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Elder Law Articles Elder Law Articles Document Transcript

  • GETTTING YOUR LEGAL AFFAIRS IN ORDER MAKE LIFE LESS COMPLICATED An assortment of brief articles on relevant topics for those of us who want to make things easier for ourselves and those we love, especially as we age. Compiled by Paul Shipp Managing Attorney of the Flint Hills Offices of Kansas Legal Services 1
  • TABLE OF CONTENTS WHAT IS PROBATE AND HOW DO I AVOID IT? ..................................................... 5 THE DEFINITION OF PROBATE ............................................................................. 5 THE MYTH OF A WILL ............................................................................................ 5 SHOULDN’T I JUST GET A TRUST? ....................................................................... 6 GOOD PLANNING IS KEY ....................................................................................... 6 CHECK THE NAMES OF ALL BENEFICIARIES .................................................... 6 PROPERTY WITH A CERTIFICATE OF TITLE ...................................................... 7 CASH AND BANK ACCOUNTS ............................................................................... 7 GIFTS ......................................................................................................................... 7 CONCLUSION ........................................................................................................... 7 PRESERVING YOUR WILL.......................................................................................... 8 DO NOT LOSE THE WILL ........................................................................................ 8 DO NOT CIRCULATE YOUR WILL ........................................................................ 8 TELL YOUR EXECUTOR YOU NAMED HIM/HER ............................................... 9 UPDATE YOUR WILL .............................................................................................. 9 TRANSFER ON DEATH DEEDS .................................................................................. 9 WHAT IS A TRANSFER ON DEATH DEED? ........................................................ 10 ONCE THE TRANSFER ON DEATH DEED IS FILED MAY I CHANGE MY MIND? ...................................................................................................................... 10 WHAT IF I SELL MY HOUSE BEFORE MY DEATH? .......................................... 10 WILL THIS COUNT AS A TRANSFER OF ASSETS AND CREATE A PROBLEM FOR MEDICAID ELIGIBILITY? ............................................................................. 10 I HAVE A MORTGAGE ON MY HOME. MAY I STILL USE A TRANSFER ON DEATH DEED? ........................................................................................................ 11 AFTER MY DEATH, WHAT NEEDS TO BE DONE? ............................................ 11 2
  • MY HOME IS IN JOINT TENANCY WITH MY SPOUSE. WE WOULD LIKE TO LEAVE OUR HOME TO OUR CHILDREN, AFTER OUR DEATH. CAN THIS BE DONE WITH A TRANSFER ON DEATH DEED? .................................................. 11 DOES THIS AVOID TAX CONSIDERATIONS? .................................................... 12 HOW DO I TRANSFER MY AUTOMOBILE? ........................................................ 12 HOW CAN I GET A TRANSFER ON DEATH DEED? ........................................... 12 THE DURABLE POWER OF ATTORNEY ................................................................. 12 A SAD STORY ......................................................................................................... 13 HOW IS A POWER OF ATTORNEY EXECUTED?................................................ 13 OTHER TYPES OF POWERS OF ATTORNEY ...................................................... 13 SOMETIMES A POWER OF ATTORNEY IS NOT APPROPRIATE ...................... 14 ELDERLY AMERICANS INCREASE USE OF CREDIT DEBT ................................. 14 THE STATISTICS .................................................................................................... 14 CHAPTER 13 BANKRUPTCY ................................................................................ 15 CHAPTER 7 BANKRUPTCY .................................................................................. 16 PROTECT YOUR SOCIAL SECURITY ...................................................................... 16 A SAD STORY ......................................................................................................... 16 FEDERAL LAW PROTECTS YOUR SOCIAL SECURITY INCOME .................... 17 WHAT CAN I DO? ................................................................................................... 17 BEWARE OF FINANCIAL EXPLOITATION ............................................................. 18 WHO ARE THE EXPLOITERS? .............................................................................. 18 BANKS SOMETIMES DON’T REPORT EXPLOITATION FOR FEAR OF BEING SUED ........................................................................................................................ 18 IF IT SOUNDS TOO GOOD TO BE TRUE, IT’S NOT ............................................ 19 PROTECT YOUR IDENTITY CHECK YOUR CREDIT REPORT.......................... 19 ELDER ABUSE; MORE LIKELY TO OCCUR IN THE HOME .................................. 20 INSTITUTIONAL ABUSE IS RARE ....................................................................... 20 ABUSE IN THE HOME IS MORE COMMON ........................................................ 21 AN EXAMPLE OF ABUSE IN THE HOME ............................................................ 21 YOUR REMEDIES! ................................................................................................. 22 ELIGIBILITY FOR MEDICAID .................................................................................. 23 3
  • WHO QUALIFIES? .................................................................................................. 23 SO HOW DOES UNCLE SAM DEFINE “POOR?” .................................................. 23 WHAT IF I AM MARRIED? DO BOTH OF US HAVE TO BE POOR? .................. 24 THE WELL SPOUSE CAN KEEP A GOOD AMOUNT OF COLD HARD CASH & INCOME! ................................................................................................................. 24 SPENDING DOWN .................................................................................................. 25 HOW DOES THE SICK SPOUSE SET THE WELL SPOUSE UP? ......................... 25 I HAVE MORE QUESTIONS, WHAT DO I DO? .................................................... 26 4
