We are excited to announce our Virtual SALLI (Senior Advocate Lifelong Learning Institute) Spring Classes. We will be hosting two Virtual Series, consisting of six classes each, on the Zoom platform. These classes are FREE and open to all ages.
History Bites Series
Join us weekly on Tuesdays from 10:30AM - 12:00PM, May 19 - June 23, to hear award-winning historian John V. Quarstein present fascinating short stories about Virginia history. This Series is in partnership with the Mariner's Museum.
May 19 - Virginia Scandals
May 26 - Southampton Insurrection
June 2 - Virginia Canals
June 9 - Victory at Yorktown
June 16 - Fort Monroe: Freedom's Fortress
June 23 - Hampton Roads Tourism
All About the Arts
Join us weekly on Fridays from 10:30AM - 12:00PM, May 22 - June 26, to hear local artists talk about their crafts. This Series is In partnership with Tidewater Arts Outreach.
May 22 - Art Appreciation
May 29 - Storytelling and Improv
June 5 - Release your Inner Songwriter
June 12 - Creative Writing Workshop Part 1
June 19 - Creative Writing Workshop Part 2
June 26 - History of Origami
Zoom is a free program and is simple to use. Once you register for the classes, we will send you instructions on how to load the Zoom program onto your computer, laptop, tablet or smart phone. We will also be offering a Zoom practice session sometime next week, before the classes begin. Zoom is an interactive platform that allows for attendees to see one another and ask questions at the end of the presentations.
You can view a detailed description of each class and/or register HERE. For more information, call 757-724-7001.
May is National Elder Law Month. This designation was established by the National Academy of Elder Law Attorneys (NAELA) as a way to acknowledge the profession which supports the senior community (defined as people over 65 years) with all of their planning needs. It is celebrated by elder law attorneys throughout the country who offer special living days, seminars, clinics, and other activities to educate the public.
Phone Scam Alert:
A Warning for Seniors in Hampton Roads
Senior Services of Southeastern Virginia (SSSEVA) wants to warn the public about a phone scam seeming to target seniors and their caregivers in Hampton Roads. We've gotten multiple reports from seniors and family members throughout the region who received these phone calls over the last couple of weeks. The callers, all calling from a 757-461-exchange with rolling last four digits, identify themselves as “Senior Services,” and then try to entice you to buy life insurance.
Senior Services of Southeastern Virginia wants to make it clear that our organization does not sell life insurance and will never call anyone to try to sell products of any kind.
What If They Call Me?
If you encounter a suspected phone scam, hang up immediately on the caller, write down the caller’s phone number to share with law enforcement, and then notify your local police department's consumer fraud unit.
You can report such incidents to the Virginia Attorney General's Office:
FTC: Some nursing homes attempting to take Medicaid patients stimulus checks
Copyright 2020 The Associated Press. All rights reserved.
Photo by: Eric Gay/AP
By: Alex Hider
Posted at 9:32 AM, May 19, 2020
The FTC says it is investigating reports of nursing homes across the country that are illegally seizing the stimulus checks of their residents on Medicaid.
According to a blog post on the FTC website, Lois Greisman — the agency's Elder Justice Coordinator — says several state attorneys general, including Iowa AG Tom Miller, have received complaints that nursing homes are withholding their patients $1,200 stimulus checks.
According to Greisman, the nursing homes claim that they are entitled to the money because the patients are on Medicaid, and because the checks are federal funds, the money should be signed over to the facility to pay for their care.
However, Greisman pointed out in her post that according to the CARES Act, the stimulus checks are considered a "tax credit" — meaning they can't be seized by the government.
"Tax law says that tax credits don't count as "resources" for federal benefits programs, like Medicaid," Greisman wrote. "So: when Congress calls these payments "tax credits" in the CARES Act, that means the government can't seize them.
Greisman said that anyone with a loved one facing such a similar situation should first contact their state attorney general. Anyone still having trouble can reach out to the FTC directly.
