Personal Injury Cases: New law effective as of October 1, 2009. If you have been involved in an automobile accident that is not your fault, an important practical question is whether the at-fault driver has insurance, and, if so, how much? The minimum amount of liability insurance required in Connecticut is only $20,000.00 per person and $40,000.00 per incident. Often, that is insufficient to cover damages sustained in a collision. A new law in Connecticut requires the at-fault driver’s insurance company to tell you exactly how much insurance the driver has. Prior to the passage of this law, many insurance companies refused to do so. This new law is important because it fosters prompt settlement of claims, often without the need to initiate a lawsuit. The new law applies to accidents occurring after October 1, 2009.
If you have been involved in an automobile accident, contact us immediately. We stay current on all changes in personal injury law and know what to do to protect your interests.

Medicaid planning: Can you complete the Medicaid application without professional help? If a family member needs Medicaid (Title XIX) to pay for care in a nursing home or at home, a Medicaid application will be required to initiate the process. The Medicaid application is filed with the Department of Social Services (“DSS”) where it is reviewed by an intake worker. The Medicaid application process can be quite daunting. As an example, in most cases, the application requires the production of all of the applicant’s bank statements for the prior four years. A review of the bank statements by the intake worker often results in follow-up questions concerning specific transactions. The job of the intake worker is to scrutinize the applicant’s past transactions (potentially as far back as five years) and verify that nothing has occurred that affects eligibility. A family member may have difficulty assembling the required documents or knowing how to respond to inquiries about past transactions.
Please contact our office if you need help with a Medicaid application. We can help you get through the potential mine field of issues that may be raised by an intake worker.

Estate planning: What is the current status of the Connecticut and federal estate tax?
The 2009 session of the Connecticut Legislature increased the Connecticut estate tax exemption for property passing to non-spouse beneficiaries from $2,000,000.00 to $3,500,000.00, effective as of January 1, 2010. On the federal level, there is no federal estate tax applicable to the estate of anyone dying in 2010, but in 2011 the federal exemption for property passing to non-spouse beneficiaries returns to $1,000,000.00. Everyone expects the federal law to be changed by Congress, but when and how is anyone’s guess. Both the Connecticut and federal estate tax have unlimited exemptions for property passing to a surviving citizen spouse.
If you have questions regarding how the Connecticut or federal estate tax may apply to you, please contact us.

Real estate transactions: Change in federal law will affect residential real estate closing process. For many years, federal law has required the Buyer and Seller of residential real estate to sign what is referred to as a “HUD-1” closing statement. The purpose of the HUD-1 is to disclose all costs associated with the transaction and all adjustments between the Buyer and Seller. It has not been uncommon for the figures on the HUD-1 to change, often at the last minute. The change in federal law requires a mortgage lender to give the Buyer/Borrower a Good Faith Estimate of all closing costs at least 10 days prior to the closing. In most cases, the closing costs disclosed on the Good Faith Estimate cannot be changed at the closing. This change in federal law puts a premium on accurately determining all closing costs much earlier in the process.
Whether you are a Buyer or a Seller, we will explain the HUD-1 and Good Faith Estimate and assure that your interests are protected by the terms of the Purchase and Sale Agreement and at the closing.

Business entities: Seller/Owner financing. When a business is sold, it increasingly is common for the Seller to take back what is referred to as “Seller/Owner financing”. This means that part of the purchase price for the business will not be paid in cash at the closing; rather, it will be paid by the Buyer to the Seller over time. In today’s economic climate it often is difficult for a potential Buyer to obtain the amount of Bank financing needed to permit the purchase of the business for the contract price. In those circumstances, there is a strong incentive for the Seller to finance the short fall. If this occurs, it is critically important that the Purchase and Sale Agreement spell out the terms of the financing, the security for the financing, and the remedies in the event of a default.
Whether you are selling a business or buying a business, we have the experience needed to assure that your interests are protected by the terms of the Purchase and Sale Agreement and at the closing.