  • WHAT IS PROBATE AND HOW DO I AVOID IT? THE DEFINITION OF PROBATE Many do not realize that quot;Probatequot; is actually a verb, meaning it is something we quot;doquot; and not somewhere we go, or something we have. Probate can be used as an adjective describing a place or a thing, for example, a probate court or probate property. Originally quot;Probatequot; referred to a court procedure by which a will (Last Will and Testament) was/is proved to be either valid or invalid. The actual procedure of quot;Probatequot; is accomplished by a probate court. The probate court's job is to probate, quot;probate property.quot; Generally, the probate process involves collecting a deceased person's probate property, liquidating liabilities, paying taxes and distributing probate property to heirs. Sometimes the probate court has a will (Last Will and Testament) to probate, and sometimes the probate court is left to its own devices to figure what to do with the deceased's probate property. So, what is probate property, anyway? Just to put it bluntly, probate property is all the stuff people leave lying around, that nobody knows what to do with when they die. For example, you can’t drive your car after you have died, or spend the money in your bank account. All property you have that does not automatically go to someone upon your death is potentially probate (probateable) property. Most individuals do not want friends and family to have to deal with the hassle of probate court. Most do not want to deal with the hassle because it takes too much time, and by the time everyone is done with the probate process some items become “fees” instead going to family and friends. THE MYTH OF A WILL The biggest myth out there is that a will (Last Will and Testament) avoids probate! A will does not avoid probate. Probate is actually what wills are written for. The best will you will ever have, is the one you will never need. A good estate plan doesn't need a will. This does not mean that you “do not need a will,” as you should have one as a backup, just in case you missed something. Generally, there are two ways to avoid probate: 1) A Trust, or 2) Good planning. 5
  • SHOULDN’T I JUST GET A TRUST? Most of us will not have a trust. If you are fortunate to have lots and lots of money you can have an attorney, well versed in trust law, help you create a trust. A trust is an arrangement where a human, called a Trustee, handles a fictitious entity, called a Trust. The Trust is actually given all of the property you want to keep out of probate. The fictitious entity, the Trust, holds legal title to all property and the Trustee (the human being) has the ability/authority to do with the Trust property as he/she sees fit, so long as it fits within the rules outlined in the trust document (the paper that creates the Trust). There are differences of opinion in the legal community as to whether everyone needs a living trust. A basic living trust will cost more than $1,000, but more complicated trusts can cost thousands. Figuratively, when a person dies with all of his/her assets (property) in a trust then that person has nothing laying around; nothing is quot;laying aroundquot; because the Trustee can immediately do whatever the Trustee is directed to do in the trust document. Explaining the details of exactly how Trusts work is so complicated that most attorneys don't understand them. GOOD PLANNING IS KEY Because most of us will not have a Trust when we die we must practice good planning. A good planner can create a situation for those left behind that makes disposing of property simple and easy. It helps if you start with a list of all your assets. After you have a list you then must figure out a way to make it so that when you die the person you want to have the property can easily get it, without going to court. CHECK THE NAMES OF ALL BENEFICIARIES You should check the names of all beneficiaries on your life insurance policies. You should do the same on any retirement accounts (like annuities) or other accounts where you must name a beneficiary. If you name a person (or persons) as a beneficiary, who is dead, then the asset will go to the bottomless pit of probate court! 6
  • PROPERTY WITH A CERTIFICATE OF TITLE Many do not realize that use of quot;transfer/pay on death instrumentsquot; can be used for almost anything with a certificate of title. If you have real estate you can use a transfer on death deed (covered in previous article). If you have a car, truck, mobile home, or boat you can declare a transfer on death owner by so designating on the title of the respective item. The transfer is only effective upon your death. There are only a handful of states that allow this type of transfer for items like automobiles, and Kansas is one of them. CASH AND BANK ACCOUNTS You can also name a pay on death beneficiary at your bank, which is also only effective upon your death. Normally the person who is to get the property through such a transfer only has to show a certified copy of the death certificate, and it's theirs. Another way to avoid probate is the proper titling of property. You should check the title on any real estate and make certain, if you are married, that you have a designation of right of survivorship as that makes the property pass directly to the next person named on the title. GIFTS Gifts are another way to avoid probate. Giving away property while you're alive helps avoid probate for a very simple reason: if you don't own it when you die, it doesn't have to go through probate. Do not forget, however, that if you make large gifts, more than $11,000, to any one recipient in a calendar year will require the filing of a federal gift tax return. CONCLUSION With good planning you will only have some personal and sentimental items left laying around, and with some recent changes in the probate laws your family/friends could go down to your local court house, with your will, and take care of everything in a day or two, with a simple affidavit. 7
  • PRESERVING YOUR WILL If you have a Will you may probably wonder what you should do to preserve it. You may also wonder how often you should update it and what you can do to help your family out in the event your Will is needed. This article is being provided to assist you with making certain your will is preserved, at the same time this article offers tips on making things easier for your family, in the event the Will is needed. DO NOT LOSE THE WILL One of the biggest mistakes of families is the loss of the Will left by a loved one. It is vitally important that the Will is put with all of your “important legal documents.” Many times, at the death of a loved one, persons in the family are emotional, and unfortunately at those times family members may not be thinking as clearly. It is at this time that family members need all of the help they can get. It is a great help to make certain that the deceased family member has kept all “important legal documents” in one location, and that family members know where those papers are located. Important legal documents include the Will, deeds, financial documents, insurance policies, durable power of attorney, stocks, bonds, living