What to Do: Estate and Special Needs Planning Under the SECURE ActBy Mark W. Worthington, JD, LLM, CELA, CAP
The SECURE Act brings major changes to retirement tax policy and basic estate planning and drafting.
What Did SECURE Do?
The SECURE Act (December 20, 2019) changed the required payout for inherited defined contribution plans (401(k)s, 403(b)s, IRAs, etc.) left to designated beneficiaries (DBs)1 from RMDs (required minimum distributions annually over the life expectancy of the DB), to an “all out by the 10th year after death” rule. We call the time period (whether lifetime or 10 years) the ADP, or “applicable distribution period.”
You still need to know all the pre-SECURE rules governing defined contribution retirement plans and naming trusts as death beneficiary of those plans, including drafting conduit trusts and accumulation trusts. That is because for the most part, SECURE layered on exceptions and definitions without repealing existing statutes and regulations.2
Why Does This Matter?
Even if we had a flat rather than progressive tax structure, (1) smaller RMDs over a longer ADP is more real after-tax net-present-value dollars for the family, and (2) SNTs need to be able to retain income in the discretion of the trustee, and retained trust income is taxed at the top federal rate of 37 percent at mere $12,950 taxable income.
What Else Did SECURE Do?
SECURE carved out exceptions to the 10-year rule. There are five types of eligible designated beneficiaries (EDBs) who continue to qualify for RMD over a life-expectancy ADP. Those are:
• Surviving spouse (who still has all the pre-SECURE options, such as a spousal rollover)
• Minor children
• Disabled (IRC §72(m)(7), not 42 USC §1382c(a)(3))
• Chronically ill (IRC §7702B with some modifications)
• A person not more than 10 years younger than the deceased plan owner
Under SECURE, the ADP is not necessarily fixed at the death of the plan owner. It can start as lifetime for an EDB, then switch to 10-year rule at the EDB’s death (or attaining age of majority). It can also start as lifetime for any DB where death was pre-2020, and then at death of the DB post-2019, it switches to 10 years.
Special SNT Rules
By themselves, the EDB exceptions provide no possibility of an accumulation SNT being able to use a life-expectancy ADP. Fortunately, SECURE as finally enacted contains two special provisions permitting qualifying SNTs to use lifetime ADPs.
1. Qualifying SNT. An SNT that benefits one or more disabled or chronically ill (DisCI) persons for their lifetimes, and no other persons during that time, qualifies to take RMDs over the life expectancy ADP.
2. ADP Separate Accounts Rule override. If A, B, and C are the death beneficiaries of retirement plan, they each get to use their separate life expectancies to compute RMDs. Under Treasury regulations, doing the same thing by passing the retirement plan through a revocable trust that splits outright to A, B, and C requires all of them to use the life expectancy of the oldest to compute RMDs. SECURE overrides this in the case where the revocable trust divides at the retirement plan owner’s death into one or more shares for SNTs, and shares for typicals (as the non-disabled are referred to in the special needs community). In that case, we only look to the SNT to determine the ADP/RMD for the SNT. However, the shares for typicals still consider the beneficiaries of all of those shares to determine ADP/RMDs.
Here’s Just Some of What We Don’t Know
• Disability Definitions and Documentation
• SECURE does not cite to Social Security disability definition and has no definition appropriate for minors with disabilities.
• What certification is adequate to establish DisCI? Is periodic recertification necessary for disability?
• Qualifying SNT Remaindermen: Do ages of remaindermen still matter? Can we name charities?
• Who is a minor?
• With a 10-year rule, must we still be able to identify the beneficiary with the shortest life expectancy where the DB is not an EDB?
The IRS is expected to issue guidance in the near future.
Planning and Drafting
Ideas abound about planning under SECURE: life insurance (no longer to pay estate tax, but to pay the accelerated income tax at higher bracket rates), charitable remainder trusts (to mimic the stretch), and separate discretionary trusts for retirement and non-retirement plan assets (to allocate the tax burden where most efficient yet still equalize benefit). But the guidance I offer here in planning and drafting is keeping within the confines of the basic estate plan.
