Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law


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When To Apply For Social Security

Deciding when to draw Social Security can be one of the most important decisions a person can make.  There are different views on the topic.  Some say take it as early as possible while others think full retirement age (age 66 for those born from 1943 to 1954) is best to avoid reduction in benefits.  A smaller group believes that waiting as long as possible is the best choice to maximize benefits.  Only 6.5 percent of Social Security recipients put off collecting their benefits until they reach age 70, the age at which they can collect the maximum benefit.

First recognize that drawing Social Security at age 62 comes at a high price – 30 percent of your benefit amount.  Also recognize that if you are still working, there is an offset of benefits for earnings over $19,560 in 2022 until you reach full retirement age.  You will lose $1 for every $2 you earn over $19,560.  In the year you reach full retirement age you will lose $1 for every $3 you earn above $19,560.  Many think what is the use of drawing and then losing some of those benefits due to work earnings? 

The decision of how long to wait to claim Social Security benefits depends on a number of factors. Besides other income sources in retirement many look at projected longevity.  But Social Security experts advise waiting as long as possible to start collecting benefits, up to age 70.  This is because if you delay taking retirement beyond your full retirement age, you amass “delayed retirement credits” that increase your benefit by 8 percent for every year that you wait, over and above annual inflation adjustments.  Your checks will be about 76 percent more than had you claimed at age 62, the earliest you can file. It’s tough to find a better and more reliable investment than that.

However, keep in mind that if you are collecting benefits based on the work record of a current or ex-spouse, there is no point in waiting until 70 because you will not accrue delayed retirement credits beyond your full retirement age.

Don’t Wait Any Longer Than 70 to Draw Benefits

Delayed retirement credits stop at age 70, so there is no advantage to putting off starting benefits any longer.  Not only won’t your credits increase by claiming after age 70, but if you wait longer than half a year, you’ll start losing monthly benefits you would have otherwise received.  The Social Security Administration (SSA) will pay you retroactively for benefits accrued up to six months after your 70th birthday, but that’s it.  If you wait any longer, benefits you would have received are permanently forfeited.

Realize that the SSA won’t automatically start sending you checks once you turn 70 or any age. You need to apply for benefits. You can do this starting four months before the date that you want your benefits to begin.  To get the maximum amount, you’ll want the benefits to start the month you turn 70.  There is, however, one scenario where benefits will automatically kick in at 70: those who took benefits after reaching their full retirement age and then suspended their benefits to earn delayed credits until age 70.  For them, the SSA should automatically restart benefits at 70.

You can apply online — click here.  If you can’t submit your application online, you can call 1-800-772-1213 (TTY 1-800-325-0778). As of April 7, 2022, SS offices reopened, but going online can save you wait times to file an application.

When will you get your first check?  The SSA issues checks a month behind, so your benefits should start arriving the month after the month you turned 70.  For example, if you were born July 17, you should ask that your benefits start in July and your first check will come in August.  However, those born on the first day of the month get a small bonus: the SSA treats them as if they were born the previous month and starts paying benefits in their birth month.  So, for example, if you were born July 1, you’d request benefits to start in June and the payments would begin in July.

What If You’re Still Working at 70?

Working past age 70 (or any time past your full retirement age, in fact) won’t affect your benefits.  And while you won’t increase your monthly benefit by waiting past age 70 to claim, you could boost it by working in addition to collecting Social Security. This is because the SSA recalculates your benefits each December based on your 35 highest-earning years of work. If your earnings plus your Social Security benefits allow you to replace a lower-earning year, your overall benefit could increase in the annual calculation. But Social Security benefits are taxable, so if you’re earning more money your tax rate may be higher.

In most cases, your Medicare premiums will be deducted from your Social Security check. If you happen to be retiring at age 70 and you’ve been paying Medicare’s high-earner surcharges, keep in mind that you can reverse these surcharges if your income drops far enough. The Social Security Administration uses income reported two years ago to determine a beneficiary’s premiums. If your income decreases significantly due to certain circumstances, including retirement, you can request that the SSA recalculate your benefits and your premium surcharges could be eliminated or reduced. 

