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Thursday, June 22, 2017

How Safe is My Mother from Financial Exploitation?


 

Jennifer’s 80-year-old mother seemed to be running low on funds every month.  By the end of the month, she had no money for groceries.  Jennifer had helped her mother with a budget, so she thought her mother had plenty of money to make it through each month.  When she asked her mother to allow her to look at her bank statements, though, Jennifer discovered a series of automatic debits to several companies she did not recognize.  It turns out, her mother had signed up for monthly book delivery clubs, as well as recurring magazine subscriptions for magazines Jennifer knew her mother did not read.
Read more . . .


Monday, April 22, 2013

Protecting Seniors from Being Taken Advantage Of

Unfortunately, there have been an increase in reports of senior citizens being taken advantage of. There are various ways seniors are being taken advantage of, but one strikes particular interest with our firm; the deceptive and unfair methods of some Financial Advisors.

Being an Elder Care and Disability Law Firm, we are constantly in contact and working closely with Financial Advisors. They are a vital resource not only for us, but for our clients. We are confident in the Financial Advisors that we work with, but it is a shame that not many out there are honoring their commitment and efforts to help families.

In the link provided below there are a list of 7 guidelines that the Consumer Financial Protection Bureau suggest to seniors to follow to avoid choosing a bad financial advisor or product

Click Here

It is important to be aware and alert to suspicious activity. Senior abuse is a crime and will not go untolerated. If you suspect any senior abuse being taken place please contact the Department of Health and Services.

For more resources and information on senior abuse you may also check out this website : http://www.ncea.aoa.gov/


Monday, February 11, 2013

Helpful News for Trustees and Beneficiaries for Special Needs Trusts

Last fall the Social Security Administration quietly released the text of changes to the Program Operations Manual System -- the POMS. Though described as "clarifications" by Social Security, they were actually far-reaching changes that would have driven up the cost of trust administration, complicated the lives of beneficiaries and provided no additional protection for anyone involved.

Lawyers, trustees and advocates raised objections, and thankfully Social Security listened. Last week another set of changes were announced and the news is entirely good for everyone.

First, a word about POMS. This not very well known set of rules has far-reaching effect. It is a manual of instructions for Social Security eligibility workers, explaining how to treat all manner of documents, transactions and information obtained in the course of eligibility applications and reviews. You can look at the POMS online, but you will quickly see that it is a complicated, detailed and tightly-written set of rules.

The POMS is not law. It is not even a set of regulations governing Social Security eligibility. It has no legal force, and so one might think it is not important. Actually, it is more important than the law, at least in day-to-day decision-making. It is the document Social Security eligibility workers look to when faced with any wrinkle, confusion or question.

The changes last fall addressed several sections of the POMS dealing with how to treat expenditures from special needs trusts. Some of the changes focused on just "self-settled" special needs trusts, others included expenditures by "third-party" special needs trusts and perhaps even payments by family members or others who try to help recipients of Supplemental Security Income (SSI).

Among the changes posted last fall:

  • When family members paid for items for a trust beneficiary -- like medical supplies, clothing, transportation or pretty much anything else -- reimbursement from a trust would be treated as income to the beneficiary, even though nothing ever went through the beneficiary's hands or account. The same would have been true for trust payments to the family member's credit card.
  • Payments for caregiving could not be made to a family member unless the family member was certified in some way. (This change actually wouldn't have made much difference in Arizona, since a variation of this rule is already in place for Arizona Medicaid -- AHCCCS/ALTCS -- recipients.)
  • Travel expenditures for third persons to visit a trust beneficiary would have been prohibited in pretty much all circumstances.

What changed? Social Security initially removed the change governing travel, and then indicated that the others were under review. Reportedly the high-level reconsideration included senior staff and even out-going Social Security Commissioner Michael J. Astrue (who had already submitted his resignation from that post, to be effective February 13, 2013). Commissioner Astrue wanted the reconsideration completed before the end of his tenure, so Social Security moved very quickly to make changes.