SECURE gives powerful new impetus to Roth conversions and Roth contributions, especially where an SNT (with trust income tax rates) is the beneficiary: No RMDs during plan owner’s lifetime, post-mortem lifetime RMDs, and no taxable income when money comes out of the plan.
The good news is that while you need to understand a lot about pre- and post-SECURE law to do a good job planning, there does not seem to be much about drafting that will change.
Adult Non-EDB Beneficiaries
If these beneficiaries take outright, or via a conduit trust, or via any trust where the beneficiaries are all DBs, then you get the 10-year rule. The tradeoff between asset protection trusts for beneficiaries and punishing income tax rates is dramatically intensified.
EDB Other Than DisCI
• The only way to leave assets in trust for these beneficiaries and qualify for the life expectancy ADP is via a conduit trust.
• A conduit trust for a person not more than 10 years younger than the deceased plan owner will produce a less than 10-year ADP if they are both 81 or older.
• Most of the time, the surviving spouse will be named to take retirement plans outright as this produces the best overall tax result, even in states with an estate tax. Where there are compelling reasons to leave retirement plans in trust for the surviving spouse, not only must a conduit trust be used, but the marital deduction trust must require withdrawals and distributions of the retirement plan assets that are the greater of the RMD or the fiduciary accounting income of the retirement plan.
• A conduit trust for minor children may not be a good idea. Your client in most cases is likely to live until his/her children are no longer minors. If your client dies when the child is a minor, the life expectancy ADP only lasts until the age of majority. If that were, say, age 18, 100 percent of the plan must be distributed from the trust out to the child at age 28. If you forgo the conduit provisions, while all assets must come out of the plan within 10 years of the owner’s death, the retirement plan assets can be retained in trust for as long as desired.
If you want each child to get lifetime ADP during the child’s minority, you will need to specify the division at the death beneficiary designation level, and name each child’s subtrust under the revocable trust as beneficiary.
• Tighten up your SNT so that no one can benefit from retirement plans and retirement plan accumulations other than the initial special needs beneficiary(ies) during his/her/their lifetime. No discretionary distributions to descendants, for example. Note: You don’t need to similarly restrict trustee’s use of other assets.
• Until we have guidance or regulations from Treasury, the most conservative approach is to assume that SNT remaindermen must not merely be individuals, but all be identifiable individuals whose ages count in determining lifetime ADP. That is, you continue to draft your accumulation SNT considering the ages of the remainder beneficiaries in the same way you always have.
• Where there are shares for an SNT and shares for typical children, consider adding an allocation clause to the revocable trust first funding the SNT with a fraction (or all) of the Roth retirement plans.
Even if you are conscientious about giving each client a closing letter, it can be a real service to clients to send them a SECURE update letter. Refine your list to those who had an SNT or a conduit trust.
If you have drafted conduit trusts for clients, the result under SECURE depends on exactly how it was drafted. The result could be annual distributions from the trust for 10 years (or lifetime, if an EDB), one big distribution from the trust at year 10, or 10-year or lifetime withdrawals from the plan, but the trust may accumulate those withdrawals.
NAELA and You
You really can make a difference. The only reason SNTs were saved from the SECURE Act's 10-year rule is that a small group of volunteers on the NAELA Tax Steering Committee — people like you — realized there was a problem and drafted an issues brief that NAELA sent to the House of Representatives. When you volunteer for a committee or a project, your attributes will encounter opportunities that will produce real results.
1 A DB is an individual, or a group of individuals where we can determine the one with the shortest life expectancy as of the death of the retirement plan owner. SECURE did not change the rules where there is no DB.
2 Every practitioner should have a copy of Life and Death Planning for Retirement Benefits, 8th Ed. 2019, by Natalie B. Choate (www.ataxplan.com). A SECURE Update will be a free download for owners of the book. The author of this article has no financial interest in this book.
