Morton Legal Blog

Spousal Rights to Social Security Benefits

    To qualify for divorced spouse benefits, the couple must have been married at least ten (10) years. Further, the divorced spouse must not remarry and be at least sixty-two (62) years old. The divorced spouse is eligible to receive half of that worker’s primary insurance amount. The primary insurance amount is the monthly benefit amount to which a worker is entitled. Like regular social security benefits, there are penalties if the divorced spouse begins to draw on the benefits before reaching their full retirement age.

Further, the divorced spouse is eligible to receive the benefits from the worker even if that worker has deferred receipt of their benefits as long as the divorce was final for at least (2) years or the divorced spouse has reached full retirement age. Additionally, the receipt of these benefits does not affect the family maximum benefit for any other derivative benefits which the worker’s family is eligible, such as spousal or children’s benefits.

A surviving divorced spouse may also be eligible for a mother or father’s benefit if they have custody of a worker’s child that is under sixteen (16) years of age or disabled. These benefits will be approximately 75% of the worker’s primary insurance amount.

If a divorced spouse has had multiple marriages that have lasted ten (10) years or more, the divorced spouse will be able to collect whichever worker’s benefit that will be the largest income to the divorced spouse. Marriages that occur after the divorced spouse reaches the age of sixty (60) do not qualify for a divorced spousal benefit.

Attorney Liable for Aiding Fiduciary Breach

A Texas appellate court finds that an attorney breached his fiduciary duty to a trust beneficiary when he knowingly aided and abetted the trustees in breaching their fiduciary duty. Parenti v. Moberg (Tex.App. [4th Dist.] 5-30-2007) No. 04-06-00497-CV.

Special Needs Trust Income Available for Child Support

A Pennsylvania appeals court rules that income from a father’s special needs trust is available to pay child support.  Mencer v. Ruch.  (PA.Super 182, 2007) No. 1902 WDA 2006.

Trust Denied Charitable Deduction

The U.S. Court of Appeals for the Third Circuit finds that the Internal Revenue Code prohibits an estate from claiming a charitable deduction when the proceeds of a single trust are distributed to both charitable and non-charitable beneficiaries. Galloway v. U.S. (3rd Cir. 6-21-2007), No. 06-3007.

Abusive Insurance Sales Tactics Uncovered

A recent New York Times story reports on the misleading credentials and sales tactics of some unscrupulous financial advisors.  http://www.nytimes.com/2007/07/08/business/08advisor.html?pagewanted=1&_r=2.  Mississippi’s own Secretary of State’s office was quoted in the article. 

“If insurers would cut off these companies, this behavior would end tomorrow. Instead, they just close their eyes or say it’s not their fault when a supposedly rogue sales agent misbehaves,” said Jim Nelson, an assistant secretary of state in Mississippi. “It’s scandalous that the insurance companies are working with these marketing organizations.”

VA Benefit

 The VA disability pension program is more commonly known as the “Aid and Attendance” program. It is available to single veterans, to veteran households with one or more dependents, or to the surviving spouse and/or surviving dependent children of a veteran. In order to qualify for the benefit, a veteran must have served 90 days on active duty with at least one day during a wartime, must have been discharged under conditions other than dishonorable, must be permanently and totally disabled or 65 years or older, and must meet the income eligibility requirements.

 While eligibility for the benefits is based on income, the way in which the income is calculated for application purposes allows most veterans to qualify. The VA deducts from income unreimbursed medical expenses which lowers the income amount in order to allow the veteran to qualify for the additional benefits. Assuming that a veteran and/or veteran’s spouse meets the income eligibility requirement, the veteran and/or the veteran’s spouse must also retain no more than $50,000 cash assets if single and no more than $80,000 cash assets if married without penalizing the monthly benefit to which the applicant is entitled.

 Further with the pension plans, there are no penalties for transfers made after the applicant has qualified for the monthly Aid and Attendance pension benefit. The maximum monthly benefit that can be received through the VA is $2,393; however, this amount also depends on how severely disabled the veteran is. Ultimately, the VA will pay the difference between an applicant’s countable family and the yearly income limit which corresponds with the number of dependents in the veteran’s family and the amount of income a veteran receives from other sources.

Real Property Held by Revocable Living Trust held Exempt

On certification of a question from the U.S. Court of Appeals for the Tenth Circuit, the Kansas Supreme Court finds that a bankruptcy debtor may claim a homestead exception even when the real property has been transferred to a living trust prior to bankruptcy. Redmond v. Kester  (Kan., No. 97,627,  June 8, 2007).

Special Needs Trust Proceeds Available for Child Support

A Pennsylvania appeals court rules that income from a father’s special needs trust is available to pay child support.  Mencer v. Ruch.  (PA.Super 182, 2007) No. 1902 WDA 2006.

Heather Mencer instituted a support action against Gary Ruch, the father of her daughter. Due to a brain injury that occurred prior to the daughter’s birth, Mr. Ruch was on public assistance. Ms. Mencer entered into an agreement that Mr. Ruch’s support obligation would remain at zero unless he became eligible for Social Security disability benefits. She later became aware that Mr. Ruch was the beneficiary of a supplemental needs trust created under New York law from proceeds of a personal injury action.

Although the trust had distributed child support payments to a child from a previous relationship, the trial court adopted the order of a hearing officer that income from the trust should not be considered for purposes of child support. Ms. Mencer appealed, arguing that the trial court’s failure to include Mr. Ruch’s trust funds as income would have material impact on her daughter.

The Superior Court of Pennsylvania reverses, finding that the trial court misapplied the law by failing to consider as income the distributions made by the trust in calculating Mr. Ruch’s child support obligations. The court rejects Mr. Ruch’s argument that the trustee is not permitted to pay child support from the trust under applicable New York law, ruling that the father, rather than the trustee, is obligated to pay the child support.

Medicaid Planning

What is Medicaid?
Medicaid  is a federal government program that provides financial assistance to persons age 65 and over, or those under 65 who are disabled and who are in need of substantial medical assistance. Medicaid is a needs-based program a person must have a medical need for the assistance and must be of limited financial means before he or she may qualify.