We hope you have found this newsletter informative and helpful. Please call us if you, a family member, friend, or colleague requires legal services in any of the practice areas covered in our office. As always, we are here to serve our past and present clients, and we welcome new referrals.

Very truly yours,

STEVEN P. FLOMAN ALLISON M. DEPAOLA BERNARD J. KITO, III.

• A. non–payment of medical bills that should be covered by your health insurance policy;
• B. non–payment of long term disability benefits that should be covered by your disability insurance policy;
• C. non–payment of costs to fix a home that has been damaged in a fire or by water or wind and that should be covered by your homeowner’s insurance policy;
• D. non–payment of the proceeds of a life insurance policy;
• E. non–payment of the cost of nursing home care that should be covered by the terms of a long term care insurance policy;
• F. non–payment of uninsured or underinsured motorist’s benefits that should be covered by your auto policy.

An insurance policy is a contract governed by the same rules of law that govern contracts, in general. One such rule of law is that each party to the contract has a duty of good faith and fair dealing. That requirement of good faith and fair dealing applies to the insurance company.

In addition to that, Connecticut has special rules that govern the form and content of insurance contracts, and, as well, the manner in which a claim must be adjusted by the insurance company. Part of the statutory framework includes the Connecticut Unfair Insurance Practices Act, commonly referred to as “CUIPA.” CUIPA contains a specific enumeration of prohibited conduct and practices, including unfair settlement practices. Multiple violations of CUIPA by the same insurance company may be the foundation for a separate claim against the insurance company based upon violation of the Connecticut Unfair Trade Practices Act.

At about the same time the Listing Agreement is signed, the Seller also will sign a Residential Disclosure Report. This report asks a number of questions about the condition of the home, the repair history of the home, and whether the seller has knowledge of problems with particular parts of the home. State law requires that this report be completed and signed by the Seller and furnished to the Buyer in a timely manner.

When a Buyer has been found who is willing to purchase the home on terms acceptable to the Seller, a Real Estate Purchase and Sales Contract is signed by both parties. Among other provisions, the Contract will state the purchase price, the amount of the deposit, the amount of the mortgage, the closing date, the items of personal property included as part of the sales price, and any rights of way, easements or other encumbrances on title that run with the land.

Most Contracts contain an inspection contingency, and a financing contingency. In general, these contingencies allow the Buyer to cancel the contract if either contingency is not satisfied, and the Buyer notifies the Seller of this within time periods specified in the Contract. On occasion there also is a contingency that allows the prospective Buyer to cancel the Contract if the Buyer is unable to sell his/her existing home by a specified date.

One would think that the legal issues associated with buying or selling a home are simple, leading one to ask “why do I even need a lawyer” or “why do I need a lawyer anywhere except at the closing.” Although most residential real estate transactions eventually do close, it is not unusual to see disputes arise along the way, sometimes at the last minute, and sometimes even after the closing.

Here are some examples of disputes that sometimes arise along the way: areas of the home requiring replacement or repair not readily apparent from a visual or even closer inspection; delays in obtaining financing; problems with the title to the property; driveway or other neighbor encroachment issues; an inability to sell an existing home in order to fund the purchase of a new home; delays in construction; a request to take possession prior to the closing; an inability or simple unwillingness to close on the date for closing set forth in the contract; water, drainage or sewage problems discovered for the first time after closing.

The resolution of all such disputes is governed by the language of the Contract, the content of the Residential Disclosure Report, Connecticut statutory and case law, and the terms of all of the other written documents generated between the date of the Contract and the date of the closing. For those reasons, from the beginning, advice by an attorney and careful review of all documents you sign is of the utmost importance!

Legal questions often arise as you operate your business. Does the proposed new lease protect me? What is the best type of financing for my proposed expansion? What if one of my employees makes a mistake on a job? How do I protect my customer list and other confidential information? Should I merge with another company in the industry? We get along well with each other as competitors and we each bring different strengths to the table, but, what if things don’t work out?

When you are ready to retire from your business, become less active in it, or sell it completely, what is the best way to do so?