About the Author
Mark Worthington, CELA, CAP, Framingham, Massachusetts, is a member of the NAELA Tax Section Steering Committee. This article is provided by the Tax Section. For information on joining this section, visit www.NAELA.org/Sections.
‘No Intubation’: Seniors Fearful Of COVID-19 Are Changing Their Living WillsBy Judith GrahamMAY 12, 2020
Navigating Aging focuses on medical issues and advice associated with aging and end-of-life care, helping America’s 45 million seniors and their families navigate the health care system.
To contact Judith Graham with a question or comment, click here.
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SEE ALL COLUMNSDENVER ― Last month, Minna Buck revised a document specifying her wishes should she become critically ill.
“No intubation,” she wrote in large letters on the form, making sure to include the date and her initials.
Buck, 91, had been following the news about COVID-19. She knew her chances of surviving a serious bout of the illness were slim. And she wanted to make sure she wouldn’t be put on a ventilator under any circumstances.
“I don’t want to put everybody through the anguish,” said Buck, who lives in a continuing care retirement community in Denver.
For older adults contemplating what might happen to them during this pandemic, ventilators are a fraught symbol, representing a terrifying lack of personal control as well as the fearsome power of technology.
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Are you a senior who is affected by COVID-19? Tell us what you’re seeing, and help us report on important, untold stories. Contact us at firstname.lastname@example.org.
EMAIL USUsed for people with respiratory failure, a signature consequence of severe COVID-19, these machines pump oxygen into a patient’s body while he or she lies in bed, typically sedated, with a breathing tube snaked down the windpipe (known as “intubation”).
For some seniors, this is their greatest fear: being hooked to a machine, helpless, with the end of life looming. For others, there is hope that the machine might pull them back from the brink, giving them another shot at life.
“I’m a very vital person: I’m very active and busy,” said Cecile Cohan, 85, who has no diagnosed medical conditions and lives independently in a house in Denver. If she became critically ill with COVID-19 but had the chance of recovering and being active again, she said, “yes, I would try a ventilator.”
What’s known about people’s chances?
Although several reports have come out of China, Italy and, most recently, the area around New York City, “the data is really scanty,” said Dr. Carolyn Calfee, a professor of anesthesia at the University of California-San Francisco.
Initial reports suggested that the survival rate for patients on respirators ranged from 14% (Wuhan, China) to 34% (early data from the United Kingdom). A report from the New York City area appeared more discouraging, with survival listed at only 11.9%.
But the New York data incorporated only patients who died or were discharged from hospitals — a minority of a larger sample. Most ventilator patients were still in the hospital, receiving treatment, making it impossible for researchers to draw reliable conclusions.
Calfee worries that data from these early studies may not apply to U.S. patients treated in hospitals with considerable resources.
“The information we have is largely from settings with tremendous resource gaps and from hospitals that are overwhelmed, where patients may not be treated with optimal ventilator support,” she said. “I would be very worried if people used that data to make decisions about whether they wanted mechanical ventilation.”
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SIGN UPStill, a sobering reality emerges from studies published to date: Older adults, especially those with underlying medical conditions such as heart, kidney or lung disease, are least likely to survive critical illness caused by the coronavirus or treatment with a ventilator.
“Their prognosis is not great,” said Dr. Douglas White, a professor of critical care medicine at the University of Pittsburgh. He cautioned, however, that frail older adults shouldn’t be lumped together with healthy, robust older adults, whose prospects may be somewhat better.
Like other clinicians, White has observed that older COVID patients are spending considerably longer on ventilators ― two weeks or more — than is the case with other critical illnesses. If they survive, they’re likely to be extremely weak, deconditioned, suffering from delirium and in need of months of ongoing care and physical rehabilitation.
“It’s a very long, uphill battle to recovery,” and many older patients may never regain full functioning, said Dr. Negin Hajizadeh, an associate professor of critical care medicine at the School of Medicine at Hofstra/Northwell on New York’s Long Island. “My concern is, who’s going to take care of these patients after a prolonged ventilator course ― and where?”