For the SSA’s Retirement Benefits page, click here.


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A Return to Normal

We are back in the conference room after a year of meeting clients in the lobby for more space and ventilation. What a wonderful thing to return to some of the normal practices around the office. I love this room because it reminds me of so many wonderful people I have met and worked with at this table.


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Information About Filing For Medicaid

Medicaid can be very complicated and confusing, but it is a critical benefit for persons in need of long-term care. I prepared this presentation for a recent educational seminar for professionals and caregivers. Feel free to download or read online to learn more about applying for institutional Medicaid.


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Long-term Care Costs Increased in 2020

All long-term care costs rose sharply in 2020, but assisted living facility costs increased the most, according to Genworth’s latest annual Cost of Care Survey. The across-the-board rises were due in part to increased costs brought on by the coronavirus pandemic. 

In the past year, assisted living facility rates grew 6.15 percent for a median cost of $51,600 per year or $4,300 per month. Genworth also reports that the median annual cost of home health aides rose 4.35 percent to $54,912, while the median cost of a private nursing home room rose 3.57 percent to $105,850 and the median cost of a semi-private room in a nursing home is now $93,075, up 3.24 percent from 2019. The national median annual rate for the services of a homemaker also climbed 4.44 percent to $53,768. 

In response to this year’s price increases, Genworth conducted a follow-up study to understand how COVID-19 is impacting the cost of care. Genworth found that labor shortages, personal protective equipment costs, regulatory changes, employee recruitment and retention, wage pressure, and supply and demand were contributing to rate rises.

The only care setting where costs did not increase was adult day care, which provides support services in a protective setting during part of the day. Costs for adult day care actually fell from $75 to $74 a day, a 1.33 percent decrease, perhaps because many adult day care sites have been forced to close due to the pandemic.

Monthly care costs for Alabama in 2020 were:

Homemaker services, $3432; homemaker health aide, $3432; adult day health care, $655; assisted living private one bedroom, $3150; nursing home semi-private room, $6540; and nursing home private room, $6911.                                                                                                                                                 

Alaska continues to be the costliest state for nursing home care by far, with the median annual cost of a private nursing home room totaling $436,540 per year (yes, that is not a typo – it really is that expensive). Missouri was the most affordable state, with a median annual cost of a private room of $68,985 per year. 

The 2020 survey, conducted by CareScout for the seventeenth straight year, was based on responses from 14,326 nursing homes, assisted living facilities, adult day health facilities and home care providers. Survey respondents were contacted by phone during July and August 2020.

As the survey indicates, long-term care is growing ever more expensive making planning for long-term care essential.


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Titling Property: Why Your Lawyer Needs To See Your Deed

Title to real property defines legal ownership of the property, and that ownership is usually identified by language in the deed showing who owns the property and how it is owned.  Rights associated with property is also a matter of state law and can be altered by marital status. 

There may be multiple times when you will need to decide how to title property – such as when you purchase property or when you give property to others during your lifetime or through your estate when you die.  It is important to understand the different ways property can be owned before you make decisions on how to title it or whether a will may need to be probated.      

The most common ways to hold title are:

  • Sole Ownership
  • Joint Tenancy with or without Right of Survivorship
  • Tenants by the Entirety
  • Tenants in Common
  • Life Estate Tenant
  • Heirship
  • Community Property

Sole Ownership 

Sole ownership is ownership by one individual or entity.  The most common sole ownership is one held by a single person or a married person who wants to hold property apart from his or her spouse.  Sole ownership might also be ownership by a business or trust. 

It is important to realize that even if you are a sole owner, if you are married and the property is your homestead in Alabama, you will not be able to transfer the property without your spouse’s signature on the deed.  It is also important to have your will in place to transfer the property at death since there is no right of survivorship with sole ownership. If you own property alone and die without a will your next of kin will inherit the property through the laws of intestacy (laws defining how property passes without a will).

Joint Tenancy with or without Right of Survivorship

Joint tenancy means that two or more people hold title to real estate jointly, and each has the right to occupy the full property during his or her lifetime.

