The New York Times recently highlighted a new trend: more seniors are deciding not to marry. In fact, according to a 2017 Pew Research Center report, 75% more Americans over fifty cohabitate with an unmarried partner now than in 2007. Although we often think of cohabiters as being young, over 4 million are over the age of 50, 900,000 of whom are over the age of 65. Often marriage and aging are triggers for people to have their estate plans in order, but as the article suggests, it is equally if not more important for unmarried couples to have well drafted estate plans as well.
The trend is brought on by a combination of factors including aging baby boomers, rising divorce rates, and more expansive views of relationships. Cohabitation brings companionship, intimacy, economic stability, and wards off isolation. Unlike marriage, however, cohabitation does not make you responsible for your partner’s debt, affect government or pension benefits, nor render your partner ineligible for Medicaid. However, there are many additional estate planning concerns impacted by the decision of whether to marry.
For unmarried couples it is critical to document whether you want your partner as a decision maker if you become incapacitated. Without proper documentation, unmarried partners could be “frozen out” from hospital visits. In addition, cohabitants have to plan whether they will support their partners financially (especially if their health declines) and decide whether to include them as a beneficiary of their trust or will. In Massachusetts, for example, intestacy laws provide for your legal spouse, but not for your unmarried partner. The situation only becomes more complicated where the seniors have adult children from prior marriages. One national study also found cohabiters are less likely to provide care than spouses. This trend emphasizes the need for couples to communicate with each other and their children about long-term care planning. Finally, marriage has both income and estate tax implications that should be discussed with professional advisors.
As the article demonstrates “in many ways, cohabitation among older people remains improvisational, only recently a common phenomenon, one that couples shape to suit them.” While estate planning is important for every adult, regardless of their age or marital status, older, unmarried couples should take special note to update their estate plans to reflect their specific relationship, as well as personal and financial goals.
To access the full article visit: https://www.nytimes.com/2017/05/08/health/older-americans-unmarried-couples.html. If you have questions on how this topic may relate to you, please feel free to contact our Estate Planning Group at 617-951-3100.
A recent decision in United States Bankruptcy Court should serve as a warning to business owners who utilize multiple entities in operating their businesses, and as a reminder to avoid comingling assets among separate entities.
In In re Cameron Construction and Roofing Co., Inc., 565 B.R. 1 (2016), a bankruptcy trustee for the debtor company sought to access the assets of an affiliated company, which had the same owner as the debtor company, in order to pay the claims of the debtor company’s creditors. The debtor company was an operating construction company, and the affiliated company was setup to own the real estate the debtor company used as the base of its operation.
The court granted the bankruptcy trustee’s request and allowed for the substantive consolidation of the two companies (which the court distinguishes from the piercing of the corporate veil, where a creditor gains access to the assets of the company’s shareholder(s) to satisfy the company’s obligations).
In its reasoning, the court identified a number of factors that favored consolidating the two companies for the purposes of paying the debtor company’s creditors. While the two companies filed separate tax returns, made separate corporate filings with the state, and issued separate W-2 statements for employees, they disregarded the formal legal distinction between them in important ways.
First, while the common owner of the debtor company and the affiliated company owned 99% of the affiliated company and the debtor company owned the other 1%, the debtor company had contributed 10% of the affiliated company’s capital. The court regarded this unfair capital structure as being indicative of a “substantial identity between the entities.”
Second, the court found that the affiliated company did not engage in business in accordance with its stated business purpose in the filings it made with the state, which was to own, manage and develop real estate. Rather, the affiliated company employed 17 people (compared to the debtor company’s 15 people), though those employees actually performed work for the debtor company without any formal subcontract or formalized arrangement between the companies, seemingly to reduce the total workers compensation insurance costs related to the employees. As such, the actual scope of the work of the affiliated company’s employees fell outside of its stated business purpose.
Further, the debtor company and the affiliated company did not have a formal lease for the premises owned by the affiliated company and occupied by the debtor company. The debtor company did make “rent” payments to the affiliated company, which were reported on both entities’ tax returns, but those payments changed over time and appeared to be a mechanism for funding the affiliated company’s payroll for the employees it was employing on behalf of the debtor company.