In St. Paul, Minnesota, Joyce Edwards, 61, who is unmarried and lives on her own, has been wondering the same thing.
In late April, Edwards revised her advance directive to specify that “for COVID-19, I do not want to be placed on a ventilator.” Previously, she had indicated that she was willing to try a ventilator for a few days but wanted it withdrawn if the treatment was needed for a longer period.
“I have to think about what the quality of my life is going to be,” Edwards said. “Could I live independently and take care of myself — the things I value the most? There’s no spouse to take care of me or adult children. Who would step into the breach and look after me while I’m in recovery?”
People who’ve said “give a ventilator a try, but discontinue it if improvement isn’t occurring” need to realize that they almost surely won’t have time to interact with loved ones if treatment is withdrawn, said Dr. Christopher Cox, an associate professor of medicine at Duke University.
“You may not be able to live for more than a few minutes,” he noted.
But the choice isn’t as black-and-white as go on a ventilator or die.
“We can give you high-flow oxygen and antibiotics,” Cox said. “You can use BiPAP or CPAP machines [which also deliver oxygen] and see how those work. And if things go poorly, we’re excellent at keeping you comfortable and trying to make it possible for you to interact with family and friends instead of being knocked out in a coma.”
Heather McCrone of Bellevue, Washington, realized she’d had an “all-or-nothing” view of ventilation when her 70-year-old husband developed sepsis — a systemic infection ― last year after problems related to foot surgery.
Over nine hours, McCrone sat in the intensive care unit as her husband was stabilized on a ventilator by nurses and respiratory therapists. “They were absolutely fantastic,” McCrone said. After a four-day stay in the hospital, her husband returned home.
“Before that experience, my feeling about ventilators was ‘You’re a goner and there’s no coming back,’” McCrone said. “Now, I know that’s not necessarily the case.”
She and her husband both have advance directives stating that they want “lifesaving measures taken unless we’re in a vegetative state with no possibility of recovery.” McCrone said they still need to discuss their wishes with their daughters, including their preference for getting treatment with a ventilator.
These discussions are more important than ever ― and perhaps easier than in the past, experts said.
“People are thinking about what could happen to them and they want to talk about it,” said Dr. Rebecca Sudore, a professor of medicine at the UCSF. “It’s opened up a lot of conversations.”
Rather than focusing on whether to be treated with a ventilator, she advises older adults to discuss what’s most important to them — independence? time with family? walking? living as long as possible? ― and what they consider a good quality of life. This will provide essential context for decisions about ventilation.
“Some people may say my life is always worth living no matter what type of serious illness or disability I have,” she said. “On the other end of the spectrum, some people may feel there are health situations or experiences that would be so hard that life would not be worth living.”
Sudore helped create Prepare for Your Care, a website and a set of tools to guide people through these kinds of conversations. Recently it was updated to include a section on COVID-19, as have sites sponsored by Compassion & Choices and The Conversation Project. And the Colorado Program for Patient Centered Decisions has published a decision aid for COVID patients considering life support, also available in Spanish.
Some older adults have another worry: What if there aren’t enough ventilators for all the COVID patients who need them?
In that situation, “I would like to say ‘no’ because other people need that intervention more than I do and would benefit, in all probability, more than I would,” said Larry Churchill, 74, an emeritus professor of medical ethics at Vanderbilt.
“In a non-scarcity situation, I’m not sure what I’d do. I’m in pretty good health, but people my age don’t survive as well from any major problem,” Churchill said. “Most of us don’t want a long, lingering death in a custodial facility where the chances of recovery are small and the quality of life may be one we’re not willing to tolerate.”
