Firm Newsletter

January 2010

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.

July 2008

Dear Friends,
This is the sixth newsletter I have sent to clients since January, 2006. I hope you have found the topics in past newsletters to be interesting and helpful. 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

Personal Injury Cases: How is a value placed on losses sustained in an automobile collision?

Being involved in an automobile collision is a frightening experience. The memory of the collision and the fear it engenders can remain with you for years. If you have been injured in an automobile collision that is not your fault, the law requires the at fault driver’s insurance company to compensate you for what happened by paying you “fair, just, and reasonable damages” for your losses. One person’s idea of what is “fair, just, and reasonable” may differ significantly from another’s. What goes into the determination? Here are some factors that are considered.

• How much physical damage was done to each car? For example, a fender bender is not treated as seriously as a collision that causes substantial damage to one or both of the cars.

• What injuries were sustained? For example, in most cases, a broken bone will be considered a more significant injury than a sprained neck or back.

• Is there a permanent injury? Some injuries clear up after several months; others may have an impact on you for the rest of your life.

• Have you missed time from work?

• Do you have out of pocket medical expenses?

• How are your symptoms and injuries described in your medical records? For example, did you tell a health care provider that your neck really hurts, but the entry in the medical record says you are continuing to improve?

• Do your medical records before the collision reflect normal age related changes to the parts of your body injured in the collision?

• How have the injuries affected your life? For example, are you back to the same routines you followed before the collision, or have things changed for you, even if only slightly?

If you have been injured on snow or ice we would be pleased to meet with you. A thorough investigation of legal responsibility for an injury sustained on snow or ice almost always includes photographs of the area, weather reports showing precipitation and temperature during relevant time periods, and a determination of who is in control of the area where the injury occurred.

Medicaid planning: Government programs that help you stay at home.

Although Medicaid generally is thought of as the government program that pays for the cost of long term nursing home care, there are Medicaid and other government programs that assist elderly or disabled residents receive care at home. Most programs have income and asset eligibility limitations, but in some cases the limitations are surprisingly generous. Here are some of the more prominent programs.

• The Connecticut Home Care Program for Elders (CHCPE) is administered by the Department of Social Services. It can pay for home health aides, companions, adult day care, transportation to medical appointments, and related services that make it easier to stay at home.

• The CONNPACE program is administered by the Department of Social Services and provides assistance with the cost of prescription medicine.

• Medicare home care benefits are part of the coverage available through Medicare Part A. Services can include intermittent skilled nursing care, physical and occupational therapy, and home health aides.

• Medicare hospice services are part of the coverage available through Medicare Part A. Services include prescription medicine, nursing and other medical care, and grief counseling.

• Veterans and surviving spouses of veterans may be eligible for what is referred to as the Aid and Attendance Benefit. The Aid and Attendance Benefit is a monthly cash payment made to the veteran or surviving spouse. The program is administered by the Department of Veterans’ Affairs.

The goal of each program is to make it easier for an elderly or disabled family member to stay at home. We would be pleased to meet with you to help you assess whether a family member is eligible for one or more of these important government benefit programs.

Estate planning: I’m not old! Why do I need to do this?

Many people assume that a Durable Power of Attorney Instrument and Health Care Instructions are only needed by “old” people. The truth is that in today’s fast paced society anyone legally an adult (older than eighteen in Connecticut) should consider executing these documents.

• A Durable Power of Attorney Instrument authorizes others to make financial decisions for you if you become incapacitated as the result of an accident or an illness.

• Health Care Instructions authorize others to make health care decisions for you if you become incapacitated as the result of an accident or an illness, including decisions about the termination of life support systems.

• Young adults at college or work away from home should not overlook the need for these important documents.

• In the absence of a Durable Power of Attorney Instrument and Health Care Instructions it may be necessary for a family member to ask the Probate Court to appoint a conservator to make those decisions for you.

We would be glad to meet with you to prepare these important documents.

Real estate transactions: We’re thinking of buying a home together, but we’re not married.

It increasingly is common for non-married people to buy a home together. What happens if the relationship ends? Who stays? Who goes? What are the terms? A written agreement that sets forth the rights and responsibilities of each party will make the separation easier for both.

• Ideally, the agreement should be entered into prior to the purchase or shortly after the purchase.