will, car titles, trust documents, etc. All of the listed documents should be kept in a safe place, i.e. a safe deposit box, file cabinet or fireproof box. Most attorneys recommend that you tell at least two or three people where your Will and other important legal documents are located. DO NOT CIRCULATE YOUR WILL It is not recommended that you tell your family members what is written in your Will. A Will should never be copied and handed out, as that can cause hard feelings among family members, and could increase the possibility of confusion, especially if copies are circulating. It is also important that the original Will not be written on after it is signed (executed). Nothing should be stapled, taped or paper clipped to the Will. If the Will is marked and/or items are attached to it that contradict what the will states then it is possible that the Will could be invalidated. If changes need to be made to the Will an attorney should be contacted. Do not alter your Will in any way, including writing on it or crossing items out. Again, if the Will is altered it could be invalidated. 8
  • TELL YOUR EXECUTOR YOU NAMED HIM/HER In your Will you named an executor/executrix (the person to carry out your wishes). Your executor/executrix should be one of the people who are told where your Will and other important legal documents are located. UPDATE YOUR WILL How often should my will be updated? Updating a Will should be considered anytime there is a significant change in the family. Significant changes include divorce, death of a family member, marriage, the birth of a new child, loss or sale of real estate, loss or sale of other personal property specifically mentioned in the Will, entry into a long term care facility, etc. There is no magic time period, like every three, five or ten years; generally a review of all legal documents should occur at any time there is a major change in the family. When a review of the Will is done there should also be a review of each and every legal document in your possession. There should be confirmation that all of the bank accounts have pay on death beneficiaries named. All of the insurance policies should be checked and verified as to the named beneficiaries. The deeds of all real estate should be checked and ways to dispose of those items, besides a Will should be considered. TRANSFER ON DEATH DEEDS Everyone has heard a horror story about probate. The cost, the waiting, the forms – all designed to put someone (a Judge) in charge of overseeing the actions of the Administrator. Both are working to see that the instructions of the will are carried out. The system is designed to protect a number of interests – the family, the creditors, those left out of the will, charitable beneficiaries, etc. Each person in the process is doing his or her job. It is just that the system of checks and double checks takes a lot of time. Often, the family situation makes this process unnecessary. Fear of the probate process has brought forth many alternatives. In 1997, the Kansas legislature enacted a process to allow families with limited assets to transfer those items without using the probate courts. This transfer process uses a Transfer on Death Deed. 9
  • WHAT IS A TRANSFER ON DEATH DEED? The Transfer on Death Deed is a legal document on which you indicate who you want to receive your real estate upon your death. The Deed must be executed with the proper legal description. All current property owners must sign the Deed. The signatures of the owners must be notarized. The Deed must list all the persons who should receive a share of the property at your death. The Deed is then filed at the Register of Deeds office in the county in which the real estate is located. There is a small charge for recording the Deed. ONCE THE TRANSFER ON DEATH DEED IS FILED MAY I CHANGE MY MIND? Yes, you may revoke the Deed or change the beneficiary of your real estate at any time prior to your death. WHAT IF I SELL MY HOUSE BEFORE MY DEATH? Then the Deed takes no effect. It is a legal document that only transfers interest in your home at the time of your death. If you don't own the house when you die, then there is nothing to transfer. Also, since your beneficiaries don't own anything until your death, you don't need any permission from them to sell the property before your death. You are free to do anything that you could do prior to the execution of the Transfer on Death Deed. WILL THIS COUNT AS A TRANSFER OF ASSETS AND CREATE A PROBLEM FOR MEDICAID ELIGIBILITY? No. Again, nothing transfers before your death, so there is no transfer of assets. However, the use of a Transfer on Death Deed does not eliminate the possibility of Estate Recovery, if you need Medicaid payments for nursing home care prior to your death. Only in this situation would the State of Kansas have any interest in your home. 10
  • I HAVE A MORTGAGE ON MY HOME. MAY I STILL USE A TRANSFER ON DEATH DEED? Yes. The transfer only happens at your death. You are still responsible for the mortgage payments prior to your death. The mortgage, if unpaid, would still have to be paid by your beneficiaries, unless you have some type of mortgage insurance that will take over the payments. The Transfer on Death Deed cannot be used to avoid any obligation that may go with the property, such as liens, mortgages, taxes or other claims. AFTER MY DEATH, WHAT NEEDS TO BE DONE? After your death, a beneficiary will need to file a certified copy of your death certificate with the County Register of Deeds. This is generally sufficient to transfer title to your beneficiaries. They will then be allowed all rights of ownership and can sell or use the property and become responsible for property taxes, etc. MY HOME IS IN JOINT TENANCY WITH MY SPOUSE. WE WOULD LIKE TO LEAVE OUR HOME TO OUR CHILDREN, AFTER OUR DEATH. CAN THIS BE DONE WITH A TRANSFER ON DEATH DEED? Yes. The joint tenancy deed will transfer the home to the surviving spouse. The Transfer on Death Deed, signed by both spouses, will transfer the property to the children (beneficiaries) upon the death of the surviving spouse. At that point, the children will need to file a death certificate for both parents. You will need to decide how your children will own the house, either individually, as joint tenants or as tenants in common. These choices only matter at the death of the children and determine whether one child's share goes to the other children (in the case of joint tenancy) or to the deceased child's heirs (in the case of tenants in common). 11