Is there a Will? Where is the Will? What if there is no Will? How do we pay the funeral home? What will happen to the house? Will the Probate Court tie things up for years? Will probate costs and legal fees eat up the entire estate?

In Connecticut, the Probate Court is the court of original jurisdiction over a variety of matters, including, for example, conservatorship proceedings, guardianship proceedings, and adoption proceedings. It also is the court of original jurisdiction in matters relating to the administration of a decedent’s estate.

The Probate Court has two separate roles in the administration of a decedent’s estate. The first role is to transfer title to assets that appear in the decedent’s sole name to the beneficiaries named in the Will or the heirs at law, if there is no Will.

Assets that appear in the decedent’s sole name are referred to as probate assets. Probate assets can not be passed on to the beneficiaries named in the Will or the heirs at law without intervention by the Probate Court.

An asset that is jointly owned is an example of what is referred to as a non-probate asset. It is called a non-probate asset because it passes, by operation of law, to the surviving joint owner without any intervention by the Probate Court. Other examples of non-probate assets are retirement benefits, life insurance policies, and annuities. They are non-probate assets because they pass to the designated beneficiary, by operation of law, without any intervention by the Probate Court.

The second role of the Probate Court is to receive the Connecticut estate tax return. A Connecticut estate tax return is required to be filed for all decedents who died after January 1, 2005, even if there are only non-probate assets. The Connecticut estate tax exempts from tax unlimited amounts of assets passing to a spouse, and $2,000,000.00 in value of assets passing to anyone other than a spouse. For that reason, in most instances, no Connecticut estate tax will be required to be paid. Nonetheless, a return is required to be filed for all decedents.

The number of documents that are required to be filed with the Probate Court will depend upon whether the decedent died as the owner of probate assets, and the value of the probate assets.

If the probate assets have a date of death value less than $20,000.00, there is an expedited estate administration process that can be followed.

If the probate assets have a date of death value in excess of $20,000.00 these are the documents typically that must be filed with the Probate Court: an Application for Administration; an Inventory; an Application for Permission to Sell Real Estate (only if there is no Will); a Return of Claims; a Connecticut estate tax return; a Final Administration Account; and, an Affidavit of Closing.

If you die without a properly executed Will, your probate assets will pass according to what is referred to as the “intestate law” of the state in which you resided at the time of your death. That may or may not be what your choice would have been.

For example, Connecticut’s intestate law provides that the probate estate of a Connecticut resident who dies without a Will and is survived by a spouse and children is distributed as follows: the first $100,000.00 is distributed to the spouse; the balance is distributed ½ to the spouse, and ½ to the children. Is that what you want?

Having a properly executed Will allows you to direct what happens to your probate estate after you have died.

If you become incapacitated without having executed a Durable Power of Attorney Instrument, and Health Care Instructions, in most instances neither financial nor health care decisions can be made for you unless someone is appointed as your conservator by the Probate Court. Is that what you want?

Having a properly executed Durable Power of Attorney Instrument allows you to choose who will make financial and health care decisions for you if you become incapacitated. The person you have designated can act on your behalf without having to go through the Probate Court to do so.

Having properly executed Health Care Instructions allows you to determine whether you want to be kept alive by a mechanical device if you are in a persistent vegetative state, and, as well, to name the person who is authorized to convey your wishes to the health care providers caring for you.

Is home care an option? Who provides it? How much does it cost? Can we get any help with the costs?

If home care is not an option, how does the family choose a nursing home? How much does it cost? Does Medicaid or other insurance cover the cost? If not, how does the family pay for it?

The legal issues involved in Medicaid eligibility planning are complex and multi–dimensional. They require an analysis of both state and federal law. In addition to familiarity with the United States Code, the Connecticut General Statutes, the Code of Federal Regulations and the Department of Social Services’ Uniform Policy Manual, Medicaid eligibility planning requires attention to gift tax issues, income tax issues, common law contract issues, probate administration issues, and statutory and common law transferee liability issues.

State and federal Medicaid eligibility planning differs depending on whether the potential applicant is a single person, on the one hand, or a person with a spouse still living in the community, on the other hand. That is because the Medicaid eligibility rules for a single person are different from the Medicaid eligibility rules for a married couple.