• The agreement should cover subjects such as responsibility for expenses while living together, sharing appreciation and depreciation, allocating tax benefits and burdens, buy-out options, and a mechanism for resolving disputes.

• Statutory provisions applicable to the division of property when a marriage or civil union fails are not applicable, but may provide helpful guidance.

• Because of the potentially conflicting interests, the same law firm should not represent both parties.

• Although love, affection, and friendship abound in the beginning, it is important not to lose sight of the fact that the purchase also is a business transaction and should be treated as such.

We would be pleased to meet with you to help prepare an agreement that protects your interests and, at the same time, treats your partner with respect and sensitivity.

Business entities: Maintain your liability insurance.

An important reason for creating a business entity is to protect the owner from personal liability for claims arising out of the conduct of the business. Although this works in most instances, one area in which the owner continues to have personal liability is for negligent conduct committed by the owner.

• Example 1: Owner is driving the company car on company business and goes through a red light colliding with another car and injuring the other driver. In this example, the owner, because he is the driver, has personal liability for the injuries to the other driver that have been caused by the ownerÍs negligent driving; this is so even though the owner is driving the car on company business.

• Example 2: An employee is driving the company car on company business and goes through a red light colliding with another car and injuring the other driver. In this example, the owner has no personal liability for the injuries caused by the negligent driving of his employee, because the employee is acting as an agent of the company and not the owner.

• Be sure to maintain insurance sufficient to insure the owner’s potential liability in circumstances in which the owner’s negligent conduct may cause an injury.

We can help you structure your business entity in a manner that minimizes the circumstances in which the owner may have personal liability arising out of the conduct of the business.

Our job is to present your case persuasively to the other driver”s insurance company. If a reasonable settlement can not be negotiated with the insurance company, our job, then, is to present your case persuasively to the judge or jury who ultimately determines “fair, just, and reasonable damages” for your losses.

Very truly yours,
STEVEN P. FLOMAN

January 2008

Dear Friends,
This is the fifth newsletter I have sent to clients since January, 2006. I hope you have found the topics in past newsletters to be interesting and helpful. 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

Personal Injury Cases: How do snow and ice affect legal liability? Although Southern Connecticut winters are not as consistently filled with snow and ice as they once were, we still contend with snow or ice on many days and nights in the winter months. How does the presence of snow or ice affect legal liability?

• If you are the driver of a vehicle on a road that has snow or ice, you must use a sufficient extra degree of care to keep your vehicle under control.

• If you are the owner of a home, you must clean your sidewalk within a reasonable period of time after a storm has ended.

• If you live in an apartment building or condominium complex, the person in control must clean sidewalks and parking areas within a reasonable period of time after a storm has ended.

• If you are shopping in a complex of retail stores, the person in control of the complex must clean the sidewalks and parking areas within a reasonable period of time after a storm has ended.

If you have been injured on snow or ice we would be pleased to meet with you. A thorough investigation of legal responsibility for an injury sustained on snow or ice almost always includes photographs of the area, weather reports showing precipitation and temperature during relevant time periods, and a determination of who is in control of the area where the injury occurred.

Medicaid planning: What if the healthy spouse dies first?

As we live longer, it is increasingly common to find a healthy spouse providing a significant level of care at home for an ill spouse. Although the expectation is that the healthy spouse will outlive the ill spouse, that is not always the case. Since the ill spouse cannot live at home without the well spouse, what steps can be taken to protect the couples’ asset base if the healthy spouse dies first?

• Retitle most family assets so that they are owned by the healthy spouse.

• Change the Will of the healthy spouse to provide that on his/her death the assets pass directly to the children or to an “income only” trust for the ill spouse.

We would be pleased to meet with you, discuss your specific family and financial circumstances, and, if appropriate, prepare the documents needed to implement this important type of protection for your assets.

Estate planning: How do I protect the children of my prior marriage?

Second or third marriages with one or both spouses having children from a prior marriage are increasingly common. How do you assure that the children of your prior marriage receive a portion of your estate when you die?

• Trust your spouse to carry out your wishes at his/her death. There is an element of risk with this approach. What if the relationship between your spouse and your children becomes strained after your death?

• Provide for an outright disposition to your children of a portion of your estate at the time of your death. This will assure that your children receive the assets designated for them immediately after your death.