Last week one of the reviews got completed, and the reimbursement policy changed. Not only did it change -- it actually changed to make good sense. Now POMS section SI 01120.200 E.1.d, "Reimbursements to a third party," reads:

"Reimbursements made from the trust to a third party for funds expended on behalf of the trust beneficiary are not income.

"Existing income and resource rules apply to items a trust beneficiary receives from a third party. If a trust beneficiary receives a non-cash item (other than food or shelter), it is in-kind income if the item would not be a partially or totally excluded non-liquid resource if retained into the month after the month of receipt. If a trust beneficiary receives food or shelter, it is income in the form of in-kind support and maintenance (ISM)."

Similar changes have been made in another, related section, SI 01120.201 I.1.f.

What does it mean?

  •  It means that an arrangement used by trustees all over the country, though without any specific authorization, has now been formally blessed by Social Security.
  • It means that the trustees of special needs trusts can reimburse family members who buy clothing, bedding, diapers, supplements, medical devices, transportation services, furniture -- all manner of items -- without risking loss of benefits from Social Security.
  • It means that all of those things can be done without limiting or losing benefits from AHCCCS and ALTCS (Arizona's version of Medicaid). It means that a system that worked well, was responsible and cost-effective, is now available again to trustees, beneficiaries and family members.

Word is that the other changes are in the works for release this week. Here's hoping all the changes will be as thoughtful and responsive to practical realities.


Monday, January 21, 2013

Can A Special Needs Trust Pay for things such as Credit Card Bills or Security Deposits?

   Administering a "special needs" trust can be a challenge. The rules often seem vague, and they occasionally shift. What may seem like a simple question might actually involve layers of complexity. Sometimes expenditures might be permissible under the rules of, say, the Social Security Administration, but not acceptable to AHCCCS, the Arizona Medicaid agency -- or vice versa. Trustees work in an environment of many constantly-moving parts.

Take these two examples:

Example 1:  Being the trustee of a Self-Settled Special Needs Trust for a sister. Can you pay her credit card bills?

Maybe (don't you just love lawyers' answers?). Let's break the question down a little bit.

    First, identify the trust as "self-settled." That means the money once belonged to your sister (it might have been an inheritance, or a personal injury settlement, or her accumulated wealth before she became disabled). That also means the rules are somewhat more restrictive.

We will assume that the bills are for a credit card in her name alone. If the card belongs to someone else, the rules may be different. Not many special needs trust beneficiaries can qualify for a credit card; when they can, it can be a very useful way to get things paid for (as you will soon see).

The next question requires a look at the trust document itself. It might be that it prohibits payments like the one you would like to make. That would be uncommon, but not unheard of. We will assume that the trust does not expressly prohibit paying her credit card bills.

What benefits does your sister receive? Social Security Disability and Medicare: Not a problem.But if it is Supplemental Security Income (SSI) and AHCCCS (Medicaid) there could be a problem.

    Next, we need to know what was charged to the credit card. Was it food or shelter? If it was used for meals at restaurants, or grocery shopping, or for utility bills, you probably do not want to pay the credit card bill from the trust. If you do (and assuming the trust permits it) then you will face a reduction of any SSI she receives, and possible loss of AHCCCS benefits.

Were the credit card bills for clothes, medical supplies, gasoline for her vehicle, even car repairs? There is probably no problem with paying the credit card statement. Even home repairs should be OK in most cases (just not rent, mortgage, utilities, etc. -- and the rules might be different if anyone else lives with your sister).

As you can see, what started out as a simple question turns out to have a lot of complexity. You might want to talk with a lawyer about your sister could use the credit card. When it works, though, it can be quite beneficial.

Example 2: Can a special needs trust pay the security deposit on a new apartment?

What an interesting question. We think the answer is probably "yes."

Once again we need to look at the trust document itself. Was it funded with your own money (like a personal injury settlement), or was the trust set up by a relative or friend with their own money? Is there language prohibiting payment for anything related to your apartment?