If the potential applicant is a single person, assets owned by the potential applicant must be “spent down” to $1,600.00 before eligibility for Medicaid can be established. There are a variety of ways to “spend down” in a manner that directly or indirectly benefits the family of the applicant. The specific strategies employed in each instance are unique and individualized. They always depend upon the wishes of the potential applicant, the dynamics of the family, and the nature, type, and extent of the assets and income of the potential applicant.

If the potential applicant is married and has a spouse still living in the community, the family home is an excluded asset. Literally, this means that ownership of the home does not affect eligibility for Medicaid. The same is true for one motor vehicle. It, too, is considered an excluded asset.

In addition to excluded assets which can be owned by the community spouse, a portion of the couple’s non–excluded assets also are protected for the community spouse. The technical term for the amount of non–excluded assets that is protected for the community spouse is the Community Spouse Resource Allowance. The acronym “CSRA” often is used. The CSRA is ½ of the couples’ non-excluded assets, but subject to a maximum of $101,640.00. and a minimum of $20,328.00. The maximum and minimum increase every January 1.

Medicaid eligibility planning sometimes involves making one or more transfers of assets, as gifts, to children of the potential applicant. In most instances a transfer of this nature creates a period of Medicaid ineligibility, called a penalty period. Special rules, however, allow for the penalty free transfer of the family home in several circumstances.

Medicaid eligibility planning requires a careful analysis of the elder generation parents’ sources and amounts of income, and, as well, of the nature, value, and method of ownership of all of their assets. At the same time, Medicaid eligibility planning requires a patient, careful, skillful, and sensitive listening to the wishes of the elder generation parents for each other, their wishes for their children, and their assessment of their children’s ability to work together and carry out those wishes.

This is the eighth newsletter I have sent to clients since January, 2006. As many of you know, I recently have welcomed Attorneys Allison M. DePaola and Bernard J. Kito, III to my staff and they have participated in writing this newsletter. We expect to continue to provide the same careful, individually crafted, personalized, and cost effective legal counsel, advice, and representation that I have provided many of you in the areas of law discussed in this and earlier newsletters. In addition to these practice areas, we now will provide counsel, advice, and representation in all aspects of family law, and in employment law including subjects such as unemployment compensation, hiring and termination, and other employment issues.

Personal Injury Cases: What is a statute of limitations? It is a legal doctrine that requires you to start a lawsuit against the person who has injured you within a certain period of time after you have been injured. In most cases, the statute of limitations requires that the suit be started no later than two years from the date of your injury. In some cases, the period may be extended to three years from the date of your injury. If you do not start a lawsuit within the required time period, your right to do so is barred.

Rules concerning the statute of limitations are construed very strictly. If you have been injured, please contact us immediately. An important part of our responsibility is to assure that your lawsuit is started before the statute of limitations expires.

Medicaid planning: New rules concerning continuing care retirement communities: In most instances the equity in a home owned by husband and wife is an “excluded asset” for Medicaid eligibility purposes. However, if husband and wife sell their home and use the proceeds as an entrance fee to a continuing care retirement community, new rules say that in most instances the entrance fee no longer is an “excluded asset”, but, rather, now is an “available asset”. The change is the combined result of the 2005 Deficit Reduction Act (effective as of February 8, 2006) and proposed changes to the Connecticut Uniform Policy Manual (“UPM”). The UPM is the Manual used to administer the Connecticut Medicaid program.

Please contact our office immediately if you are considering a move to a continuing care retirement community. We may be able to negotiate language in the entrance agreement that will avoid this harsh result.

Estate planning: What is the status of estate planning for same sex couples?

Public Act 09-13 was recently passed by the Connecticut Legislature and signed by Governor Jodi Rell.  This Public Act changes the legal definition of “marriage” in Connecticut to mean the legal union of two persons.  Connecticut previously defined marriage as the union of a man and a woman.  This Public Act also transforms existing civil unions into marriages as of October 1, 2010, unless the civil union has been previously annulled or dissolved, or is in the process of dissolution.