• Create a spousal trust for a portion of your estate at the time of your death. The terms of the trust will provide that your spouse receives the income from the trust during his/her lifetime, but the entire principal of the trust will pass to your children after your spouse’s death.

• Enter into a pre-nuptial agreement which contractually dictates the disposition of assets owned prior to your marriage.

We would be pleased to meet with you, discuss your specific family and financial circumstances, and develop a plan that appropriately balances the interests of your children and your present spouse.

Real estate transactions: Is a reverse mortgage right for you?

If you are short on cash, have limited income, and have substantial equity in your home, a reverse mortgage may be an option to consider.

• Available to homeowners 62 or older, with limits on the amount that can be borrowed determined by your age and the value of your home.

• An attractive feature of a reverse mortgage is that no repayment is required while the homeowner is alive and living in the home.

• Money can be taken as a lump sum or as a periodic income stream.

• Interest accrues on the amount that has been borrowed, thereby reducing the equity in the home over time.

• Interest rates and loan charges for most reverse mortgage products tend to be higher than conventional mortgages or lines of credit.

• Compare a conventional line of credit as an alternative way to access cash from your home, when needed.

We would be pleased to meet with you to help determine if a reverse mortgage is appropriate for you.

Business entities: Maintain protection for your non-business assets.

An important reason for creating a business entity is to protect the owner’s non-business assets if the business fails. A business owner must be vigilant to

• Avoid giving a personal guaranty for a business obligation, if possible.

• Be certain that personal assets are not titled in the name of the business entity.

• If you have multiple businesses it often is advisable to have separate business entities for each business. If one business fails, it will not take down the other.

• In giving financial statements for the business, avoid the temptation to include non-business assets on the statement as a way of enhancing the financial profile of the business.

Maintaining the protection of non-business assets requires ongoing vigilance by the business owner. If you have questions about a business transaction and how it may affect your non-business assets, we would be glad to meet with you.<BR
Insurance Company Bad Faith: Long term disability policies.

Many people have long term disability policies, either purchased privately or offered as a benefit of employment. What happens if you believe you are disabled, but the insurance company disagrees?

• The starting point for the analysis always is the language of the policy. The definition of “disability” may differ significantly from policy to policy.

• Any ambiguity in the policy is construed in favor of you, the insured. The legal doctrine that requires this is called contra proferentem, discussed in greater detail in our January, 2007 newsletter.

• If the policy is an employer furnished policy and the insurance company turns you down, federal law provides that a court review of the insurance company’s decision is limited to determining if the decision was reasonable based on the medical evidence the insurance company had in its possession.

• On the other hand, if the policy is a privately purchased policy and the insurance company turns you down, a court review of the insurance company’s decision is not so limited; rather, the court independently reviews all of the medical evidence to determine if you are disabled.

We can help you by discussing the options you have if the insurance company has denied your request for long term disability benefits.

I 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,
STEVEN P. FLOMAN

July 2007 (News Archive)

Personal Injury Cases: What if the driver who hits you has no insurance or inadequate insurance?

If the person who hits you has no automobile liability insurance or has only $20,000.00 of insurance (the minimum amount required by Connecticut law), your own insurance company steps into the shoes of the at fault driver. This insurance coverage is called “uninsured/underinsured motorists’ coverage”. It often is referred to by the shorthand “UM/UIM Coverage”. Literally, UM/UIM Coverage means that your own insurance company assumes the responsibility that should have been assumed by the at fault driver for any personal injuries you have sustained. When your insurance company makes a UM/UIM payment to you, it does not affect your rates.

• As an example, if you have $50,000.00 of UM/UIM Coverage, the at fault driver has no insurance, and the damages for your personal injury are $50,000.00, your insurance company is obligated to pay you $50,000.00.

• As another example, if you have $50,000.00 of UM/UIM Coverage, the at fault driver has $20,000.00 of insurance, and the damages for your personal injury are $50,000.00, your insurance company is obligated to pay you $30,000.00.

There are time limits for notifying your insurance company that you are making a UM/UIM claim. An important responsibility of our office is to assure that those time limits are complied with.

Medicaid planning: Should you give your home to your children now?

As with many legal questions, the answer is an annoying “sometimes you should, and sometimes you should not—it depends on the individual family circumstances.” Here are some of the considerations:

• If one spouse is in a nursing home, but the other spouse remains at home, the family home is an excluded asset any way.

