Father May Evict Based on Allegations of Elder Abuse

A New York housing court has ruled that a 72-year-old man may evict his son and his son’s girlfriend from his apartment because of the man’s fear of elder abuse. Huggins v Randolph (N.Y. Civ. Ct., Kings Cty., No. 91343/13, July 10, 2014).

Norris Huggins, the tenant of record in a Brooklyn apartment, sought to evict his son, Julian Randolph, and his son’s girlfriend, Ashley Richmond, alleging that he had been forced to flee his apartment because he was afraid of Mr. Randolph.  In an affidavit, Huggins said that "my son has in the past threatened my health and safety, forced me to sign a power of attorney and taken other steps to put me in fear of him."

Earlier this year the court granted Mr. Huggins’ motion for summary judgment against Mr. Randolph and Ms. Richmond.  Mr. Randolph subsequently moved out and Ms. Richmond tried to stay the eviction, arguing that Mr. Huggins lied in saying he feared his son, and that in any case he is free to return to the premises because his son is no longer there.

In rejecting Ms. Richmond’s motion, housing court judge Susan Avery finds that “in light of the many forms of elder abuse,” Ms. Richmond’s argument that Mr. Huggins no longer has anything to fear is “quite disturbing.” 

“[I]t is incumbent upon judges and court personnel to recognize the signs of possible elder abuse and act to protect society's vulnerable seniors," Judge Avery writes.  ". . . Mr. Huggins has the right to live in his home with the occupants of his choosing, or if he so chooses, no other occupants at all. Mr. Huggins is entitled to be the sole decision maker as to which guests, if any, are invited into his home."

For the full text of this decision, go to: http://law.justia.com/cases/new-york/other-courts/2014/2014-ny-slip-op-24184.html

SSA's Guide for Evaluating Special Needs Trusts Problematic

The Social Security Administration (SSA) recently instituted a nationally uniform procedure for review of special needs trusts for Supplemental Security Income (SSI) eligibility, routing all applications that feature trusts through Regional Trust Reviewer Teams (RTRTs) staffed with specialists who will review the trusts for compliance with SSI regulations. 

The SSA has also released its Trust Training Fact Guide, which will be used by the RTRTs and field offices when they evaluate special needs trusts.  In an article in the July/August 2014 issue of The ElderLaw Report, New Jersey attorney Thomas D. Begley, Jr., and Massachusetts attorney Neal A. Winston, both CELAs, discuss the 31-page guide in detail and caution that while it is a significant step forward in trust review consistency, it contains “a few notable omissions or terminology that might cause review problems.”  Following is the authors’ discussion of the problematic areas:  

• Structured Settlements. The guide states that additions/augmentations to a trust at/after age 65 would violate the rule that requires assets to be transferred to the trust prior to the individual attaining age 65. It does not mention that the POMS specifically authorizes such payments after age 65, so long as the structure was in place prior to age 65. [POMS SI 01120.203.B.1.c].

• First-/Third-Party Trust Distinction. Throughout the guide, there are numerous references to first-party trust terms or lack of terms that would make the trust defective and thus countable. These references do not distinguish between the substantial differences in requirements for first-party and third-party trusts.

• Court-Established Trusts/Petitions. This issue is more a reflection of an absurd SSA policy that is reflected accurately as agency policy in the guide, rather than an error or omission in the guide itself. This section, F.1.E.3, is titled “Who can establish the trust?” The guide states that creation of the trust may be required by a court order. This is consistent with the POMS. It would appear from the POMS that the court should simply order the trust to be created based upon a petition from an interested party. The potential pitfall described by the guide highlights is who may or may not petition the court to create a trust for the beneficiary. It states that if an “appointed representative” petitions the court to create a trust for the beneficiary, the trust would be improperly created and, thus, countable. Since the representative would be considered as acting as an agent of the beneficiary, the beneficiary would have improperly established the trust himself.