Assuming no trust language prohibits the payment, we can turn to the effect such a payment would have on your benefits. Social Security Disability and Medicare? Once again, no problem. SSI and AHCCCS/Medicaid? Your benefits might be reduced, but the payment can probably be made.

The key question is whether a "security deposit" is "rent." Arguably, it is not, rather it is an advance payment for cleaning. A special needs trust, even a self-settled special needs trust ,can pay for cleaning. Social Security's rules treat payment of "rent" as what's called "In-Kind Support and Maintenance (ISM)." This payment, we think, should not be characterized as ISM.

If it is not ISM, then it should have no effect on your SSI or your AHCCCS benefits. If it does, it might simply reduce your SSI payment (by the amount of the deposit, but capped at about $250). So long as you still get SSI it should not have any effect on your AHCCCS benefits.

Are these rules unnecessarily complicated? Yes. Does it sometimes end up costing more in legal fees to figure out what to do than it would to just pay the bills? Yes. Welcome to the complex world of Special Needs Trust Administration. Would it be possible to write simplified rules that allowed limited use of special needs trust funds while saving a bundle on administrative expenses? Yes, but please don't hold your breath while waiting for them.

 


Friday, January 11, 2013

New Scholarships in Georgia allowing Special Needs Children to attend Private schools with better care are changing lives!

http://www.daily-tribune.com/view/full_story/8961920/article-The-Georgia-Special-Needs-Scholarship-Program-is-changing-lives


Wednesday, January 2, 2013

The start to a new life for the Mentally Disabled

   It is a new strategy for Georgia, one of several states responding to mounting pressure from the Justice Department, which in recent years has threatened legal action against states accused of violating the civil rights of thousands of developmentally disabled people by needlessly segregating them in public hospitals, nursing homes and day programs.

   For a family with a loved one who is mentally disabled, one of the hardest decisions they will have to face is determining the proper care for their loved one. Until recently, many mentally disabled persons have been placed in hospitals to live for the rest of their lie. While they are under constant care, there are social elements that are missing when living in a hospitals. These social elements, such as sense of community, friendships, and acitivies like dancing, are essential for personal growth.

  The link below is a story that exemplifies the importance of providing better living options for those who need it most.

 

 

 

http://www.nytimes.com/2012/09/30/us/ending-segregation-of-the-mentally-disabled.html?pagewanted=all&_r=0


Monday, November 26, 2012

IRS Issues Long-Term Care Premium Deductibility Limits for 2013

IRS Issues Long-Term Care Premium Deductibility Limits for 2013

The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2013 taxes as a result of buying long-term care insurance.

Premiums for “qualified” long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 7.5 percent of the insured’s adjusted gross income. This threshold is rising to 10 percent on January 1, 2013, although it will remain at 7.5 percent for taxpayers 65 and older through 2016.

These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed a certain percentage of your income.)

However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2013. Any premium amounts for the year above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year Maximum deduction for year
40 or less $360
More than 40 but not more than 50 $680
More than 50 but not more than 60 $1,360
More than 60 but not more than 70 $3,640
More than 70 $4,550

Another change announced by the IRS involves benefits from per diem or indemnity policies, which pay a predetermined amount each day.  These benefits are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $320 per day (for 2013), whichever is greater. (The 2012 limit was $310.)

What Is a “Qualified” Policy?

To be “qualified,” policies issued on or after January 1, 1997, must adhere to certain requirements, among them that the policy must offer the consumer the options of “inflation” and “nonforfeiture” protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as “qualified” as long as they have been approved by the insurance commissioner of the state in which they are sold.

The Georgetown University Long-Term Care Financing Project has a two-page fact sheet, “Tax Code Treatment of Long-Term Care and Long-Term Care Insurance.” To download it in PDF format, go to: http://ltc.georgetown.edu/pdfs/taxcode.pdf


Monday, January 9, 2012

Happy 2012! Make Getting Your Affairs in Order Your Goal for the New Year

 

Each year, I make a list of goals that I want to accomplish for the year.  Some years, the goals have a theme – unfortunately, the theme is almost always the same:  lose weight, exercise more. . .