  • DOES THIS AVOID TAX CONSIDERATIONS? No. However, in Kansas now there is no estate or inheritance tax for children inheriting, unless the estate is large enough to require Federal Inheritance Tax payments (estates in the millions of dollars in assets). HOW DO I TRANSFER MY AUTOMOBILE? There is a similar process for a car that is best used when you are paying your personal property taxes on the car. Use of an attorney is not required for the car transfer on death deed. Ask about it in the County Treasurer's office. HOW CAN I GET A TRANSFER ON DEATH DEED? You will need to contact an attorney in order to get the document prepared. It is a legal document and affects the future titled to your real estate. If you are age 60 or over, you may contact the Kansas ElderLaw Hotline at 1-888- 353-5337. You may also visit with the Senior Law Project attorney during their visit to a nearby Senior Center. There is no charge for the legal work of the Senior Law Project attorney, who is funded by your local Area Agency on Aging. THE DURABLE POWER OF ATTORNEY For most, the durable power of attorney is the most important (and cheapest) estate-planning instrument available. A durable power of attorney is an instrument that only takes affect upon the incapacity of its maker. Sometimes a durable power of attorney can be even more useful than a will. A power of attorney allows a person to make decisions for you and to act for you as your quot;attorney-in-factquot;; if designated your quot;attorney-in-factquot; can even act in your place for financial purposes when and if you ever become incapacitated. An attorney-in-fact is the person you name to make decisions for you when you are incapacitated. The attorney-in-fact is a legal term of art and does not have to be a person who is an attorney. Your attorney-in- fact will be either a family member or a close friend you can trust to make decisions for you. Many question why they would want someone to be able to make decisions for them, especially financial decisions, like refinancing or selling a home. 12
  • A SAD STORY I recently dealt with a situation where a husband wanted to refinance his home to take advantage of better interest rates before they go up, but when it came time to actually close on the refinancing agreement his wife was unable to sign off because she was incapacitated by a debilitating stroke. The fact is we never know what hand life will deal us. As a result of his wife being incapacitated he was not able to finalize the closing and he may not be able to take advantage of the current interest rates because he did not have the ability to make financial decisions on behalf of his wife, because she did not have a durable power of attorney. Because a Power of Attorney was never drafted, and she is currently incapacitated she cannot execute one now. HOW IS A POWER OF ATTORNEY EXECUTED? The law requires that a durable power of attorney (or any power of attorney) be executed before the person is incapacitated. If a durable power of attorney is not executed before incapacity occurs then the person will not be able to legally create a power of attorney and then no one can act for that person unless a court appoints a conservator or guardian. Creating a guardian/conservatorship is a court process that takes time, costs money, and sometimes the judge may not choose the person you would prefer to make decisions for you. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that he/she could implement immediately under a simple durable power of attorney. OTHER TYPES OF POWERS OF ATTORNEY A power of attorney does not have to be durable (go into effect upon incapacity) but may be limited or general and go into effect immediately. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself. What type of power of attorney you need should be discussed with a competent attorney and a decision as to how to proceed should be made by you with the advice of an attorney. The long and short of is that the power of attorney can avoid costly court procedures and prevent wasted time. 13
  • A power of attorney may also be either current or quot;springing.quot; Many powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until incapacity occurs (that’s a durable power of attorney). In such cases, it is vitally important that the standard for determining incapacity and the triggering event making the power of attorney effective be clearly laid out in the document itself. SOMETIMES A POWER OF ATTORNEY IS NOT APPROPRIATE While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint then it may be more appropriate to not have one. If you do not a power of attorney then your friends and/or family will have to go to Court and any decision that is made will be done with the probate court looking over the shoulder of the person who is handling your affairs. In other words, you may not be able to trust someone to make those decisions for you and in that event you should let the Court oversee the situation. ELDERLY AMERICANS INCREASE USE OF CREDIT DEBT According to AARP, there has been and will continue to be a dramatic increase in the number of elderly filing for bankruptcy. A reason for the increase in bankruptcy filing among the elderly revolves around the standard of living and how much longer the elderly are living. In other words, even though the physical well being of most elderly Americans has improved, one of the direct results has been a significant decrease in the overall financial health of older Americans, as more money is needed over a longer period of time. THE STATISTICS Most elderly who file for bankruptcy have two main characteristics: 1) very low incomes and 2) substantial credit card debt. Many who fit into the category are widows living alone whose main source of income is Social Security; about 50% of those described own their homes. The most shocking statistic is that only about five percent reported medical bills as part of their debt. This means that the elderly are taking on more and more unsecured debt to make ends meet. One study illustrated that in the previous 14
  • decade there was a 217% increase in the amount of credit card debt in the elder population, thus an increase in bankruptcy filings. Some have speculated that with the recent change in financial regulations by the Bush Administration requiring credit card companies to require its clients to pay at least 4% of the balance owed on their debt instead of the usual 2% means that some Americans will have credit card minimum payments double. If a widow is living on a fixed income and can only afford to pay $40 (2%) per month on a $2,000 balance, she will soon find herself in financial straits when the minimum payment increases to 4% of $2,000, or $80 per month. Fortunately, the new requirement to pay 4% instead of 2% of unsecured, outstanding balances will cause balances to go down more quickly and the doubled payment will decrease over time, so long as it is paid on time for a few months. Some fear that with the changes in minimum payments, that bankruptcy filing will continue to increase, and coupling that with the recent changes in bankruptcy law that it will be more difficult for the elderly to file for bankruptcy, and get out of the quagmire. Recently, President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changing