,

v.

Arthur ROSSMAN, Conservator of the Estate of George M. Frank, an Incompetent; Herbert Frank; Arthur

Rossman, individually; Emma Ruff; and Lydia Campbell, Respondents,

Investors Mutual, Inc., a subsidiary of Investors Diversified Services, Inc., a Delaware corporation; United

States National Bank of Oregon, a National Banking Corporation; First National Bank of Oregon, a National

Banking Corporation; Western Savings & Loan Association, and Washington Federal Savings & Loan Association, a National

Savings and Loan Association; Central Oregon Area Education District now known as Central Oregon Community College

District; City of Banks; City of Hermiston; and City of Medford, Defendants.

No. A7710-14357; CA 14585.

Court of Appeals of Oregon.

Argued and Submitted May 12, 1980. Decided July 14, 1980.

Mervin W. Brink, Hillsboro, and Roy W. Miller, Forest Grove, argued the cause for appellant. Mervin W. Brink, Hillsboro, filed the briefs for appellant. With him on the briefs were Roy W. Miller, Forest Grove, and Brink, Moore, Brink & Peterson, Hillsboro.

H. Kenneth Zenger, Hillsboro, argued the cause and filed the brief for respondents. With him on the brief was Huffman & Zenger, Hillsboro.

Before GILLETTE, P. J., and ROBERTS and CAMPBELL, JJ.

CAMPBELL, Judge.



The plaintiff filed this suit for a declaratory judgment wherein she sought the adjudication of the rights of the parties to certain bank accounts. During trial the appearing defendants1 amended their answer and sought an additional adjudication of the parties’ rights in the proceeds from two separate sales of United States Series “E” savings bonds. The plaintiff has appealed from a decree holding that the bank accounts and the proceeds from the sale of the 1977 Series “E” savings bonds were assets of the conservatorship estate and that the plaintiff had no rights in those assets.2 We affirm in part and reverse in part and remand.

At the time of the trial of this case George Frank was 87 years of age. He is of German descent and has never learned to read or write the English language. He conversed with his family in part English and part German. During his adult life he operated a garbage collection business and accumulated assets worth at least $200,000.

The defendants Arthur Rossman, Emma Ruff, and Lydia Campbell are George Frank’s stepchildren by his late wife’s previous marriage. The defendant Herbert Frank and the plaintiff, Helen Strain, are brother and sister and the natural children of George Frank.3

Between 1969 and 1976 the plaintiff, at the request of George Frank, signed jointly with him several cards for bank accounts. These accounts are referred to by the parties as “joint accounts with rights of survivorship.”4 The plaintiff did not contribute any money to these accounts. According to the plaintiff she was to use the money in the accounts for the care of her father, George Frank, and if there was any remainder upon his death, it was to be her sole property.

In January 1977, George Frank suffered a disabling stroke which severely curtailed his ability to speak. He was in and out of hospitals. The plaintiff took him home with her to Hermiston to live. Friction developed between the plaintiff and the individual defendants. On March 12, 1977, the defendants Herbert Frank and Arthur Rossman removed George Frank from the hospital in Hermiston and returned him to Portland. On March 14, 1977, a petition was filed in Washington County for the appointment of a guardian of the person and conservator of the estate of George Frank. In the latter part of March 1977, the plaintiff, on the advice of counsel, transferred some of

1 A default was entered against all of the financial institutions and municipalities named as defendants. 2 The first purchase of Series “E” bonds was in January 1976, in the joint names of George Frank and Helen Strain with a maturity value of $20,000. The second purchase of Series “E” bonds was in January 1977 in the same joint names with a maturity value of $20,500. The trial court’s decree provided “the plaintiff is the sole and absolute owner of, and George Frank has no interest whatsoever in” the bonds purchased in 1976. The defendants have not cross-appealed. 3 Arthur Rossman, Emma Ruff and Lydia Campbell are half brother and half sisters to Herbert Frank and Helen Strain. They all had the same mother. 4 The exact language varies from account to account. The parties make no issue of this. The language in the savings and loan accounts is identical to that quoted in the account set out in Williams v. Mallory, 284 Or. 397, 399, 587 P.2d 85 (1978).



the joint accounts into her individual name to protect “her inheritance.”5 She testified that she has not spent any of the funds and that they remain intact.