Because the court found, based on the factors above, that the two companies had sufficiently intermingled their assets to an extent that would justify substantively consolidating the companies for purposes of satisfying the debtor company’s creditors, and that the affiliated company had de minimis debt and would therefore be unlikely to have its own creditors that would be prejudiced by giving the debtor’s creditors access to its assets, it granted the bankruptcy trustee’s request and allowed for the consolidation of the two companies.
The lesson for business owners, who frequently and justifiably segregate their businesses using separate legal entities, is to be aware that courts will put substance over form for purposes of determining whether an affiliated company’s assets should be used to satisfy a related company’s creditors. In addition to filing their own tax returns and corporate filings, and paying their own employees, a company’s employees should only be performing tasks on behalf of their actual legal employer and that are consistent with the company’s stated business purpose. Rent payments and any other inter-company financial arrangements should also be done at arms-length and documented as if they were arrangements with a third-party. Taking these precautions should ensure that a business owner does not put the assets of one of its companies at risk in the event that another of its companies runs into financial troubles.
If you have any questions or concerns about how this concept relates to the practices you are currently using to operate your businesses, please feel free to call Pabian & Russell’s Corporate Group at 617-951-3100. We would be glad help review your strategies and make sure they are designed to most effectively safeguard your assets.
May is Aging Life Care Professionals (ALCP) Month! What, you may ask, is an Aging Life Care Professional, and what do they do?
An ALCP is a highly experienced health care professional, usually a social worker or nurse, but also includes mental health professionals, physical therapists, occupational therapists, and others. Many have had experience in hospitals, rehabilitation centers, nursing homes, home care agencies, and other health care providers for older adults.
The highest quality professionals are usually educated at a Master’s level, and have state licensure in their profession. The national professional organization, the Aging Life Care Association (ALCA), holds life care professionals to a high level of ethical standard, and requires credentialing for Advanced Professional membership. See www.aginglifecare.org
Aging life care professionals, especially those at LifeCare Advocates, have a broad and deep knowledge of the spectrum of services available to our clients. We help families negotiate the fragmented health care system; develop relationships with elders; find quality resources for care and support of their elder loved one and themselves; provide education and support around a variety of aging issues; implement, coordinate and monitor care plans in a variety of care settings; and provide a professional, experienced, knowledgeable guide along the journey of aging.
Aging life care professionals are hired by the client and/or family, and make recommendations in the best interests of the elder client. They are often called in at a time of crisis when families are experiencing stress related to a loved one’s cognitive or physical decline, and don’t know where to turn. They are also experts in helping clients to plan ahead in order to avoid a crisis in the future.
Aging life care professionals differ from case managers in that their allegiance is solely to the client, not to an institution, insurance company, or other entity, and their relationship with the client is not circumscribed by the setting. They are able to take time in the initial stages of involvement and throughout the relationship with the client to get to know them well, and use that knowledge to match them with services, providers, and other services that meet their individual needs. They take a holistic view of their clients, aiming to not only meet their basic care needs, but enhance and improve their quality of life in a myriad of ways.
There are eight areas of expertise that an aging life care manager is expected to have to enhance the holistic view of the client: health and disability, financial, housing, family and family dynamics, local resources, advocacy, legal, and crisis intervention. ALCPs do not accept referral fees and maintain a strict allegiance to the best interests of our clients.
Though ACLPs are not legal or financial practitioners, they have a working knowledge of how these areas impact clients, and maintain a trusted group of specialists in these areas to refer our clients. LifeCare Advocates also has a professional affiliation with a well-respected law firm in Boston, Pabian & Russell. We work closely with a team of professionals to meet our clients’ needs in the best way possible!
At LifeCare Advocates, we are fortunate to work in this unique and growing profession. We take pride in our work, and benefit, as do our clients, from the collective knowledge of our amazing team of care managers.
If you find yourself or an elder loved one in need of care; guidance at a time of change of health or cognition; or are beginning to look at options for care down the road, please call us. We would welcome the opportunity to assist you! Please visit our website at www.lcadvocates.com for more information.