bankruptcy law. The act went into effect on October 17, 2005. Before the act was signed into law many criticized the Bush administration, arguing that low-income, elderly persons with high medical costs would be hard hit by the new means test required under the new law. The AARP provided a publication for Elder Advocates and concluded that the criticisms were unfounded after a quot;careful analysisquot; of the act. The only persons affected under the new bankruptcy law will be those who have incomes above their state's median income, and they will be required to pass a means test before being allowed to declare bankruptcy; otherwise bankruptcy continues to be a viable option. There are primarily two types of bankruptcy available to consumers, Chapter 13 and Chapter 7; Chapter 11 bankruptcy is usually used only for businesses. CHAPTER 13 BANKRUPTCY Chapter 13, which has also been known as a wage earner's plan, is used by about 25% of consumers. In Chapter 13 consumers work out a periodic payment plan with their creditors to pay off their debts, or at least substantial portions of the debt. Generally the creditors expect to get more than they would have received from the debtor's estate if the debtor had sought a complete liquidation under Chapter 7 Bankruptcy. One of the important 15
  • benefits of Chapter 13 is that the debtor generally can continue to live in him or her home so long as the debtor complies with the terms of the Chapter 13 arrangement. If the debtor fails to comply, the Court treats the matter as Chapter 7 liquidation. The disadvantage of Chapter 13 to the debtor is that the debts can linger for years, burdening future income. CHAPTER 7 BANKRUPTCY Chapter 7 is the bankruptcy provision most frequently used by individuals. It involves the complete liquidation of a debtor's property, with the proceeds used to pay off the debts. However, the debtor can retain certain property that is specifically quot;exemptquot; under his choice of Federal law or her State's law, such as tools of one's trade, limited equity in a car and house, and some personal effects. If you use Chapter 7, you may lose your home (depending on your state) but it does enable you to get out from under the burden of debt more quickly. The secret is to beware of the pitfall of unsecured debt and avoid it like the plague, however, if you find yourself in financial straits, be aware that bankruptcy is still an option. PROTECT YOUR SOCIAL SECURITY When living on social security the disabled and the elderly have the impossible task of planning life around the impossible, a perfect financial outlook, where there are no surprises and all financial decisions are predictable. Unfortunately it is common for those living solely on social security to fall into the trap of not making ends meet because something unexpected happens on the financial front. Nothing is ever predictable and so unfortunately, when something unpredictable occurs, persons on social security inevitably have difficulty paying creditors. The problem is only exacerbated when a creditor gets a civil judgment against the individual and then garnishes a bank account. A SAD STORY I have dealt with the situation where an elderly lady had her bank account emptied because a creditor garnished it. Her only means of support was the social security funds in the account. When the garnishment occurred it made it impossible to pay bills, buy groceries and pay for prescriptions. It took 16
  • some time, but all funds were eventually recovered, the money was returned, but it was too late because some irreparable damage had been done, including losing her home. FEDERAL LAW PROTECTS YOUR SOCIAL SECURITY INCOME If you are living on Social Security, and you have a civil judgment against you it is vital that you protect your social security. The most important thing for you to remember is that there are federal laws on the books to prevent creditors from getting to your social security but you have to notify your creditors, who have civil judgments against you that you only have as income social security. WHAT CAN I DO? The most important thing you can do is send a letter directly to your creditor (keep a copy) tell them that your only source of income is social security. You should also send a letter to the Court where the judgment was obtained. When you send your letter to the Court make certain you reference your case number and specifically tell the Court what bank your social security funds are deposited in. You should provide the account number to the Court. The letter should be notarized and a copy should go directly to the creditor and your bank. You should save a copy of the letter for your records. If you accomplish all of the above then the creditor will not able to garnish your bank account, and your social security will be protected. If you are uncertain about how to do all of the above then you can contact an attorney and he/she will draft an affidavit with everything listed above in it. If you have been a victim of a wrongful garnishment you should seek legal advice because the money can be returned to you. The important thing is to protect your income. Do not ignore creditors, as they will do all they can to get their money. If you need assistance recovering social security income, and are over age you may contact the Kansas Elder Law Hotline at 1-888-353-5337 and you can be set up with an attorney in your area. You may also visit with the Senior Law Project attorney during their visit to a nearby Senior Center. There is no charge for the legal work of the Senior Law Project attorney, who is funded by your local Area Agency on Aging. 17
  • BEWARE OF FINANCIAL EXPLOITATION One of the most vulnerable groups in America today is the elderly. The elderly suffer all forms abuse, including physical and emotional abuse, however, an often forgotten form of abuse is that of financial abuse, also known as financial exploitation. WHO ARE THE EXPLOITERS? A recent survey of various financial institutions with elderly clients revealed that 83 percent of the institutions suspected that some of their elderly clients were victims of financial exploitation. Forms of suspected exploitation included exploitation of the elders' finances by substance-abusing relatives, roommates, neighbors, attendants at a nursing facilities, or boarders; other forms of exploitation include misappropriation of cash or belongings; and abuse of the power of attorney. BANKS SOMETIMES DON’T REPORT EXPLOITATION FOR FEAR OF BEING SUED A survey was done of a small number of banks in the New York City, and it revealed that the most common forms of financial exploitation of their elderly customers were forgery, misappropriation of funds, abuse of joint accounts, and abuse of the power of attorney. The responding banks said that the most common person taking advantage of the elderly client was a relative. It is shocking, but only 43 percent of the banks said they always reported the exploitation. Most banks never report the exploitation for fear of backlash or worry about lawsuits. You may know of someone who is being taken advantage of, and you should report it to law enforcement. Here are some clues that someone is being exploited financially: • Unusual activity in a bank account, including activity inconsistent with the victim's ability, such as the use of an automatic teller machine on an account of a bedridden elder, • New acquaintances of the elder expressing a desire to reside with the elder; • Loss of amenities, such as the disconnection of utilities, when the elder is known to afford such amenities; or sudden decline in health and/or hygiene of the elder, as money may be spent items wanted by the person exploiting the elder (illegal drugs or even frivolous purchases) and not the elder’s medication or other supplies; 18