• If one child has lived with you for at least the past two years, giving the home to that particular child may have no negative Medicaid consequences, but giving it to all children may have negative Medicaid consequences.

• What is the likelihood that one or more of the children who own your home will experience financial difficulty?

• What is the likelihood that one or more of the children who own your home will experience marital problems?

• If your home is sold by your children before your death, there almost certainly will be state and federal capital gains taxes that could have been avoided if you had not given the home to the children.

We would be pleased to meet with you to review your individual family circumstances and determine whether giving the home to your children, now, makes sense for you.

Wills, trusts, and estate planning: Who do you tell?

Estate planning documents such as Wills, Revocable Trusts (“Living Trusts”), Durable Power of Attorney Instruments, and Health Care Instructions are private documents. Unlike the deed to your home or the title to your car, your estate planning documents are neither recorded nor registered anywhere. The only people who know of the existence, content, or location of these documents are you, the attorney who supervised their execution, and anyone you choose to tell. In order to avoid confusion and uncertainty, it is advisable to tell the executor named in your Will, and the financial and health care agents named in your Durable Power of Attorney Instrument and Health Care Instructions where the original documents are located, and the name, address and phone number of the attorney who prepared the documents for you. It also is advisable to give your primary care physician a copy of your Health Care Instructions. We retain a copy of all estate planning documents you signed at our office in your client file, either as a paper copy or as a scanned electronic copy.

Real estate transactions: Will the closing really take place on the closing date?

If you are buying or selling a house, you assume that the closing date stated in the Sales Agreement means the closing actually will occur on that date. That is not always the case. Connecticut courts consistently have concluded that unless the Sales Agreement says “time is of the essence” there is a reasonable period of time after the date specified in the Sales Agreement within which to close. If it is essential for you that the closing occur on the date specified in the Sales Agreement, the Sales Agreement must, at a minimum, say that closing on that date is of the essence. If we meet with you before the Sales Agreement has been signed and you tell us that time is of the essence, we will assure that the appropriate language is included in the Sales Agreement.

Business entities: What happens if an owner dies or becomes disabled?

A written Agreement among business owners concerning what happens following the death or disability of one of them is critically important for both the family of the deceased/disabled business owner and the remaining business owner(s). This is true whether your form of business is a partnership, a corporation, or a limited liability company. Connecticut trial courts and appellate courts regularly describe cases involving disputes among business owners following the death or disability of one of them. A written Agreement spells out the rights and responsibilities of all owners in those circumstances, and, as a result, often avoids the uncertainty and disagreement that otherwise may arise when one owner dies or becomes disabled. We would be pleased to meet with you to review your individual business circumstances and help you formulate a workable agreement among the business owners.

Insurance Company Bad Faith: What happens if the company says they won’t cover you?

When you purchase liability insurance as an automobile driver, homeowner, or business owner, your expectation is that if you injure someone who makes a claim against you your insurance company will both defend you and, if necessary, pay the claim. What do you do if your insurance company says the claim that has been made against you is not covered by the policy? Your only recourse may be a suit against your own insurance company in which you ask a court to order your insurance company both to defend you against the claim, and, if necessary, pay the claim. If a court finds that your insurance company has acted in bad faith, the court has the discretion to award you attorney’s fees. If your insurance company says the claim that has been made against you is not covered by your policy, seek legal advice immediately—the insurance company may be incorrect in taking that position.

Very truly yours,
STEVEN P. FLOMAN

January 2007 (News Archive)

Personal Injury Cases: Who pays your medical bills if you are injured in an automobile collision.

Even if you have been injured in an automobile collision that is not your fault, the law does not require the other driver’s insurance company to pay your medical bills as they are incurred. Rather, initially, you are required to pay your medical bills by using your own insurance. If you have Medical Payments Coverage as part of your automobile liability policy, by law, your automobile Medical Payments Coverage must be used first. After you have used up any Medical Payments Coverage you have, you next must use your own health insurance, including Medicare if that is your primary health insurer. If you have no health insurance, some health care providers will accept monthly payment arrangements or Letters of Protection from our office. An important responsibility of our office is to assure that applicable insurance is accessed or other payment arrangements are made for the medical bills you incur.