Judith Graham: email@example.com, @judith_graham
Frequently Asked Questions: Hoarding Disorders and Older Adults FAQs • December 2019 David Godfrey, JD, American Bar Association Commission on Law & Aging Eileen Dacey, LCSW, North Shore Center for Hoarding and Cluttering This FAQ is a follow up to NCLER’s Legal Basic’s Training: Self-Neglect and Hoarding Disorders, presented by David Godfrey and Eileen Dacey. The Chapter Summary and webcast recording have more information. The presenters answer frequently asked questions from the webcast below. How is a hoarding disorder different than clutter and disorganization? Hoarding disorder is its own distinct mental health diagnosis that falls under the Obsessive-Compulsive Disorder (OCD) and Related Disorders Spectrum. Clutter and disorganization can be features of other mental health issues (whether diagnosed or not diagnosed). The Diagnostic and Statistical Manual of Mental Disorders (DSM–5) criteria for hoarding are: 1. Persistent difficulty discarding or parting with personal possessions, even those of apparently useless or limited value, due to strong urges to save items, distress, and/or indecision associated with discarding. 2. The symptoms result in the accumulation of a large number of possessions that fill up and clutter the active living areas of the home, workplace, or other personal surroundings (e.g., office, vehicle, yard) and prevent normal use of the space. If some living areas are uncluttered, it is only because of others’ efforts (e.g., family members, authorities) to keep these areas free of possessions. 3. The symptoms cause clinically significant distress or impairment in social, occupational, or other important areas of functioning (including maintaining a safe environment for self and others). Significant in these factors is distress caused by trying to part with possessions that others see as having no or limited value, unable to live or work in space, and significant difficulty in the persons’ life. It is important that hoarding disorder is considered a significant emotional or mental health issue, and addressing the underlying issue is essential to long-term improvement. Hoarding disorder is far more than being messy, disorganized, or having a lot of possessions—the underlying emotional and mental health challenges must be addressed to achieve a change in behavior. How is hoarding different from collecting? Collectors look for specific items and often organize or display their collection. The items people collect are likely to have real or sentimental value that can be explained to others. A collection may take over a living or work space but does not cause the emotional distress or interfere with personal functioning. This can help distinguish between normative collecting behavior and abnormal collecting behavior that is present in hoarding disorder. National Center on Law & Elder Rights | 2 What screening tools can be used to identify a hoarding disorder? It is important to obtain training or work with professional trained on screening tools to identify a hoarding disorder. These are the screening tools used: • Clutter Image Rating: Assessing ‘volume’ • H.O.M.E.S. – Multi-disciplinary Hoarding Risk Assessment: Assessing risk • Uniform Inspection Checklist – Hoarding / Excessive Clutter: Minimum safety and sanitation standards What steps are suggested when the first report of significant hoarding is part of an eviction filing? An interdisciplinary team of specially trained therapists, organizers, and legal assistance is most helpful when responding to significant hoarding. First, therapists can work with the person to assess the persons’ needs, create a plan of care, develop trust, and begin the process. Next, organizers are equipped to assess environment and create a plan for working with the person and the therapist for harm reduction. A lawyer is needed to address the immediate issue of the eviction. In responding to the eviction, the individual, therapists, and organizers are needed to provide testimony to the Court that the issue has been assessed, that a plan to reduce harm and improve safety has been agreed to, and to ask for time to implement the plan. Any immediate safety threats to others need to be addressed. The experts in hoarding disorder may need to help the Court understand why time is needed for effective and long-lasting improvement and to assure the Court that progress is expected. Working together, the team may negotiate with the Court to set benchmarks for improvement. It is important to remember that an ordered clean out, particularly one that is not concurrent with ongoing therapy to address the underlying emotional or mental health issues, is very likely to fail as a longterm intervention. Avoiding homelessness should be a top priority for all involved. An attorney can provide important support to help all parties understand the importance of moving carefully to avoid further trauma to the