If you have questions regarding this new Public Act or would like to learn more about estate planning for same sex couples, we would be pleased to meet with you, discuss your questions and address your specific family circumstances.

Real estate transactions: What is owner’s title insurance and why do I need it? When you purchase a home, your lender will insist that you have a title insurance policy for the amount of your mortgage loan. It is important that you also have coverage to insure your ownership interest. There are many potential defects in title that simply cannot be discovered, even with a careful title search. A few examples include forged deeds, unreleased mortgages or other liens, claims by Indian nations, and transfers by persons without legal capacity. For a modest price, an owner’s title insurance policy will give you coverage for any such title defects.

We would be pleased to answer your questions about title insurance or any other aspects of your home purchase.

Business entities: What is a Severance Agreement? In the absence of a contract that obligates an employer to provide benefits beyond COBRA health coverage to a terminated employee, there is no legal obligation for most employers to do so. Nevertheless, many employers voluntarily choose to offer an employee a severance package upon the termination of the employee’s employment. In order to receive the benefits offered by the employer, the employee will be asked to sign a Severance Agreement, sometimes referred to as a Separation Agreement or a Termination Agreement. Such Agreements typically state that the employee’s acceptance of the benefits provided in the Severance Agreement constitutes a waiver of most claims the employee may have against the employer. The specific terms of a Severance Agreement are very important and should be carefully reviewed by both employer and employee.

Whether you are an employer or an employee, we can prepare and/or review a Severance Agreement that protects your interests.

We hope you have found this newsletter informative and helpful. Please do not hesitate to call us if you, a family member, friend, or colleague requires legal services in any of the practice areas handled in our office. As always, we are here to serve our past and present clients, and we also welcome new referrals.

Very truly yours,

SPF/jm                                                                       STEVEN P. FLOMAN

This is the seventh newsletter I have sent to clients since January, 2006. If you have not received past newsletters and would like to access them, you may do so on our web site at www.cantorfloman.com. The web site includes an index by subject matter.

Personal Injury Cases: Has a family member been injured in a nursing home? Many families answer “yes” to that question. Injuries include bed sores, infections, choking on food, dehydration, incorrect medication, and fractured bones from falls from bed, wheel chairs, or during transfers. Here are some ways in which the legal issues concerning a nursing home injury differ from those related to an injury sustained in an automobile collision.

• Connecticut law requires the nursing home to maintain detailed records concerning patient care. These records often provide important clues about what happened. This is particularly important if the family member has some degree of cognitive limitation that impairs observation or communication skills.
• Connecticut law requires the nursing home to file a report with the Connecticut Department of Public Health describing the injury, explaining how it happened, and outlining a course of action to prevent similar occurrences. This report also provides important clues about what happened.
• Connecticut law has established a “Patients’ Bill of Rights” applicable to patients in nursing homes. The provisions of the Patients’ Bill of Rights are helpful in establishing a standard of care that must be followed by a nursing home.

We successfully have represented the families of individuals who have been injured in nursing homes. In fact, one of our employees is a nurse with past experience working in a nursing home. We encourage you to contact us if a family member has been injured. You can access the Patients’ Bill of Rights and other information about nursing homes by visiting the Department of Public Health website at www.ct.gov/dph.

Medicaid planning: How have the rules changed concerning “immediate annuities” owned by a Medicaid applicant? The rules concerning Medicaid eligibility for an applicant or spouse of the applicant who owns an “immediate annuity” (one that is paying out a fixed monthly or yearly sum for a specified period of time) have changed dramatically. The changes are the combined result of the 2005 Deficit Reduction Act (effective as of February 8, 2006) and proposed changes to the Connecticut Uniform Policy Manual (“UPM”). The UPM is the Manual used to administer the Connecticut Medicaid program. Here are some of the changes.