Medicaid Planning: There still are important asset protections for a husband and wife if only one spouse requires long term care.

The 2006 legislative changes that I wrote about last year do not have any effect on Medicaid’s spousal asset protection rules. A very important protection concerns the family home. If one spouse is in a nursing home (“Institutionalized Spouse”) and the other spouse remains at home (“Community Spouse”) the family home is an excluded asset. That means the ownership of the home by either spouse does not affect the Institutionalized Spouse’s eligibility for Medicaid. With proper planning, it also means the State may not place a lien on the home for Medicaid benefits paid on behalf of the Institutionalized Spouse. In addition to the excluded status of the home, the Community Spouse is allowed to keep a car and ½ of the couple’s other non-excluded assets, but subject to a maximum of $101,640.00. The maximum increases every January 1. Even if one spouse is in a nursing home, appropriate planning allows the spouse in the community to keep the family home, a car, and up to a maximum of $101,640.00 in other non-excluded assets.

Wills, trusts, and estate planning: Living Wills and Health Care Representatives.

A Living Will expresses your desire not to be kept alive by a mechanical device if you are in a persistent vegetative state or in the final stages of a terminal illness. The Living Will also designates the individuals authorized to communicate your wishes to health care providers. Prior to October 1, 2006, the Connecticut Living Will statute called those authorized representatives, “Health Care Agents” and limited their authority to end of life decision making. A law passed by the Connecticut legislature that became effective on October 1, 2006 now calls the authorized representative a “Health Care Representative” It also expands the authority of the Health Care Representative to communicate your wishes for non end of life health care decision making. A Living Will signed before October 1, 2006 remains valid according to its terms. A Living Will signed after October 1, 2006 will include the expanded authority of the Health Care Representative. As with all estate planning documents, a periodic review to accommodate changes in the law or in your family or financial situation is advisable.

Real Estate Transactions: The importance of adhering to time limitations specified in the inspection contingency.

Residential real estate Purchase and Sales Agreements almost always contain an inspection contingency. The purpose of the inspection contingency is to allow the buyer time, after signing the Agreement, to have a professional inspect the property and report on actual or potential problems discovered. The reported results of the inspection often lead to additional negotiations, and, on occasion, an adjustment of the sales price. The Agreement will contain strict time limitations for conducting the inspection and reporting the results. Failure to adhere to the time limitations specified in the Agreement may constitute a waiver of the Buyer’s right to conduct the inspection or request a price adjustment based on the results. Whether you are a Buyer or a Seller, it is our responsibility to assure that the applicable time limitations are adhered to so that your rights pursuant to the Agreement are protected.

Business Entities: If you are a Connecticut company be cautious about choice of law provisions in any business Agreement you enter.

Almost all business Agreements contain language that says the law of a particular State governs the interpretation and enforcement of the Agreement. Since business transactions increasingly are conducted across state lines, the choice of law provision in a business Agreement has become extremely important. There are significant variations in the substantive and procedural law from one state to another. If you are a Connecticut business, you always will want to try to negotiate a provision stating that Connecticut law governs the interpretation and enforcement of the Agreement. If we represent you in a business transaction, it is our job to do our best to assure that any Agreement you sign states that Connecticut law governs the interpretation and enforcement of the Agreement.

Insurance Company Bad Faith: Contra proferentem can help you.

Contra Proferentem! Yes, it is an ancient Latin expression, but it can help you in disputes with your insurance company. Your insurance policy is a contract. The doctrine of contra proferentem is a rule of law that applies to the interpretation of contracts. It states that if there is an ambiguity or inconsistency in your insurance contract, the ambiguity or inconsistency is construed against the insurance company and in your favor. This is true whether the insurance contract is a life insurance policy, disability policy, homeowner’s policy, health insurance policy, automobile policy, or long term care policy. The doctrine was reaffirmed in several cases decided in 2006 by the Connecticut Supreme Court. If you have been turned down by your insurance company for a claim you have submitted, a careful review of the policy may allow us to help you obtain coverage.

Very truly yours,
STEVEN P. FLOMAN

July 27, 2006 (News Archive)

Personal Injury Cases: The importance of a timely investigation of the circumstances of a collision.