On May 20, 1977, an order was entered appointing Herbert Frank guardian of the person of George Frank and Arthur Rossman conservator of the estate of George Frank. 6

After the trial of the suit for a declaration of the parties’ rights the court entered a decree that George Frank was the “sole and absolute owner” of the Series “E” savings bonds issued in January 1977 and all the joint bank accounts in question. 7

The plaintiff contends that the trial court erred in declaring:

(1) “that Plaintiff did not have a right of survivorship in the joint bank accounts established by Plaintiff’s father before his incompetency” and

(2) “that the conservatorship estate of George Frank was entitled to sole ownership of the proceeds from the sale of the second purchase of United States Series ‘E’ bonds.”

It is clear that prior to his incapacity George Frank as the depositor of all the funds in the joint bank accounts could have terminated the accounts without any liability to the plaintiff. If the plaintiff had withdrawn the funds during the life of George Frank she would have held them as trustee for him. Greenwood v. Beeson, 253 Or. 318, 454 P.2d 633 (1969).

The question here is: What effect does the incapacity of George Frank have on the status and ownership of the joint bank accounts?

We have been unable to find any Oregon authority on this question. The rule from other jurisdictions is that when the donor depositor of a joint account becomes incompetent, his guardian or conservator does not have full discretionary rights to the account. The guardian or conservator may only use the joint account funds for the essential care, support and maintenance of the ward. Howard v. Imes, 265 Ala. 298, 90 So.2d 818 (1956); Coolidge v. Brown, 286 Mass. 504, 190 N.E. 723 (1934); First Federal Sav. & L. Ass’n of Detroit v. Savallisch, 364 Mich. 168, 110 N.W.2d

5 The lawyer who gave this advice does not represent the plaintiff on appeal. 6 The order appointing the guardian and conservator refers to George Frank as “an Incompetent.” Both parties throughout their briefs in this court use the same term. We assume that the parties intend by this term to refer to an “incapacitated person.” ORS 126.003(4). 7 There were six different bank accounts. There was testimony that the bank accounts and savings bonds totaled approximately $173,000.



724 (1961); Miller v. Yocum, 21 Ohio St.2d 162, 256 N.E.2d 208 (1970); Boehmer v. Boehmer, 264 Wis. 15, 58 N.W.2d 411 (1953). 8

In the case of In re Guardianship of Williams, 313 So.2d 411 (Fla.App.1975), the bank accounts were in the names of Edith K. Williams and Bell D. Stokes “payable to either or the Survivor.” Both Williams and Stokes had been declared incompetent. Separate guardians had been appointed. There was no evidence as to the origin of the funds. The trial court ordered the accounts terminated and the funds divided equally between the guardianships. The Court of Appeals reversed, citing Howard v. Imes, supra, holding that a guardian has “no title to the property of the ward” and “that his authority to use the proceeds of a joint account is limited by the necessity of the ward.”

The donor’s right to terminate the joint account and withdraw the funds is a personal right that cannot be transferred to a guardian. Howard v. Imes, supra. A joint survivorship account is not terminated as a matter of law upon the appointment of a guardian. Miller v. Yocum, supra.

We are of the opinion that the trial court could not terminate or authorize the guardian or conservator to terminate the joint bank accounts. The Oregon Supreme Court has recognized certain personal rights of incompetent people which cannot be exercised by the courts or the guardian. In Oregon Mut. Life Ins. Co. v. James, 166 Or. 336, 111 P.2d 1026 (1941), the guardian was denied the right to surrender the ward’s life insurance policy for cash. In California Life Ins. Co. v. Marsters, 145 Or. 640, 28 P.2d 233, 28 P.2d 878 (1934), it was held that the probate court could not change the ward’s beneficiary on a life insurance policy. Under ORS 126.347 the conservator is required to “take into account” any “joint ownership arrangement”9 previously made by the protected person.

The plaintiff recognizes that it would be premature for this court to hold that she has a vested survivorship right in the joint bank accounts. Her reply brief in this court says:

“Plaintiff has consistently argued for only one thing recognition of a contingent right of survivorship in herself.”