• Annuities purchased or annuitized after February 8, 2006 must be irrevocable, non-assignable, and actuarially sound.
• Connecticut contends that all annuities, whether purchased or annuitized before or after February 8, 2006, must name the State as the primary beneficiary to the extent of Medicaid benefits actually paid out by the State. Although this position may violate federal law, no Court yet has ruled on the issue.
• Connecticut contends that any immediate annuity owned by a Medicaid applicant is treated both as a source of income for the Medicaid applicant, and, as well, an asset owned by the applicant. Although this position may violate federal law, no Court yet has ruled on the issue.

If there is a reasonable possibility a family member will apply for Medicaid and the applicant or the applicant’s spouse either owns an annuity or is thinking of purchasing one, contact us for a full discussion of the new Medicaid annuity rules and how they may impact your family.

Estate planning: What is the current status of the federal estate tax for assets passing to non-spouse beneficiaries? To use a somewhat overused expression, it is “up in the air”.

• The value of assets that can pass, federal estate tax free, to non-spouse beneficiaries increased to $3,500,000.00 on January 1, 2009; transfers between spouses remain tax-free in unlimited amounts.
• In 2010, there is no federal estate tax at all.  
• However, in 2011, the value of assets that can pass, federal estate tax free, to non-spouse beneficiaries is reduced to $1,000,000.00; the federal estate tax begins at 45% on the first dollar above $1,000,000.00.
• Most commentators expect the law to change in 2009, but no one knows how it will change; there is a large federal deficit and the federal estate tax is a hot political issue.
• The federal estate tax includes life insurance proceeds, retirement accounts, assets in a revocable trust (living trust) and all other assets owned by a decedent.
• Because of the broad scope of assets included as part of the federal estate tax base, many people are surprised to find that their estate may face a potential federal estate tax obligation.  

We would be glad to meet with you to help you prepare an estate plan that avoids or minimizes exposure to the federal estate tax.

Real estate transactions: Should I bid on a house being sold at a foreclosure sale? You may end up as the owner at an attractive price, but there are significant elements of risk. A foreclosure sale is conducted by an attorney who has been appointed by the Court. The legal title of the attorney who conducts the sale is “Committee”.

• A sign on the property and an advertisement in a local paper will give you the date and time of the sale, and the amount of the required deposit. The property is sold to the highest bidder.
• You must take the property “as is”. In some instances you may be able to walk through the house for one hour before the bidding, but, at best, your ability to note physical or structural problems will be limited.
• There is no financing contingency. If you are the successful bidder you must give the Committee a certified check for the required deposit on the day of the sale. You must be prepared to pay the entire balance within thirty (30) days after the sale has been approved by the Court; if you do not do so, your deposit is forfeited.
• If you intend to bid at the sale, a title search of the Land Records is advisable. If you are the successful bidder, the purchase of an owner’s title insurance policy on the closing date is advisable.

We would be pleased to guide you through the process if you are considering bidding at a foreclosure sale.

Business entities: The importance of being licensed. If your business requires licensing by a State agency, treat the requirement seriously. In Connecticut, many trades and professions are licensed through the Department of Consumer Protection.

• A few examples of businesses that require licensing are health clubs, heating and cooling contractors, electricians, home improvement contractors, solar heating contractors, real estate appraisers, real estate brokers, and new home construction contractors; there are many others.
• Connecticut Courts consistently apply the doctrine of “illegality” to prevent an unlicensed business from collecting money owed it pursuant to the terms of a written contract.
• Connecticut Courts use the same doctrine of “illegality” to prevent the business from recovering the fair value of the work it has performed pursuant to a non-contractual theory of recovery referred to as “quantum meruit”.
• You can obtain additional information about business licensing requirements by visiting the web site of the Department of Consumer Protection at www.ct.gov/dcp.  

If you are in business, contact us so we can help assure that your business has satisfied all licensing requirements.

We hope you have found this newsletter informative and helpful. Please do not hesitate to call us if you, a family member, friend, or colleague requires legal services in any of the practice areas handled in our office. As always, we are here to serve our past and present clients, and we also welcome new referrals.

Very truly yours,

SPF/jm                                                                       STEVEN P. FLOMAN