One would think that if you are driving along in your car and another car hits you from behind, that, alone, is sufficient proof that the collision is the other driver’s fault. That is not so. It still is the injured party’s responsibility to prove that the driver who hit you from behind did so because of his/her fault. There are a number of Connecticut court cases that emphasize it is the injured person’s burden to prove that the collision is the other person’s legal fault, even though it may seem obvious that is the case. This underscores the need for a thorough and prompt investigation of the circumstances of a collision in every personal injury case, even those that seem obvious.

Medicaid Planning: The look back period for gifts has been increased from three years to five years.

On February 8, President Bush signed legislation that makes radical changes in the Medicaid eligibility rules. One such change has to do with what is referred to as the “look back” period. The look back period is the number of years prior to the date of a Medicaid application with respect to which gifts must be disclosed. Prior to February 8, the look back period had been three years for all gifts, except gifts to a trust. The new law increases the look back period to five years for all gifts. This is a significant change in the law! Although the change in the look back period and other changes effected by the law make asset protection strategies for Medicaid planning more complex, there still are many creative ways to protect all or some of a family’s assets if a loved one faces the prospect of needing long term care.

Wills, Trusts, and Estate Planning:The importance of funding a revocable trust (“living trust.”)

One of the reasons an estate plan includes a revocable trust (sometimes called a living trust) is to bypass the probate administration process. That is because assets actually in the trust on the date of your death can be transferred to your beneficiaries by your successor trustee without needing the assistance of the Probate Court to do so. The process of transferring your assets from your individual name to the name of your trust is referred to as funding the trust. In order to accomplish this important purpose of the revocable trust, it is critical to verify that your trust actually has been funded.

Real Estate Transactions: A “letter of intent” or “memorandum of understanding” can have legal significance.

Occasionally, parties to a real estate transaction sign a writing they prepare called a “letter of intent” or “memorandum of understanding.” It often occurs in the early stages of a transaction and springs from a belief that the document is not legally binding, but merely expresses what the parties plan to do. There are many Connecticut court cases holding that such documents can be treated as legally enforceable contracts. You may end up stuck in a deal that does not contain the terms you expected.Therefore, it is not advisable to sign what you consider to be a non-binding letter of intent or memorandum of understanding without having the document first reviewed by your attorney.

Business Entities: Arbitration provisions in business agreements can be helpful, but need to be thought through with care.

Traditionally, legal disputes between two parties have been resolved by a judge or jury in a court proceeding. Increasingly, however, parties in business transactions are opting to have disputes resolved by binding arbitration. The assumed advantage of binding arbitration is that it can provide a quicker and less expensive resolution of a legal dispute. Nevertheless, there are circumstances in which a traditional court proceeding may be advantageous. Before entering into a significant business agreement, you should have legal advice about whether a court proceeding or arbitration is the better mechanism to protect your interests in the event a dispute arises about the agreement.

Worker’s Compensation: Social security offset is repealed.

For many years, Connecticut law had provided that if you are entitled to worker’s compensation benefits because of a work related injury, but, at the same time, you also are receiving social security benefits, your worker’s compensation benefits were reduced, dollar for dollar, by the amount of social security benefits you were receiving. Many perceived this as unfair and discriminatory. This session of the Connecticut legislature repealed that law. As a result, there no longer is a reduction in worker’s compensation benefits for any social security payments you may be receiving.

Insurance Company Bad Faith: In most cases, there is no independent claim for damages for the bad faith processing of a worker’s compensation claim.

The Connecticut Supreme Court recently ruled that in most cases bad faith processing of a worker’s compensation case does not give rise to an independent claim for damages against the insurance company. The Court concluded that the Connecticut Worker’s Compensation Act, itself, contains adequate remedies for a worker who has been treated unfairly by an insurance company that processes a worker’s compensation claim. The Courts of several other states that had considered the same question had reached a different conclusion, so the Connecticut Supreme Court’s decision was somewhat surprising. The Court did leave the door open for an independent claim by stating that if the conduct of the insurance company is extraordinarily egregious, an independent claim may be asserted.