person. The process takes time. What first steps should I take in a case involving a hoarding disorder? Guidelines for Initial Assessment:1 • Provide rationale for home visit. • Do not touch anything without EXPLICIT permission. • Each decision must be the client’s decision. Can be guided by you; not decided by you. • Try to keep the home visit as short as possible. • Decide where to begin. • Photograph all rooms of the home. • Use assessment tools. • Involve family members who live in the home. 1 Clinician’s Guide to Severe Hoarding, Tompkins, Michael A., 2015, Springer.com. National Center on Law & Elder Rights | 3 Why does the process take so long? The underlying emotional or mental health issues that trigger the hoarding behavior developed over years or even decades. Helping the person heal and develop new strategies and habits will take time and doing so is the key to long term improvement. What therapies are used to treat hoarding disorder? The two most commonly applied therapies are cognitive behavioral therapy and harm reduction. The approach for each case needs to be based on careful assessment of the individual’s needs. What should I say or do when visiting the home? Avoid being judgmental. Provide encouragement and emotional support. Be honest and transparent. Focus on the issues, not on the underlying causes. Stay calm, even when it is difficult to do. The goal should be improvement, not perfection. Where can I find more resources? Resources on Animal Hoarding: • Tufts Cummings School of Veterinary Medicine: Hoarding of Animals Research Consortium • American Society for the Prevention of Cruelty to Animals • Massachusetts Animal Coalition Support Groups: • Hoarding Task Force Network • Clutter Movement Individual Support • Clutter Movement Family Support • Mutual Support Hoarding Disorder Programs, Research, and Conferences: • Hoarding Project for Safety Day • Journal of Clinical Psychiatry: Hoarding Disorder: More than Just a Problem of Too Much Stuff • North Shore Center for Hoarding • Phone App on Clutter Rating • OCD Foundation • Annual Conference on Hoarding & Cluttering • Annual OCD Conference Case consultation assistance is available for attorneys and professionals seeking more information to help older adults. Contact NCLER at ConsultNCLER@acl.hhs.gov.
Billionaire divorce uncovers secretive world of trusts in South Dakota
Billionaire divorce shines light on South Dakota trustsDuring their more than 30 years of marriage, Texas billionaire Ed and Marie Bosarge accumulated an unusual collection of treasures.
They owned 12 homes, including five properties in Maine and a private island in the Bahamas. They had a 180-foot sailing yacht with its own grand piano. They bought a $5 million Egyptian mummy. Marie bought some of Marilyn Monroe’s personal effects, including her furniture, dresses and bras.
“It was over the top,” Marie said of their lifestyle.
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LISTEN NOWNow, instead of living the high life, Marie Bosarge fears going under. When Ed filed for divorce in 2017, Marie discovered that almost all of the couple’s property — from the homes and island to her jewelry and even some of their tableware — had been put into a special trust that shielded the assets from any claims. Rather than getting half of a fortune she estimated to be worth more than $2 billion, she may wind up with little or nothing after paying her legal bills.
In a lawsuit filed in 2018, Marie claims that the trusts “were created and used by Ed to hide income and property and to hold what would otherwise have been personal income and assets.” She claims the purpose of the trusts and the transfer of assets between the trusts was “to cut Marie out of her rightful share of the community estate.”
Attorneys for Ed Bosarge — who founded high-speed trading firm Quantlab — declined to comment on the case, citing confidentiality rules. Marie’s attorney also declined comment. But in court papers, Ed’s attorneys have claimed that the assets are owned and controlled by the trust, not by him, and are therefore not marital property. They say the total value of the couple’s marital property, which would be subject to division, is about $12 million.
Marie said that since her legal bills are already well into the millions, “I could wind up with nothing.”
More than just another billionaire divorce spat, the Bosarge case offers a rare window into the highly secretive world of asset trusts in South Dakota, a state whose protective trust laws have made it a haven for billionaires and wealthy families around the world.
South Dakota is fast becoming a mini-Switzerland for the world’s rich. Analysts and local politicians estimate that $250 billion to $900 billion is now stashed in South Dakota trusts by the likes of Chinese billionaires looking to keep their fortunes out of reach of the government, Europeans looking to avoid taxes and Americans looking to shield wealth from spouses.
