Tips for Preventing, Detecting and Reporting Financial Abuse of the Elderly

As the economy worsens, incidences of elder financial abuse are reportedly on the rise. The elderly are particularly vulnerable to scams or to financial abuse by family members in need of money.

A recent study found that up to one million older Americans may be targeted yearly. Family members and caregivers are the culprits in 55 percent of cases, although financial losses are higher with investment fraud scams.

While it is impossible to guarantee that an elderly loved one is not the victim of financial abuse, there are some steps you can take to reduce the chances. One option is to have more than one family member involved in caring for the loved one. You can also encourage the elder to get involved in community activities to ensure he or she has a wide range of support. Using direct deposit as much as possible is also helpful. And of course you should always screen caregivers carefully and verify references.

Financial abuse can be difficult to detect. The following are some signs that a loved one may be the victim of this kind of abuse:

- The disappearance of valuable objects
- Withdrawals of large amounts of money, checks made out to cash, or low bank balances
- A new “best friend” and isolation from other friends and family
- Large credit card transactions
- Signatures on checks look different
- A name added to a bank account or newly formed joint accounts
- Indications of fear of caregivers

If you suspect someone of being financially abused, there are several actions you can take:

- Report the crime by calling your local Adult Protective Services and state attorney general’s office. File a police report.
- Explore options at your local probate court if your state has such courts. The court can intervene if someone in the family is misusing a power of attorney or their role as guardian or conservator.
- Contact advocacy organizations. The National Center on Elder Abuse offers guidance on how to investigate and seek justice for elder abuse. State laws vary, but some have elder abuse statutes and may be able to get restitution for breach of fiduciary duties.
- Try to get a temporary restraining order from a court while building your case.


Source: www.elderlawanswers.com, 4/6/09

New York State Approves New Type of Combination Life and Long Term Care Insurance

You may be interested to know that a new combination Life Insurance/Long Term Care policy has been approved in New York State. This policy differs from other combination policies in some important aspects. They are as follows:

1. The underwriting for the policy is based on mortality as opposed to morbidity. This means that someone who was denied for a normal LTC or combination policy may be approved for this policy.

2. Once the policy is activated, cash will become available without regard to actual LTC expenses. Other policies reimburse only for actual documented expenses.

3. There are no restrictions on how the cash is used. A typical LTC policy only covers certain types of expenses.

4. Annual cash benefits are available up to IRS limits ($102,200 in 2009).

This policy provides you with a way to obtain long-term care insurance for those clients who either are not able to obtain insurance due to underwriting issues or for those who view LTC insurance as “lost” premiums if they don’t use it.

Source: Craig Marcott, Inc., East Patchogue, 3/23/09 newsletter.

Five Star Rating System for Nursing Homes

The Centers for Medicare and Medicaid Services (CMS) has unveiled a one-to-five star rating system for nursing homes to help consumers evaluate a nursing home’s quality when selecting a facility. The ratings appear on the agency’s Nursing Home Compare Website at www.medicare.gov/NHCompare. A five-star designation means the facility ranks “much above average,” four-star indicates “above average,” three means “about average,” two is a “below average” ranking, with a one indicating that a facility ranks “much below average.” The rankings, which will be updated monthly, are based on a nursing home’s performance in three areas: quality measures, nurse staffing levels and health inspection reports.

In this first round of quality ratings about 12-percent of the nation’s nursing homes received a full five-star rating while 22-percent scored at the low end with one star. The remaining 66-percent of facilities were distributed fairly evenly among the two-, three- and four-star rankings. The ratings indicate that non-profit nursing homes deliver a higher quality of care than for-profit facilities, according to an analysis by USA Today (www.usatoday.com/news/health/2008-12-18-nursinghome_N.htm). When the rating system was announced earlier this year, Toby Edelman, senior policy attorney with the Center for Medicare Advocacy (www.medicareadvocacy.org/), said that two of three criteria CMS uses for the ratings – staffing data and quality measures – are “...self-reported by nursing facilities and are inaccurate.” Edelman said, “Relying on nursing homes to describe accurately how well they are doing...just doesn’t make sense.”

The National Citizens’ Coalition for Nursing Home Reform issued a statement (www.nccnhr.org/uploads/File/Ombudsman_statement_on_Five-Star-Release.pdf) saying it commends CMS for providing a new tool for long-term care consumers but urging consumers to “...not oversimplify nursing home selection.”

“In reviewing the Five-Star rating for a particular nursing home, consumers should compare the rating with their own experience during a personal visit to the home,” the Coalition warned. “For example, staffing data that is used for the rating system is based on the two weeks prior to the nursing home’s annual regulatory survey, an insufficient period of time to represent the usual staffing pattern of the home. Consumers should visit the home and review staffing data that is required to be posted for every shift, every day.”