  • • Depression, especially when an onset occurs when a new roommate or relative has moved in; • New signees or unusual activity on credit cards, for example, someone purchasing items that are of no use to the elder. • Suspicious signatures on documents, particularly if the elder is capable of writing as one who can sign for himself/herself can sign and needs nobody to sign for him or her. If you know of an elderly person who is being exploited financially and they live at home call 800-922-5330, and if they reside in a nursing home-type facility call 800-842-0078 and report it. IF IT SOUNDS TOO GOOD TO BE TRUE, IT’S NOT Some forms of financial exploitation occur when con artists trick individuals into participating in investment scams or bogus charitable organizations. Newsweek recently reported that 5 million elderly people are victims of financial exploitation every year, and that an enormous number of baby boomers are heading for retirement, putting America on the verge of an elder fraud epidemic. Many cases of exploitation go unreported by seniors because many are either too embarrassed about being duped or unaware that the theft is happening. Individuals should be cautious of participating in “too good to be true” investment opportunities. If it is “too good to be true” then it probably is not true. If you know of a scam or are a victim you should report it the Kansas Attorney General Consumer Hotline: (800) 432- 2310. Our country has experienced a number of recent disasters and many will come to you seeking financial assistance. It is best to stick to well-known organizations and decline to give out funds to organizations you have never heard of. PROTECT YOUR IDENTITY CHECK YOUR CREDIT REPORT Another form of financial exploitation occurs when identities are stolen. Often, the elderly neglect to check their credit reports to be certain nobody is taking advantage of them. Due to a recent change in the law, as of September 1, 2005, everyone can get a free copy of their credit report annually from all three of the major credit reporting agencies. Getting a copy of your credit report can be accomplished by one of three ways: 1) visiting 19
  • www.annualcreditreport.com 2) calling the toll free number of 877-322- 8228, or 3) completing an Annual Credit Report Request Form and mailing it to “Annual Credit Report Request Service” P.O. Box 105281, Atlanta, GA 30348-5281; the form can be obtained from www.ftc.gov/credit or can be provided to you by a local Kansas Legal Services Office. Always remember, “An ounce of prevention is worth a pound of cure!” and protect yourself and those around you. If you are age 60 or over and have more specific questions about protecting yourself or reporting financial exploitation please call the Kansas Elder Law Hotline at 1-888-353-5337, or you can set up a time to meet with a Senior Law Project Attorney in your area. The Senior Law Project Attorney is funded by your local Area Agency on Aging. ELDER ABUSE; MORE LIKELY TO OCCUR IN THE HOME Whether old or young abuse of all kinds (physical, sexual, emotional, or financial) is something one doesn't have to put up with. The Elderly are especially vulnerable to being abused, and many families are in denial that abuse of elders has occurred in their own homes. INSTITUTIONAL ABUSE IS RARE Occasionally we read of some shocking incident of elder abuse in a nursing home. We read of nursing home staff that has neglected to treat the elderly in their care, or even worse that have actively beaten or injured the person in a malicious way. Stereotypically many believe that the elderly are more likely to be abused by nursing homes, or other professionals who work in private professional institutions. Many elderly fear the nursing home or other institutional setting because of the belief that they will be abused and/or neglected in such a setting. Shockingly, the statistics paint a different picture. Did you know that most incidents of elder abuse do not happen in a nursing home, or in a nursing-home type facility? Shockingly, the reality is only about four percent of older adults live in nursing homes, and the vast majority of nursing home residents have their physical needs met without experiencing any abuse or neglect. Most elder abuse and neglect takes place within the confines of the home. The usual abusers are family members, other household members, and paid (home health) caregivers, the very persons society trusts the most. The most 20
  • common relationships of victims (60 and older) to alleged perpetrators were adult children (32.6%) and other family members (21.5%), according to a 2004 Survey of State Adult Protective Services. Even more shocking was the fact that the likely abuser is female. ABUSE IN THE HOME IS MORE COMMON There is no single pattern of elder abuse in the home. At times the abuse is a continuation of long-standing patterns of physical or emotional abuse within the family. It is more common that the abuse is related to changes in living situations and relationships brought about by the older person’s growing frailer and becoming more dependent on others (around them) for companionship and for meeting basic needs. AN EXAMPLE OF ABUSE IN THE HOME The following example was taken from a recent online publication addressing the topic of Elder Abuse; it outlines a common scenario: Agnes, 85 years old, lost her husband last year. Because of her own problems with arthritis and congestive heart failure, Agnes moved in with her 55-year-old daughter, Emily. The situation is difficult for all of them. Sometimes Emily feels as if she’s at the end of her rope, caring for her mother, worrying about her college-age son and about her husband, who is about to be forced into early retirement. Emily has caught herself calling her mother names and accusing her mother of ruining her life. Recently, she lost her temper and slapped her mother. In addition to feeling frightened and isolated, Agnes feels trapped and worthless. While it is understandable for the Elderly who are in a position similar to Agnes' to feel helpless, they should not, as there is help out there. While it is true that the infirm or mentally impaired are more vulnerable to abuse, those who do not have these obvious risk factors can find themselves in abusive situations as well. Do not tolerate abuse as there are legal remedies available, and those remedies should be utilized. 21