If one of the owners die, his or her rights of ownership pass to the heirs unless the deed specifically states that the owners are joint tenants with right of survivorship, means that the property will automatically pass to the surviving owner.  This is how many married couples own property in Alabama. 

The primary advantage to joint tenancy with right of survivorship is that the death of the first of the joint owners does not require probate of his or her will.  The property passes outside probate (outside the will) to the survivor.  Expenses of upkeep, taxes, insurance, etc., are shared between the joint tenants. 

You do not often see it, but property owned by joint tenants with right of survivorship can be severed (an owner’s share sold) resulting in the property thereafter being held as tenants in common.

A creditor who obtains a legal judgment against one of the owners can come after the property, requiring it to be divided, to have the debt satisfied. 

Tenants by the Entirety

This method of ownership can only be used when owners are legally married.  This type of ownership is generally not seen in Alabama, but it is mentioned in the code indicating at Code of Alabama § 43-7-4. There it states that:

Where there is no sufficient evidence that two joint tenants or tenants by the entirety have died otherwise than simultaneously, the property so held shall be distributed one half as if one had survived and one half as if the other had survived. If there are more than two joint tenants and all of them have so died, the property thus distributed shall be in the proportion that one bears to the whole number of joint tenants.

Property owned as tenants by the entirety cannot be severed, or one spouse cannot sell his or her share.

You will not own Alabama property in this manner, but you may see it in other jurisdictions such as Arkansas, Delaware, Florida, Hawaii, Maryland, Massachusetts, Mississippi, Missouri, New Jersey, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Wyoming.

Tenants In Common

With tenancy in common two or more persons hold title to real estate jointly.  They may own it equally or in unequal percentages.  For example one may own 30 percent of the property while the other owns 70 percent, but despite those ultimate ownership shares, each owner has the right to occupy and use all of the property while the ownership percentages define the financial ownership of the real estate.  If the property is sold, each will get his or her ownership percentage.  Either owner may sell or give away his or her share of the property, and at death his or her share will pass to those named in a will or next of kin through inheritance.  Each owner is responsible for all debts against the property (for instance both or all parties are responsible for all taxes due on the property). 

Life Estate Tenant

You may have the right to occupy property during your lifetime through a life estate, and when you die people called the remaindermen instantly become the owners.  Often in second marriages a spouse will leave a life estate to the widow and the remainder interest to his or her children.  Another situation where life estate interests are seen is when a parent gives the property to children and retains a life estate in the deed.

Heirship

While title is usually determined by the deed, that is not always true.  In the case of heir property you may be living on property that was last deeded to your grandparents whose estates were never legally settled, and there is no deed in your name.  In that event determining how your grandparent’s property passed by operation of law is necessary.  Often this requires tracing family relationships and deaths over the course of several generations to land on who actually owns the property today.  

Community Property

There are nine community property states in the U.S.:  Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.  Alaska is an opt-in community property state that gives both parties the option to make their property community property.  Alabama is not a community property state. 

Community property is a form of ownership by a married couple during marriage that they intend to own together.  Each spouse owns the property equally, and owes any debt against the property equally regardless to who earned the money to purchase the property or incurred debt for which the creditor seeks to satisfy from the property value.  In the event of divorce each spouse will gets an equal division of the property.  In the event of death there is no survivorship unless the couple lives in a state that permits survivorship (Arizona, California, Nevada, Texas, Wisconsin). Outside those community property survivorship states the couple must have a Community Property Survivorship Agreement.  Without living in a community property survivorship state or having a Community Property Agreement each partner’s share will pass through his or her estate.

The take away:

How you own property is just as important as the fact that you own it.  What you can do with property – your rights and obligations – and how you can leave property to your heirs can only be determined by knowing how the title is currently held.  If you are planning on any property acquisitions, transfers or estate distributions, it is critical that you understand how you already own or want to own or have your heirs own property.          


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Medicare Coverage for COVID-19 Vaccine

While Medicare would cover a coronavirus vaccine approved through normal channels, there was concern that because the Food and Drug Administration approves the vaccine through an emergency use authorization (EUA), Medicare might not cover it. Governmental action was needed to assure that Medicare beneficiaries could receive the vaccine without charge.