For its part, the nursing home industry is not pleased with the rating system. In an opinion piece in USA Today, Bruce Yarwood, president of the American Health Care Association (www.ahcancal.org/Pages/Default.aspx), a long-term care industry trade group, called the new rating scheme “...a complex and inaccurate system that fails to provide the consumer with an appropriate tool to measure quality of care in our nation’s nursing homes.”

Source: 50+ Lifestyles, February 2009.

Elder Law and Estate Planning Seminars: TIME IS RUNNING OUT!
Thursday, March 26th at 10am at The Miller Place Inn OR Tuesday, March 31st at The Milleridge Inn. Call 631-234-3030 to reserve your seat for the seminar and lunch.

DO YOU HAVE THE RIGHT FIDUCIARY?

When creating an estate plan, an important decision is who to name as your fiduciary. A fiduciary is a fancy legal term for the person who will take care of your property for you if you are unable to do it yourself, such as the executor of an estate, the trustee of a trust, or an attorney-in-fact under a power of attorney. Your first instinct might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.

When naming a fiduciary, it is important to be able to trust the individual, which is why people often name family members as fiduciaries. However, problems can arise when a parent with two or more children names one child as a fiduciary. According to Tim O’Sullivan, an attorney from Wichita, Kansas, who spoke on the issue of family harmony at a recent conference for elder law attorneys, a child is often not the best fiduciary for several reasons:

- It is hard for a child to be completely objective.
- Children often disagree over many things, including how long the estate should take to complete, the selling of assets and the division of personal property.
- Children often don’t communicate with each other well.

O’Sullivan says that, in his experience, when one child is named as the fiduciary, problems arise between family members about one-quarter to one-third of the time.

An alternative is to hire a professional fiduciary. A professional fiduciary can be a bank with trust powers, a certified public accountant, or a trust company. The attorney who is drafting your estate planning documents can recommend a good one in your area. A professional fiduciary will charge a fee, but the fee should be explained ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person’s or institution’s guidance.

To ensure that your family has some input, you an include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.

Source: www.elderlawanswers.com, 2/3/09

VA to Repay Vets for Care

The Department of Veterans Affairs, stung by criticism that its slow action has forced some severely disabled veterans to spend themselves into poverty, has moved to implement a two-year-old law requiring it to reimburse such veterans for the cost of care at state-run nursing homes.

The VA sent letters to the nation’s 137 state veterans nursing homes – including ones in Stony Brook and St. Albans, Queens – saying they expect to begin processing reimbursements within 90 days. A bill signed into law by President George W. Bush in 2006 required the VA to reimburse the full cost for veterans with a 70 percent or greater service-connected disability who require nursing home care.

But although Congress specified that the law be implemented by March 21, 2007, the VA still has not begun issuing payments. A VA spokesman said no one was available to explain the two-year delay. The holdup has forced some elderly veterans to spend away their life savings before they could qualify for Medicaid payments to cover the $250-per-day cost of care at the Long Island State Veterans Home at Stony Brook University.

At least eight patients at Long Island State Veterans Home who would have been covered under the law have been forced to pay for some or all of their care out of pocket, according to Sen. Charles Schumer, who visited the nursing home last month. Two of the veterans have died while waiting for the law to come into effect.

About 80 percent of patients at the nursing home are on Medicaid, a hospital official said.

Some 4,800 Long Island veterans are more than 70 percent disabled and become increasingly likely to require nursing home care as they get into their 80s and 90s.

Long Island State Veterans Home director Fred Sganga said he was encouraged, but remains cautious. “We’ve been promised this won’t take more than 90 days,” he said. “But it’s not over until it’s over.”

Source: Martin C. Evans, Newsday, Wednesday, March 4, 2009

Davidow, Davidow, Siegel & Stern is dedicated to educating veterans to their rights and entitlement options in an effort to finance their long term care. As we read about the circumstances detailed in the above article, we can’t help but feel that this could have been avoided. Forcing a veteran, that has other options available, to spend themselves into poverty to finance their long term care is completely unnecessary. This is the reason we have been committed to getting the word out on another type of Veteran pension benefit that could also finance long term care. This under-used, special monthly pension benefit called Aid and Attendance, upon eligibility approval, could provide veterans with up to $1949 a month to help pay for long term care either at home or in an assisted living facility. Many veterans do not know this pension exists! We are accredited through the Veterans Administration to guide veterans and their families through the complicated process of obtaining this benefit. Come in to find out how we can help make a difference in a veteran’s life.