8 See also 10 Am.Jur.2d Banks § 371 at 334 (1963); Kepner, The Joint and Survivorship Bank Account A Concept Without a Name, 41 Cal.L.Rev. 596 (1953); Annotation 62 A.L.R.2d 1091 (1958). 9 ORS 126.347 provides:

“In investing the estate, selecting assets of the estate for distribution under ORS 126.317 to 126.327, and utilizing powers of revocation or withdrawal available for the support of the protected person and exercisable by the conservator or the court, the conservator and the court shall take into account any known estate plan of the protected person, including his will, any revocable trust of which he is settlor, and any contract, transfer or joint ownership arrangement with provisions for payment or transfer of benefits or interests at his death to another or others which he may have originated. The conservator may examine the will of the protected person.”



In a declaratory judgment suit the court will not rule upon a contingent right:

“A court will not make a declaration ‘in a suit wherein the rights of the plaintiff are contingent upon the happening of some event which cannot be forecast and which may never take place * * *.’ (Hale v. Fireman’s Fund Ins. Co.), 209 Or. (99) at 103-04 (302 P.2d 1010).” Bell v. City of Corvallis, 25 Or.App. 821, 826, 551 P.2d 125, 128 rev. den. (1976).

We reverse all those provisions of the trial court’s decree as to the six enumerated bank accounts.10

We direct the plaintiff to deliver to the clerk of the trial court for delivery to the conservator of the estate of George Frank all securities, passbooks, and certificates representing the ownership of all the principal, interest and dividends of the six enumerated bank accounts. The conservator shall hold said funds subject to the following conditions:

(1) All accounts shall be in the name of George Frank and Helen Strain as joint tenants with rights of survivorship.

(2) None of said funds shall be used except for the necessary care, maintenance and support of George Frank.

It is our intention that any bank accounts which have been transferred from the joint names of George Frank and the plaintiff shall be returned as nearly as possible to their former status.

We are not ruling on the question of whether or not the plaintiff has a contingent right of survivorship in the funds represented by the joint bank accounts. We are merely holding that nobody except George Frank can change the ownership of those accounts during his lifetime, and he has been declared to be incapacitated.

The trial court did not give any reason for ruling that the proceeds from the sale of the 1977 United States Series “E” bonds were the sole property of George Frank. In May 1976 George Frank loaned the plaintiff the sum of $15,000 to purchase some real estate. The plaintiff testified that in February 1977 she and George Frank went to an attorney’s office where she repaid the loan by delivering a check to the attorney. The check was passed to George Frank, who indicated that 10 Account # 115-964, Hermiston branch, U. S. National Bank of Oregon

Account # 3601-133, Tigard branch, Washington Federal Savings & Loan Association

Account # 5-553-1, Hollywood branch, U. S. National Bank of Oregon

Account # 26-001576-1, Hermiston branch, Benjamin Franklin Savings & Loan Association

Account # 585-0000451, Umatilla branch, First National Bank of Oregon

Account # 58-30800, Beaverton branch, Western Savings & Loan Association



he wanted to go to the bank to buy the bonds. The bank issued the bonds in the names of George Frank and Helen Strain, or survivor. After the conservatorship hearing the plaintiff cashed these bonds. She testified that she has kept the funds intact.

George Frank suffered the stroke in January 1977. These bonds were purchased the next month. Under our de novo review, we find George Frank did not have the necessary mental capacity to make an intelligent election as to the ownership registration of the bonds. We are not holding that there was any fraud or overreaching none was pled. We hold only that George Frank did not have the required mental capacity to contract. We affirm the trial court’s decree as to the 1977 Series “E” United States savings bonds.

Affirmed in part; reversed in part and remanded.



847 P.2d 892 118 Or.App. 407

In the Matter of the Guardianship and Conservatorship of the Estate of Stanley S. Skoko, aka Stojan S. Skoko,

an incapacitated Person. Draga A. ELARDO, E. Helynn Starr, and John Jakotich, Appellants,

v. Anne C. CARR, Respondent.

P90-4-24; CA A69977. Court of Appeals of Oregon.

Argued and Submitted June 22, 1992. Decided March 3, 1993.

Phillip M. Muir, Portland, argued the cause for appellants. On the briefs were Ted A. Troutman, and Muir & Troutman, Portland.

Donald Foss, Jr., Oregon City, argued the cause for respondent. On the brief were James E. Redman and Redman & Bemis, Milwaukie.