Fortunately, The Centers for Medicare and Medicaid Services released an interim final rule Oct. 28 saying that Medicare would cover vaccines that receive U.S. Food and Drug Administration authorization — including those available through emergency use authorization — at no cost to beneficiaries. This will remove any concern or barriers to Medicare beneficiaries receiving the COVID-19 vaccine.

CMS will pay about $28 to administer single-dose vaccines. For vaccines that require two or more doses, it will pay around $17 for the first dose or the first few doses and $28 for the final dose in the series. According to CMS, the cost to vaccinate the roughly 67 million seniors enrolled in Medicare will be about $2.6 billion.

 


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Legal Brief: Alabama Small Estate Summary Distribution

This is a short presentation on The Alabama Small Estate Summary Distribution available for estates that include no real property and assets not exceeding $30,245 (in 2020).


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Social Security Recipients Can Draw Unemployment Benefits

It is estimated that 20 percent of Americans over 65 are in the work force.  AARP calls the hottest demographic in the labor market to be those men and women working not only past traditional retirement age but into their 70s, 80s and sometimes beyond.  So among the unemployed are seniors who found irreplaceable meaning in work and/or counted on their jobs to supplement inadequate retirement.

The COVID-19 pandemic has sent unemployment to its highest levels since the Great Depression, and older workers have been particularly hard hit.  Many of those who continued to work beyond retirement age also draw Social Security benefits, and some are now being forced to take their benefits early after losing their jobs when doing so will permanently reduce the amount of benefits they can draw. 

If you are already receiving Social Security, are you also eligible for full unemployment benefits? Until recently, the answer was not necessarily.  Many states reduced unemployment benefits of those receiving Social Security retirement benefits by up to 50 percent, something called the “Social Security offset.” But after AARP and the National Unemployment Law Project pushed to have these laws overturned, this is no longer the case. In 2015 Illinois became the last state to repeal the Social Security offset.

“These two benefits are not duplicate payments,” the Law Project said at the time.  “Older workers who must work or choose to work should not have their unemployment benefits cut or eliminated simply because they have reached the age to qualify for Social Security.”

So do not assume that you cannot draw Unemployment Compensation because you are at or above the traditional retirement age and draw, or could draw, Social Security.  If you have lost your job you need to apply for Unemployment Compensation. Similar to Social Security, certain other “unearned” income you may receive, like annuities and investment income, do not count against receiving unemployment insurance.  Only earned income affects unemployment benefits.


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Greater Transparency to be Required of Nursing Homes

The Center for Medicare and Medicaid Services (CMS) has issued its Interim Final Rule Updating Requirements for Notification of Confirmed and Suspected COVID-19 Cases Among Residents and Staff in Nursing Homes. This is good news for people who are concerned about their relatives living in long-term care.

CMS will require nursing homes to report COVID-19 facility data to the Centers for Disease Control and Prevention (CDC) and to report to residents, their representatives, and families of residents in facilities. Failure to report in accordance with 42 CFR §483.80(g) can result in an enforcement action.

There have been some problems for Alabama residents trying to obtain information about infection rates in individual facilities despite the fact that it is reported that residents and staff members of long-term care facilities now account for about 13 percent of the cases in Alabama, and 100 deaths in long-term cre facilities account for more than a third of the state’s total deaths as of May 1. Since relatives have been unable to visit since March, a great deal of anxiety about the care of residents has increased.

In Alabama up until now staff are required to tell families if someone living or working at the facility has tested positive for coronavirus, but those facilities do not have to say how many cases have been reported. Greater transparency will benefit family members seeking to protect their institutionalized loved ones.


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Stimulus Payments for Seniors Update

Late yesterday, after much congressional protest, the administration reversed course and announced that tax filing will not be required for Social Security recipients to receive their stimulus payments. 

It is not clear if this course reversal applies to those on Veteran’s Benefits and SSI, but it would be surprising if it did not. We will keep you posted.