  • YOUR REMEDIES! 1. Call the police. If you are being subjected to physical abuse of any kind you should call the police. Doing such a thing could drastically change any given situation, and it could possibly land a family member or friend in jail, however, your safety is more important. 2. Contact Adult Protective Services. 800-922-5330 (Statewide Hotline, reporting only open 24 hrs a day). Explain the situation to them and have them open an investigation. 3. Report abuse to your doctor or other professional. If you cannot contact Adult Protective Services (because you are afraid to make the attempt) directly then you should tell your doctor and ask him or her to remain a confidential informant. You can usually make a report to your doctor in confidence and ask that the information shared remain in confidence. Taking this step protects you, as your doctor will not (should not/cannot) disclose what you told them to the family member or abuser. Under Kansas Law your physician is a mandatory reporter and will notify authorities. Usually Adult Protective Services will get involved and open an investigation. If abuse is confirmed then Adult Protective Services will work closely with other agencies (including law enforcement) in the community to ensure your health and safety. 4. Contact your local Family Crisis Center. The Kansas Coalition against Sexual and Domestic Violence is a resource available Statewide. Violence is not something that only affects younger individuals. If you want local help call toll free, 888-END-ABUSE (888-363-2287) and you will be connected with an advocate who can assist you with getting out of an abusive situation. 5. Talk to an Attorney. Call the Elder Law Hotline (Toll Free) 888- 353-5337. If you are a caregiver and believe you have been abusive, or are in danger of abusing an older person in your care, there is help available for you as well. You should find ways of giving yourself a break and temporarily relieving the tension of having total responsibility for an older person who is completely dependent on you. There are many local respite or adult day care programs to help you, contact your local Area Agency on Aging (North Central Flint Hills Area Agency on Aging, 800-432-2703) for help. If you suspect abuse, do not allow your fear of meddling in someone else’s business stop you from reporting your suspicions. You could be saving someone’s life, and drastically improve the quality of their life; call the police or Adult Protective Services. 22
  • ELIGIBILITY FOR MEDICAID The average cost of nursing home care in Kansas is more than most people can afford. Many individuals who need nursing home care worry themselves as to how they are going to pay for it. Others worry that they will have to waste their savings and assets. In the end many end up having to look to the government to pay for the nursing home care through Medicaid. Medicaid is a state and federal partnership that assists in providing health care to the poor. Medicaid is a welfare program, and in order to participate the recipient of its benefits must qualify. Many don’t understand how the program works and end up making very poor financial decisions. The secret is to not be afraid, or ashamed to apply for the benefit because the worst thing the government can tell you is, “No!” and then you are no worse off than you were before you applied. WHO QUALIFIES? This article is not going to give you a list of questions and tell you at the end if you qualify for Medicaid. Rather, it is going to attempt to explain how Medicaid eligibly works, and is a mere “scratch of the surface.” If you want to know if you qualify you have to apply. Before one makes an application you must have a medical need to be in a nursing home type facility. The applicant will be required to complete a CARE (Client Assessment and Referral Evaluation) screening prior to, or soon after admission. The trick is to apply for the benefit as soon as you need nursing home type care. Medicaid is a “welfare program,” meaning it is a program offered to the poor. This means that it is exclusively for those who need it, because they financially cannot afford the nursing home type care. Keep in mind that your definition of poor may not match the government’s definition of poor. There are many who are poor, and should have been getting the benefit a long time ago, but aren’t because they thought they would not qualify. On the opposite end of the spectrum there are others who have sought to beat the system, attempting to make themselves appear to be poor on paper, and get a benefit they do not qualify for. SO HOW DOES UNCLE SAM DEFINE “POOR?” In order to meet the qualifications of the Medicaid program the applicant’s income must be less than the private pay cost of the nursing home care (approximately $3,000, but it varies from year to year). Attribution of income to the applicant follows the “name on the check” rule, that is, income is attributed to the person to whom payments are made. For example, if the applicant is married and he receives a check made only to the applicant, that check is attributed to the 23
  • applicant. However, jointly held income-producing property is allocated pro rata. For example, if payment is made to the applicant and his or her spouse, the income is divided between the applicant and the spouse on a pro rata basis. If a Medicaid recipient is receiving income, most of the recipient’s income will be applied to nursing home expenses. The recipient will normally be allowed to keep a minimal amount of money each month for personal needs, like haircuts and personal hygiene products. The applicant for Medicaid cannot retain over $2,000 in non-exempt assets. In other words, the Medicaid applicant must not own more than $2,000 in non- exempt assets. Some examples of non exempt assets include cold hard cash, more than one automobile, more than one house, etc. Exempt assets include, the applicant’s home (which he or she resides in), a vehicle, household goods and personal effects, life insurance with a death benefit of $1,500 or less, materials used in an income-producing trade or business (including rental properties), and prepaid burial plans. Many have the notion that he or she must have less than $2,000 in cash before they can qualify, but this is not exactly true. Qualification can be very tricky, and that is why it is essential to just go ahead and apply. What is exempt and no-exempt can get very dicey, and if you have the money, it is recommended to get an