Before RICHARDSON, C.J., and DEITS and DURHAM, JJ.

DEITS, Judge.

Petitioners assign error to the trial court’s refusal to order the conservator of Stanley Skoko’s estate to separate funds that are in joint accounts in the names of Stanley and Sophie Skoko with right of survivorship. They also assign error to the trial court’s order that any “successor conservator shall take no steps to terminate the joint ownership with right of survivorship * * *.” On de novo review, ORS 19.125(3), we affirm.

Before her death, Iva Skoko created several joint accounts with right of survivorship in her name and in the names of two of her children, Sophie and Stanley. Stanley is incapacitated and has a conservator. Stanley was unaware of the joint accounts until Sophie told him about them after their mother’s death. Stanley’s only reaction when told of the joint accounts was to cry because he was upset about his mother’s death. After the death, Sophie deposited a large sum of her own funds into one of the joint accounts. She also listed her name and social security number first on half of the joint accounts, and placed Stanley’s name and social security number first on the remaining joint accounts. Sophie managed Stanley’s interest in the joint accounts for his benefit, but was never asked for an accounting by his conservator. Petitioners, siblings of Stanley and Sophie, petitioned the trial court to order the conservator to separate the funds in the joint accounts.



Petitioners first argue that ORS 126.293, which provides that the conservator must take possession of all of the protected person’s property that has substantial value, requires that the conservator separate the joint accounts. That statute provides, in part, that a “conservator shall take possession of all the property of substantial value of the protected person * * *.” Although the statute authorizes the conservator to withdraw funds for the benefit of Stanley from the joint accounts, see ORS 126.317, there is nothing in the statute that requires the conservator to separate the joint accounts so long as the protected person’s funds are available for his use.

Petitioners next argue that ORS 126.313(7) requires the conservator to separate the funds. That subsection provides that a conservator may act without court authorization or confirmation to “change the character of * * * an estate asset in connection with the exercise of any power vested in the conservator[.]” That statute gives the conservator the authority to separate the funds of the joint accounts; again, it does not require the conservator to do so. Petitioners argue that ORS 126.313(7) compels the conservator to separate the funds from the joint accounts because it is in the best interests of the protected person. They contend that Sophie’s access to all of the funds in the joint accounts makes it impossible for the conservator to properly protect Stanley’s interest in the accounts. However, there is no evidence in the record that Sophie has improperly managed the joint accounts to the detriment of Stanley. The mere possibility that Sophie could misuse her authority does not compel the conservator to separate the joint accounts.

Finally, petitioners argue that ORS 126.347 mandates that the conservator separate the joint accounts. It provides:

“In investing the estate, selecting assets of the estate for distribution under ORS 126.317 to 126.327, and utilizing powers of revocation or withdrawal available for the support of the protected person and exercisable by the conservator or the court, the conservator and the court shall take into account any known estate plan of the protected person, including the will of the protected person, any revocable trust of which the protected person is settlor, and any contract, transfer or joint ownership arrangement with provisions for payment or transfer of benefits or interests at the death of the protected person to another or others which the protected person may have originated. The conservator may examine the will of the protected person.”

Petitioners argue that, because ORS 126.347 limits the conservator’s power in the revocation and withdrawal of funds from a joint account that the protected person originated, there is “no authority allowing a conservator to retain joint ownership of the accounts unless the incapacitated person was the donor/depositor.” We do not find the argument persuasive. ORS 126.347 is not the sole source of a conservator’s authority. See ORS 126.317 to ORS 126.327. The statute might apply in a situation where the conservator had separated joint accounts; that did not occur here. The trial court did not err in refusing to order Stanley’s conservator to separate the funds in the accounts held jointly with right of survivorship by Stanley and Sophie.



Petitioners also assign error to the trial court’s order that any “successor conservator shall take no steps to terminate the joint ownership with right of survivorship * * *.” They argue that the trial court lacked authority to restrict the conservator’s right to separate the funds of the joint accounts. ORS 126.343 provides that the court “may, at the time of appointment or later, limit the powers of a conservator otherwise conferred by ORS 126.307 to 126.337, or previously conferred by the court, and may at any time relieve the conservator of any limitation.” The trial court’s order was within its authority.

Affirmed.

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