Very truly yours,
STEVEN P. FLOMAN

January 2006 (News Archive)

PERSONAL INJURY CASES:

An “Offer of Judgment” is a litigation tool used when the “at fault” party’s insurance company is unwilling to offer reasonable compensation to settle your case. It is a statement filed with the Clerk of the Court saying you are willing to settle the case for a specified sum of money. The jury hearing your case is never told about the Offer of Judgment. If, after a trial, the jury awards you damages in an amount higher than the amount stated in your Offer of Judgment, you are also entitled to interest on the full amount awarded by the jury. This can be a significant additional amount of money. For many years, the interest rate had been 12%. In 2005, the Connecticut legislature lowered the interest rate to 8% for actions accruing after October 1, 2005. Although this is a significant reduction in the interest rate, an Offer of Judgment (renamed as an Offer of Compromise) remains an important litigation tool.

MEDICAID PLANNING:

Making gifts of assets to children on a monthly basis has been a relatively conservative and well recognized asset protection strategy. In 2005, the Connecticut legislature provided that a transfer of assets as a gift that results in a Medicaid penalty period also creates a debt in favor of the State by the recipient of the gift. The amount of the debt can be no more than the amount gifted or the amount of Medical assistance eventually paid by the State on behalf of the person who made the gift. There also are pending federal law changes that will have a substantial impact on gifting as a Medicaid planning strategy. If you have implemented a Medicaid planning strategy that incorporates gifts, it may be advisable to review it.

WILLS, TRUSTS, and ESTATE PLANNING:

The Connecticut legislature repealed the Connecticut State Gift Tax and the Connecticut State Succession Tax, effective as of January 1, 2005. In their place, the legislature instituted the Connecticut Estate Tax. The Connecticut Estate Tax has an unlimited exemption for property passing between spouses. The exemption for property passing to children or other non–spouse beneficiaries is $2,000,000.00, in the aggregate. Although $2,000,000.00 is a lot of money, the taxable estate includes the proceeds of life insurance policies, equity in your home, all retirement benefits, and all non–excluded gifts made after January 1, 2005. If your net taxable estate exceeds $2,000,000, the Connecticut Estate Tax applies to the full amount, not just the excess.

REAL ESTATE TRANSACTIONS:

For many years, Connecticut residents selling real estate have been required to complete a Residential Property Condition Disclosure Report, The Report requires the Seller to answer questions about the condition of the home, the repair history of the home, and whether the seller has knowledge of problems with specific areas of the home. The law requires the Seller to deliver the Statement to the Buyer prior to the closing. The importance of reasonable accuracy and honesty in the content of the Report has been emphasized in several cases decided by the Connecticut Appellate Courts in 2005. In those cases, the Seller was held responsible for problems first discovered after the closing, in part, because of information known by the Seller and not disclosed on the Report.

BUSINESS ENTITIES:

In 2005, there were several Connecticut Appellate Court cases in which creditors attempted to impose personal liability on the owner of a business entity. In one case, the entity was a Stock Corporation. In another case, the entity was a Limited Liability Company. In both cases, the Court declined to hold the owner personally liable. In reaching its decisions, the Court emphasized the importance of respecting the independent integrity of the business entity. There should be no commingling of funds, documents should be signed in a representative capacity on behalf of the entity, and regular meetings of owners should occur and be recorded. Failure to follow the formalities creates a possibility of personal liability on the part of the owner.

WORKER’S COMPENSATION:

In a series of cases involving police officers injured in automobile collisions with uninsured drivers, the Connecticut Appellate Courts have made it clear that a municipality that self insures for automobile liability purposes still must provide uninsured motorists’ coverage for its employees. However, the municipality is not required to provide more than the minimum amount required by state law which is only $20,000.00 per person and $40,000,00 per incident. In most instances, the police officer’s family uninsured motorist’s policy also will apply, and may provide an additional source of funds to cover the damages sustained in the collision.

INSURANCE COMPANY BAD FAITH:

All insurance policies require the insurance company to act in good faith. This is true whether the insurance policy is an automobile policy, health policy, disability policy, or life insurance policy. Connecticut also has a statute that defines certain insurance company behavior as an “unfair insurance practice.” Examples of statutory unfair insurance practices include false advertising, misrepresenting benefits available pursuant to a policy, and unfair claims settlement practices. Connecticut Appellate Court cases in 2005 continue to hold that if there is a pattern of similar unfair practices by the insurance company, such conduct may create an independent cause of action under Connecticut’s Unfair Trade Practices Act.

Very truly yours,
STEVEN P. FLOMAN