This year, I’m challenging you to make one of your New Year’s goals to get your estate planning affairs in order.  This is one goal that is easy to accomplish – I promise!

Here are 5 easy steps you can take to accomplish this goal.

1.         Get educated about estate planning.  Attend an estate planning workshop or two.  Estate planning attorneys like me are always giving seminars and workshops to educate people about estate planning.  Yes, these workshops help attorneys attract clients, but the goal of these workshops is really to educate people about the basics of estate planning so clients can have meaningful conversations and can make thoughtful decisions about their own estates. 

2.         Review your old documents.  Do you have a will or trust?  Advanced Directives or Healthcare Powers of Attorney and Living Wills?  Do you have a Durable Financial Power of Attorney?  How old are your documents?  If your wills name guardians for your children who are now 30 years old, your documents are definitely out of date.  Did you name an executor who is now dead or is your ex-wife named as your executor?  Probably time to revise your will. 

            What about your health care documents? If they were done in Georgia before 2007, you may want to update them to the Advance Health Care Directive that went into effect in 2007.  Who have you named to make healthcare decisions for you?  Is that person still the right person to make decisions for you?           

3.         Look at the ownership of all of your accounts.  How is your bank account titled?  Title indicates who owns the account.  Are you the sole owner or is it a joint account?  Who is the joint owner and is this someone who should be a joint owner of your account?  Here’s a link to a blog I wrote last year about the pros and cons of joint ownership of accounts:  http://bit.ly/xm8W5o

4.         Check the beneficiary designations of your accounts.  The beneficiary is the person who would receive the proceeds of the account at your death.  Is the beneficiary your estate?  If so, why did you make your estate the beneficiary?  Having your estate as the beneficiary pretty much ensures that your estate will have to be probated.  Is your beneficiary under the age of 18 or someone with special needs?  It may not be the best thing to give someone under the age of 18 a large inheritance.  Although the court will put protections in place for those under 18, those protections can be expensive and once the beneficiary has their 18th birthday, the money is all theirs – to spend however they wish. Yikes!

             If the beneficiary has special needs, a gift may mean they lose governmental benefits.

            Distributions from IRA’s and 401(k)’s have income tax consequences, so have you considered how your beneficiary designations will affect the tax liability of your beneficiaries?

5.         Make an appointment with an estate planning lawyer, a CPA and your financial advisor.  A good, comprehensive plan involves a group of professionals who can guide  and counsel you in making decisions about your estate. 

Will you accept thechallenge to make getting your New Years Goal getting your affairs in order?

Here's to a great new year!

 


Sunday, June 19, 2011

Trust Me - Who Should Be My Trustee?


Once I convinced my client, Mary, that a trust is a safe, and not so scary, way to protect herself and her stuff during any incapacity, she wanted to know who could possibly serve as a backup trustee?   According to Mary, her daughter was a kind and loving person who would do everything she could to support her mother, but her daughter’s financial skills were somewhat suspect.  Mary’s son is a busy family man with a great job, but he seems too busy to help Mary now.

Who could she choose? 

First, what does a trustee do exactly?  A trustee is a fiduciary, which means that he or she has a legal or ethical duty regarding the management of property for another.  Although a trustee may have either the duty to manage the trust assets or the duty to distribute those assets, many trustees both manage and distribute.  A trustee is usually responsible for investing the assets in the trust, distributing those assets to the beneficiaries according to the trust terms, and making sure any required accountings are prepared and that taxes are paid when necessary.