attorney versed in Medicaid law to help you with the application. WHAT IF I AM MARRIED? DO BOTH OF US HAVE TO BE POOR? The quick answer to this question is emphatically, “No!” You may have heard of something called “Spousal Impoverishment.” Spousal Impoverishment is when one spouse is made to qualify for the benefit so that the other spouse is not left financially destitute. Sometimes the process is called “Division of Assets.” The goal of the process when there is a sick spouse, and a well spouse, is to set the well spouse up so that he or she is able to live independent of welfare as much as possible. A person (hopefully a qualified competent attorney) giving good advice on how to divide the assets between the sick spouse, and the well spouse, will help in making decisions about how to get as many exempt assets in the well spouse’s exempt column. This allows the well spouse to protect a portion of his/her income and resources without being impoverished. THE WELL SPOUSE CAN KEEP A GOOD AMOUNT OF COLD HARD CASH & INCOME! The most shocking surprise of many applicants for Medicaid is how much nonexempt property (like cold hard cash) the well spouse can keep. The amount varies from year to year, but in 2007 the maximum share was set at $101,640.00. 24
  • Once the resources of the couple have been divided, the well spouse will not be required to contribute any of his or her own exempt income or assets towards the cost of the sick spouse’s care. All other assets will have to be spent by the sick spouse. What sometimes happens is the couple will not apply for Medicaid, and deplete all of their nonexempt assets (cash), leaving both persons financially destitute, and then when the couple reaches the end of their rope, and finally applies for Medicaid, and get it; it is then they learn that they should have applied a long time ago and done a division of assets, and then the well spouse would have been able to keep more. Many do not realize that the well spouse may be able to keep a portion of the sick spouse’s income, for the well spouse’s own use. In 2007 the well spouse could keep up to $1,712 per month, as income. In addition, if there are shelter expenses (rent, mortgage, taxes, or insurance) in excess of a certain threshold then the well spouse may be entitled to an allowance that is even greater. There is also a special allowance given monthly for any dependent family members living with the at- home spouse, i.e. a disabled adult child or other dependant, like an adopted grandchild. The specific amounts are as not listed here because they are subject to change annually. SPENDING DOWN After the assets are divided between the well spouse and the sick spouse, the sick spouse has to spend all of the nonexempt assets, and his/her own assets, down to less than $2,000. Many have the thought that the sick spouse is required to just pay the nursing home bill every month until the money is depleted, but this is poor planning and bad advice. It is true that the sick spouse has to “spend down” his portion of the marital assets before Medicaid will kick in, however, those funds do not have to go solely to the nursing home. The sick spouse can set the well spouse up in a strong financial position, but the sick spouse has to follow the rules set by Medicaid so as not to be disqualified for the benefit. HOW DOES THE SICK SPOUSE SET THE WELL SPOUSE UP? The government does not want to leave the well spouse financially destitute, and so the answer to the question goes back to good advice from a qualified, competent attorney, especially when there is a nest-egg of non-exempt property. One question often asked is whether the Medicaid applicant can just give his or her assets away in order to spend down to the $2,000. The short answer to this question is “No way!” but the sick spouse can be very creative in how he or she spends that money, so that it is spent in such a way that it benefits the well spouse. 25
  • The applicant for Medicaid cannot transfer assets for less than adequate consideration, a fancy way of saying, selling the second car for $5 or the farm for a buck is not allowed. If this type of thing is done the applicant will be disqualified from the program. When determining eligibility, the government will use a “look-back period.” The look-back period can be anywhere from 36 to 60 months depending on if it is just a transfer (36 months) or a transfer to a trust (60 months). The transfers made within the look-back period may incur one month of ineligibility for uncompensated value. The penalty is calculated by dividing the value of the gift by the average monthly cost of nursing home care. The penalty period begins to run at the time of the transfer. So what is the secret? The secret is the sick spouse can spend down by providing for the well spouse. Does the well spouse need a new car? A new roof? A new wardrobe? Extra groceries (nonperishables)? A prepaid funeral? New furniture? New windows? It is smarter to spend money on those items instead of giving it all to the nursing home. This sets the well spouse up in a stronger financial position. How the money is spent should be guided with sound legal advice. I HAVE MORE QUESTIONS, WHAT DO I DO? Medicaid eligibility is a complicated matter. This article is not an exhaustive discussion. If you have more questions, or something is not clear, please contact the Kansas Department on Aging at 1-800-432-3535, or the Social and Rehabilitation Service Office near you, or the Kansas Elder Law Hotline at 888-353-5337. 26
  • NOTES 27
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  • The information in this booklet is provided as a public service by Kansas Legal Services, It was compiled by Paul Shipp (Managing Attorney in the Flint Hills Offices of Kansas Legal Services). It was written to provide you with helpful information regarding the subject matters covered. This publication must not be used as a substitute for the advice of an attorney. If you require legal advice then you should seek out a qualified, competent attorney. Distributed by the Flint Hills Offices of Kansas Legal Services, 104 South Fourth Street, Manhattan, KS 66502; Phone: 785-537-2943. For assistance with Elder Law Questions, Call: 1-888-353-5337 If you need any of the articles contained within this pamphlet in larger print or alternative media so that you can review it please feel free to contact the Flint Hills Offices of Kansas Legal Services directly. Anyone may copy and reproduce the information contained herein so long as no fee is charged to the recipient. Copyright © 2008 By Kansas Legal Services This publication may be reproduced and distributed provided it is done at no cost to the recipient. Kansas Legal Services offers Free and Reduced Cost Legal Services. If you need help with a legal problem you may want to contact us, we serve the entire state of Kansas: 800-723-6953 (Marilyn Harp, Executive Director) 29