Bill Introduced to Freeze Estate Tax at 2009 Levels and to Eliminate Discounts on Nonbusiness Assets - Part II

Valuation discounts (particularly of the minority and marketability type) can significantly reduce what might otherwise have been the estate and gift tax values of transferred property. In contrast, the IRS often takes the position, on audit and in litigation, that application of these discount reductions should not be available for estate and gift tax purposes. For example, the Revenue Service has argued that a taxpayer may make gifts to a child of minority interests in property and incorrectly (in the Service’s view) claim lack-of-control discounts under the gift tax even though the taxpayer or the taxpayer’s child controls the property being transferred. The Service has also contended that a taxpayer, who contributes marketable property (such as publicly-traded stock) to a partnership (such as a family limited partnership) or other entity that he or she controls, may (when interests in that entity are transferred through the estate) inappropriately claim marketability discounts even though the heirs may be able to liquidate the entity and recover the full value by accessing the underlying assets directly.

H.R. 436 presents a standard for gift and estate tax purposes, with respect to discounts, that is sympathetic to those IRS articulated positions. Under the bill, in the case of the transfer of any interest in an entity, other than an interest which is actively traded:

“(A) the value of any nonbusiness assets held by the entity shall be determined as if the transferor had transferred such assets directly to the transferee (and no valuation discount shall be allowed with respect to such nonbusiness assets), and

(B) the nonbusiness assets shall not be taken into account in determining the value of the interest in the entity.”

The bill also contains a 10% “look-through” rule. Under this rule, if a nonbusiness asset of an entity consists of a 10% interest in any other entity, the bill would disregard the 10% interest and would treat the entity as holding directly its ratable share of the assets of the other entity. This rule would be applied successively to any 10% interest of the second entity in any other entity, thus seeking to prevent the circumvention of the “nonbusiness asset” discount disallowance through the use of a holding company structure.

Finally, the bill attacks “minority interest” discounts by providing that, in the case of the transfer of any interest in an entity other than an interest which is “actively traded,” no discount shall be allowed by the reason of the fact that the transferee does not have control of the entity if the transferee and members of the family of the transferee have control of the entity.

The Pomeroy bill’s proposed effective date is “date of enactment.”

The Association for Advanced Life Underwriting expects other proposals respecting the estate, gift and generation-skipping transfer taxes will follow this Pomeroy proposal. We will report promptly on them as they arise.

Source: AALU Bulletin No: 09-10, 1/23/09.

Bill Introduced to Freeze Estate Tax at 2009 Levels and to Eliminate Discounts on Nonbusiness Assets - Part I

House Ways and Means Committee member Pomeroy (D-ND) has introduced H.R. 436, “Certain Estate Tax Relief Act of 2008,” a bill that would freeze the lifetime estate tax exemption at $3.5 million per decedent (the 2009 level) and would retain the 2009 estate tax rate ceiling at 45%. The “carryover basis” rules that would have taken effect upon the repeal of the estate tax are themselves repealed under the bill. In addition, H.R. 436 would reduce the availability of valuation discounts for gift and estate tax purposes and, through a “clawback” provision, would effectively impose a higher rate on estates over $10 million. The Association for Advanced Life Underwriting strongly supports sustainable estate tax reform which can enable clients to plan with certainty; for example, reform with an exemption level of $2.5 to $3.5 million, a top rate of 45% and a reunification of gift and estate tax exemption levels. Some of the provisions have to be closely examined for potential negative impact on clients.

The bill contains a provision that would phase out the effect of the graduated estate tax rates and unified credit on estates over $10 million. Although the bill does not address directly the generation-skipping tax exemption (currently $3.5 million), the fact that the GST exemption is tied to the estate tax exemption would also raise the GST exemption under this bill. The bill would implement an idea that discounts to the value of an entity holding “nonbusiness” assets (including most assets not used in the active conduct of a trade or business) should be eliminated for transfer (estate, gift and GST) tax purposes.

Under current law, transfer taxes are imposed on the “fair market value” of the property transferred, which is generally defined as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” In the case of non-publicly traded interests, a hypothetical “willing buyer” would take into account numerous factors, including the degree of control of the business represented by the equity interest being acquired., as well as any limits on his or her ability to dispose of the interest in the future. Recognition of the existence of these factors by the courts has resulted in the allowance of often steep minority interest and marketability discounts to the value of such property. Other discounts include those applicable to transfers of partial interests in property and built-in capital gains. Next week, in Part II, we will go on to list some of the other provisions included such as Valuation Discounts.

Source: AALU Washington Report, 1/23/09

NEW POWER OF ATTORNEY LEGISLATION PASSED

On January 27th, Governor Paterson signed new power of attorney legislation as Chapter 644 of the Laws of 2008. This law makes dramatic changes, including a new statutory short form, to be notarized, and if a principal wants to authorize gifts, a new form that must be witnessed rather than notarized. As enacted, the law has a March 1, 2009 effective date, but we are hopeful that the date will be extended to at least September 1, 2009 by separate legislation, that is, by a chapter amendment. Look for subsequent newsletters as developments warrant.