A trustee can be an individual who is a family member or friend.  Parents often want their children to succeed them as trustee.  When deciding whether to have a child as a successor trustee – or when choosing which child – be sure to be realistic about your adult child’s financial abilities.  Make sure that the person you choose understands that the trust will be managed for the benefit of beneficiaries – and that the trustee might not be one of those beneficiaries.  Be aware that a trustee might have a conflict of interest if the trust assets will eventually pass in part or whole to the trustee or his or her family members.  Also, it is best not to choose someone who has financial problems such as large debts, a failing business, or a looming bankruptcy.  Someone with financial issues might be tempted to borrow or use trust assets for his or her own benefit, despite the terms of the trust.

A trustee can also be a professional individual, like a lawyer or CPA, who can be hired to serve as a trustee.  Trustees may charge a percentage of the assets in the trust, or an hourly fee for any time spent administering the trust.

Of course, a bank or trust company may also serve as a trustee.  Generally, a bank or trust company will have a trust department and will hire employees to serve as Trust Officers with primary responsibility for administering the trusts.  The bank or trust company will charge a fee – usually a percentage of trust funds – to serve in that capacity.  Many banks and trust companies will only serve as a trustee if the assets in the trust are whatever minimum amount the bank or trust company deems appropriate for their business.

You can also choose co-trustees who will work together to administer the trust.  Sometimes it makes sense to have a professional or corporate trustee along  with a family member.  In that case, the family member’s role might be to make sure the professional or corporate co-trustee is aware of the needs of the beneficiary and is making investment and distribution decisions appropriate to the circumstances.

The best way to choose a trustee is to start with a list of relatives, friends, business or professional people you know, and banks and trust companies, and think hard about their ability to manage money.  Think about their character and ethics, and choose the best from that list. 


Sunday, June 5, 2011

Trust Me, It's Like A Little Red Wagon

 

Trust Me, It's Like A Little Red Wagon

Mary, an independent, strong-willed woman all of her life, realized that she might need help managing her finances.  She came to me with concerns that her memory might be slipping a little, and she was afraid that she might forget to pay her bills.  After assuring her that she was fine, I encouraged her to consider placing her assets in a trust so that she could write her own rules for management of those assets.  Mary was skeptical.  “Trusts are way too complicated for me!  I don’t even know what a trust is. And who would be the trustee?” 

I explained that a trust is very much like that little red wagon you had when you were a kid.   I have a picture of my sister hauling me around in a red Radio Flyer wagon when I was about three years old, and I remember using that wagon to cart my Barbie dolls to the neighbor’s house.  I also remember that I was the boss of that wagon, and would only let my best friend, Paula, touch that wagon and the Barbies in it.

So, how is a trust like that wagon?

A wagon is a receptacle – a place to put your “stuff”.  When you were a kid, you probably put all of your important toys, and things you found by the side of the road, inside that wagon.  You took the handle of the wagon and pulled the “stuff” wherever you wanted it to go.  You could take things out of the wagon, or put new things in the wagon, whenever you wanted.  When you got tired, you put down the handle.  If you wanted, you could allow someone else to take the handle and haul your stuff for you.  You made the rules for your wagon.

A trust is like that.  You put your assets – your adult “stuff” – in the trust.  While you are alive and well, you can be the trustee.  The trustee is the person that puts the stuff in the trust, makes sure the stuff in the trust is taken good care of, and takes the stuff out of the trust whenever necessary.  When you no longer want to be the trustee, or you can no longer serve as trustee because of incapacity or death, someone else will pick up the handle and serve as the trustee. 

As the trust maker, you get to decide the rules of the trust.  Just like you could decide who got to pull your wagon, you get to decide who will be the trustee.  You can also decide who will benefit from the things in that trust and when they can benefit. 

Unlike the rules you made up as a child, though, the rules of the trust are written in a document so that the person serving as trustee knows the rules and must legally follow those rules. 

In the next blog post, I’ll discuss how to decide who should be the trustee – who can pull your little red wagon.


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The Elrod-Hill Law Firm,LLC assists clients with Estate Planning, Veterans Benefits, Medicaid, Elder Care Law, Probate, Special Needs Planning and Pet Trusts in the North Atlanta area including the counties of Dekalb, Gwinnett and Fulton.



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