Marie said that when she and Ed married in 1989, they had little wealth. Soon after they were married, their house was repossessed. But Ed, an accomplished mathematician and former NASA contractor, eventually found success trading commodities.
In 1998, he and a business partner founded Quantlab in Bosarge’s house. Marie said she was one of the first employees, managing the main office in their dining room and smoothing relations between the co-founders and early employees.
As Quantlab grew, so did the Bosarges’ wealth. They built a 37,000-square-foot home in Houston called Chateau Carnarvon, which had its own hair salon, massage room, music room and theater. Some rooms were filled with gold leaf, tapestries and paintings.
They had five properties in Maine, one in Aspen and a luxury flat in London. They bought a succession of sailing yachts, including a 180-foot superyacht named Marie. Since she liked to play piano, they had a grand piano permanently fixed to the floor of the yacht “so it wouldn’t slide around,” she said.
Ed had a fondness for berets and antiquities. They bought $1 million tapestries and a $5 million Egyptian mummy, now in a Houston museum.
Marie, with her high cheekbones, arched brows and blond hair, had an affinity for Marilyn Monroe. She bought an array of Monroe memorabilia, including the actress’s hot-pink Ferragamos, the couch that she reclined on during her psychiatrist visits, a table from Monroe’s Brentwood, California, home, the red dress she wore in “Gentlemen Prefer Blondes,” and some of her bras.
“She was ahead of her time,” Marie said.
In 2012, according to the lawsuit, Ed began an affair with a Russian woman. He filed for divorce in 2017 by registered mail, Marie said.
Initially, Marie thought she would get half of everything they owned.
“I thought I would be fine,” she said.
Instead, she found out that Ed had been transferring their business and personal assets into a complicated series of trusts — first in Bermuda and then in South Dakota.
Initially, Marie was a beneficiary of the trusts, meaning she would receive income or benefits from the assets. But before their divorce, according to the lawsuit, Ed transferred the assets into new trusts that limited or shut out her interests. In keeping with South Dakota law, he was not required to notify her of the changes, according to the lawsuit.
Marie said she had little knowledge of the trusts during their marriage. She knew Ed had offshore trusts for many his business assets, since, as she put it “he always said only dumb people pay taxes.”
But she said she didn’t know that their personal belongings — from the yachts and mummy to a diamond necklace he gave her and even their tableware — were also locked up in a trust.
She said when she found out about the trusts, “I cried. I was in tears. I couldn’t believe some of the things, you know, that I found out.”
“He had a fiduciary duty as a husband to tell me,” she said. “I just can’t understand how it can be legal.”
Yet South Dakota’s trust laws may be difficult to challenge. Trusts in South Dakota are perpetual, meaning a wealthy family can put assets into a trust that are held in perpetuity, rather than for a limited period of time. The state also gives trusts sweeping privacy and asset-protections against creditors, business partners, lawsuits or ex-spouses.
Adding to its attraction, South Dakota has no inheritance or capital gains or income taxes.
Marie says she and her attorneys have had difficulty finding even basic details about the trusts because of the state’s strict information protections. South Dakota has put strict nondisclosure orders on all the attorneys and filings in the Bosarge divorce case.
The divorce was scheduled to go to trial in April, but has been postponed indefinitely by the coronavirus crisis. Marie said her legal bills have already topped $3 million. When asked what she will do if she gets only enough to pay her legal bills, she said “I don’t know. I don’t really have a plan.”
Jeff Sodoma, MPA, Esq. is a lawyer based in Virginia Beach, Virginia
Hello, there! Welcome to my blog. I will use this blog as a platform for my writing. I will write about topics in the legal world, certainly, as well as everything else under the sun, because I have many interests (and viewpoints). All views expressed in this blog, unless otherwise noted, are mine alone. One of my interests is music--my wife believes that I should go on "Beat Shazam" because I know so many songs--and I will be, from time to time, analyzing song lyrics and how they relate to the legal world.