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The recent Financial Industry Regulatory Authority (“FINRA”) announcement about federal enactment of a substantial piece of legislation that will likely delay close of some foreign direct investment (“FDI”) deals overseen by the Committee on Foreign Investment in the United States (“CFIUS”). The Act supports CFIUS regulatory response to the evolution in alternative trading system (“ATS”) transaction types. Under the new legislation, foreign investors will be responsible for filing mandatory “declarations” with description of transactions prior to close or transfer to an estate or trust; and payment of a filing fee of up to $300,000 per transaction.  

CIFIUS Oversight Expanded

Federal enactment of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) on August 13, 2018 expands the jurisdictional powers of CFIUS responsible for oversight of foreign direct investment (“FDI”) made by investors from abroad. FIRRMA establishes that ATS compliance with Securities and Exchange Commission (“SEC”) NMS Regulation, and Regulation SHO close out standards. The Act also stipulates ATS have the capability of identifying trading risks occurring in those systems to be compliant. Full implementation of the Act will come in effect after the adoption of near future ATS regulatory provisions required to impose compliance within the investment sector.

The intent to commission, conspire to commission, or commission of a criminal act through intimidation, coercion, or solicitation of another for “racketeering activity” as defined by the  Racketeer Influenced and Corrupt Organization (RICO) Act  is illegal in New York. The RICO Act prohibits enterprises, including family businesses, from fraudulent and criminal racketeering activities while conducting interstate trade or foreign commerce. The costs associated with a RICO criminal proceeding can lead to excessive fees and the loss of an enterprise, including estate or trust held assets of a family business and its proceeds.  

A Lost Inheritance?

August 14, 2018 a federal US Court of Appeals declined to exercise supplemental jurisdiction over a Connecticut Superior Court decision denying Virginia A. D’Addario damages for beneficiary rights to her mother’s estate inheritance coinciding with the conviction of her sibling, David D’Addario in a RICO violation case (D’Addario v. D’Addario, No. 17-1162 (2d Cir. 2018). The Second Circuit appellate court instead vacated and remanded the case, upholding her claim of legal expenses incurred in pursuance of complaint against her brother and the other RICO defendants; yet rested a claim for full distribution of estate assets under her name was not necessary as RICO losses were speculative; and the estate was not closed.  

As of 2018, cross-border families planning an estate will require an investment plan meeting relevant rules to domicile, succession, generation-skipping transfer, and gift tax laws in each country where distribution will occur at the time of a decedent’s death. International estate planners use investment techniques specific to cross-border transfers and enforceable transfer tax situs rules, domestic and foreign credits, and treaties where they may apply.

Recent Domestic Tax Reforms

U.S. federal Internal Revenue Service (“IRS”) tax law reforms in 2018, have modified estate and gift tax lifetime exclusion amounts for:

A recent study suggests that people with moderate to severe anxiety in middle age may be more likely to develop dementia as they get older. The study based its conclusions off of data from four previously published studies that tracked a total of 30,000 individuals over a 10-year period and clearly shows a link between living with anxiety in middle age and developing dementia later on in life.

The findings were published in the BMJ Open, a an online, open access journal, dedicated to publishing medical research from all disciplines and therapeutic areas. While the study was not a controlled experiment designed to prove whether or how anxiety might directly contribute to the development of dementia, it is nonetheless shines light on how mental health is just as important as our physical health as we age.

One of the study’s senior authors believes that dementia may develop after anxiety during middle age because of the increase in and constant elevation of stress hormones may cause brain damages across regions associated with memory. However, that same author is unsure whether treating the underlying anxiety and reducing the levels of elevated hormones would end up reducing the risk of dementia in old age.

The $1.5 trillion tax bill passed last year will likely have far reaching consequences on millions of seniors across the country, some good and some bad. While only time will truly tell how things will shape out, there are a number of areas many tax lawyers and elder law attorneys believe senior citizens and retired persons are likely to see an impact to their finances.

For the most part, the overwhelming majority of elder Americans will not see an increase to their taxes because most senior citizens have incomes that rely on Social Security which for the most part is not taxable at lower levels of income. Furthermore, because most older households do not itemize deductions they are not likely to see an impact because the new tax laws target taxpayer who have major itemized deductions on their taxes, particularly in states where there are high state and local income and property taxes.

The one proposed change to itemized deductions that did not make it into the final draft of the 2017 tax bill was the elimination of deductions for medical bills, a major deduction that would have had far reaching effects on senior citizens. An outcry from AARP, the National Academy of Elder Law Attorneys, the public, and other advocacy groups was successful in preventing any changes to itemizing medical bills and actually expands it for two-years.

High income retirees could see some of their Medicare premiums skyrocket up to 203 percent in 2018 due to shifts in the income brackets that are used to determine how much older Americans will pay for their Medicare Part B and Part D coverage. Those predictions come from an analysis by HealthView Services, a provider of health-care cost projection software used to prepare current and future retirees for the impact of health care costs which includes Medicare costs, long-term care expenses, and Social Security optimization strategies.

The additional surcharges for Medicare Part B, which covers preventive services, and Medicare Part D, which covers doctor visits, could end up diverting larger portions of the income seniors and future retirees expected to put towards their retirements. For example, a 55-year old couple earning a combined $140,000 could anticipate their lifetime Medicare surcharges rise by over $120,000 due to the changes to how the health-care program charges its beneficiaries, according to the Health View Services analysis.

The factors driving up the cost of Medicare for seniors comes from a 2015 bill known as the Medicare Access and CHIP Reauthorization Act or “DocFix” law which adjusted the way premiums are calculated for high-income individuals. The bill also lowered the range for the third, fourth and fifth-income brackets, which moved some retirees into the next higher bracket thus increasing their Medicare costs. Those changes began to take effect in 2108.

As more nursing homes and assisted living facilities begin to shift toward a more pet friendly approach to help accommodate the emotional needs of their residents, seniors and their families should begin to examine the pros and cons of living with pets where facility rules permit. In addition to accounting for size and weight restrictions of pets that facilities may impose, individuals need to consider whether or not their age and health allow them to properly care for the animal as well.

For elders who have lost a spouse, living with a pet can provide much needed companionship, emotional support, and to provide the unconditional love and support we all need. However, pets need medical attention of their own which includes trips to the vet for shots, checkups, and medical treatment. Furthermore, animals can suffer from their own health problems like arthritis, pneumonia, and even the flu.

Other issues like the health of the elder can affect whether or not it may be suitable to keep a pet in old age or in an assisted living facility as canes and walkers do not always make for a good mix with certain types of pets. Frail elders with balance issues or those with vision problems may not be safe with even small dogs that run, jump, or are otherwise rambunctious. Additionally, it is not fair to the animal if its owner cannot take it for a walk, necessitating outside care for the animal.

The U.S. Department of Labor is expected to release new guidelines that will allow small businesses to band together to purchase insurance for their workers with “association health plans” that could end up disrupting healthcare markets. The once common association health plans were attractive to scam artists that took advantage of the states’ inability to regulate these types of health care planes, leaving hundreds of thousands of patients with unpaid medical bills totaling over a quarter of a billion dollars.

Fortunately for patients, the Affordable Care Act (ACA) impose requirements on healthcare companies that effectively prevented association health plans from doing business because of the types of coverage plans needed to offer. For the most part, health insurance plans must offer coverage for the 10 essential health care benefits which include emergency services, habilitative and rehabilitative services, inpatient care, outpatient care, maternity and newborn care, mental health and addiction treatment, laboratory services, prescription drugs, and preventative services and chronic care treatment.

However, the loosening of these regulations could allow association health plans to become big enough that they may be considered “large group” insurance plans, which cover more than 50 individuals. These large group insurance plans are subject to far less state regulation and fewer ACA requirements than small-group or individual plans. In particular, large group insurance plans do not have to offer coverage for mental health services and other vital care mandated by the ACA.

A recent report by the Old-Age, Survivors, and Disability Insurance Trust (OASDI) Board of Trustees indicates that funding for the nation’s Social Security program will face massive funding deficits in the coming future. According to OASDI’s 2017 Report, Social Security will begin paying out billions more than it takes in starting in 2022, due in large part to waves of Baby Boomers entering retirement.

Currently, more than 62 million Americans rely on benefits from Social Security to help pay for basic expenses like food and shelter. Of that number, 42.8 million are retired workers who have already paid into the system while the remainder are beneficiaries are those who are the disabled or and the survivors of workers who’ve passed away. The Center on Budget Policy and Priorities found in 2016 that Social Security’s guaranteed monthly payout ensures that over 22 million people are kept out of poverty, 15 million of which are retired workers.

Since 1982, the OASDI trust has consistently taken in more income than it has paid out to American retirees. OASDI’s reserves currently sit at $2.9 billion, which is primarily invested in special-issue bonds, and is expected to hit roughly $3 trillion by 2021. However, just one year after the reserve assets peak, funding is expect to take a sharp downturn as millions of Baby Boomers enter retirement.

A recent analysis of generic drug prices paid by Medicare Part D enrollees by healthcare consulting firm Avalere Health determined that despite the relatively stable prices of these medications, some seniors find themselves paying more and more each year. The reasons, according to the report, have to do with the way insurance companies place enrollees into pricing tiers and the lack of policy changes to curb higher out of pocket costs for elders.

As reported by Avalere, insurance companies have been moving many generic drugs into copay tiers requiring patients to pay larger portions of the drugs’ cost, thus shifting more costs onto patients this way and keeping Part D premiums stable. The moves are important to insurance companies because they understand enrollees decide on their Medicare Part D plans based on the price of the premiums. Unfortunately for patients, they do not realize the full costs of their healthcare plans until they start filing prescriptions.

The numbers on just how much Part D enrollees are paying for their generic drugs is quite staggering. Despite the average prices of generic drugs increasing by on 1 percent from 2011 to 2015, total out of pocket costs increased by $6.2 billion, or 93 percent. Unfortunately, some of the drugs subject to these massive upcharges include some of the most widely prescribed and low cost medications for chronic conditions such as cholesterol, hypertension, and diabetes.