In order for a court to properly create a trust according to the guide, the court should order creation of a trust totally on its own motion and without request or prompting by any party related to the beneficiary. If so, who else could petition the court for approval? The plaintiff’s personal injury attorney or trustee would be considered an “appointed representative.” Would a guardian ad litem meet the test under the guardian creation authority? How about the attorney for the defendant, or is there any other person? If an unrelated homeless person was offered $100 to petition the court, would that make the homeless person an “appointed representative” and render the trust invalid? The authors have requested clarification from the SSA and are awaiting a response.

Until this issue is resolved, it might be prudent to try to have self-settled special needs trusts established by a parent, grandparent, or guardian whenever possible.

• Medicaid Payback/Administrative Fees and Costs. Another area of omission involves Medicaid reimbursement. The guide states that “the only items that may be paid prior to the Medicaid repayment on the death of the beneficiary of the trust are taxes due from the trust at the time of death and court filing fees associated with the trust. The POMS, [POMS SI 01120.203.B.1.h. and 203B.3.a], specifically states that upon the death of the trust beneficiary, the trust may pay prior to Medicaid reimbursement taxes due from the trust to the state or federal government because of the death of the beneficiary and reasonable fees for administration of the trust estate such as an accounting of the trust to a court, completion and filing of documents, or other required actions associated with the termination and wrapping up of the trust.

While noting that the guide, in coordination with training, “is a marked improvement for program consistency for trust review,” Begley and Winston caution advocates that “the guide should be considered as a summarized desk reference and training manual and not a definitive statement of SSA policy if inconsistent with the POMS.”

Annuities Purchased by a Medicaid Applicant Must Name State as Remainder Beneficiary

The Georgia Supreme Court recently issued an opinion regarding the requirement that an annuity purchased by a Medicaid applicant must name the state as a remainder beneficiary.  The opinion, though, is instructive as much for its deference to CMS and state agency statutory interpretations, as it is for its holding. Reversing an appeals court decision, the court ruled that, because it finds that the federal statute is ambiguous, annuities benefitting a Medicaid applicant need to name the state as a remainder beneficiary in order to avoid a transfer penalty. Cook v. Glover (Ga., No. S13G1127, July 11, 2014).

Jerry Glover purchased an annuity for himself shortly before applying for Medicaid. He later refused to name the state as a remainder beneficiary on the annuity, the state approved his application but assessed a seven-month transfer-of-assets penalty against him.

Mr. Glover appealed, arguing he wasn’t required to name the state as a remainder beneficiary. After a hearing, an administrative law judge upheld the penalty, and a trial court affirmed the decision. The Georgia Court of Appeals reversed. Although agreeing that a plain reading of 42 U. S. C. § 1396p (c) (1) (F) standing alone clearly required that the state be named a remainder beneficiary of any annuity, the Court of Appeals interpreted subsection (G) to unambiguously remove actuarially sound annuities benefitting Medicaid applicants from the requirements of subsection (F) by removing them from the definition of “assets” with respect to a transfer of assets.  

The Georgia Supreme Court reversed, holding that the penalty period is valid. The court examined the statutory language regarding annuities and found that the relationship between the two subsections is not clear and unambiguous.  Because the federal law was vague and ambiguous, the court ruled that the state Medicaid agency's interpretation, which is consistent with the Centers for Medicare and Medicaid Services' interpretation of the statute, is "reasonable and entitled to deference."

For the full text of this decision, go to: http://www.gasupreme.us/sc-op/pdf/s13g1127.pdf

California Heir Liable to Reimburse State for Mother's Medicaid Benefits

A California appeals court has ruled that the heir of an estate who sold her interest in her mother’s house to her brother is liable to the state for reimbursement of her mother’s Medicaid expenses. Estate of Mays (Cal. App., 3d, No. C070568, June 30, 2014).

Medi-Cal (Medicaid) recipient Merver Mays died, leaving her house as her only asset. Ms. Mays’ daughter, Betty Bedford, petitioned the court to be appointed administrator of the estate, but she was never formally appointed because she didn’t pay the surety bond. The state filed a creditor’s claim against the estate for reimbursement of Medi-Cal expenses, and the court determined the claim was valid.  A dispute arose between Ms. Bedford and her brother, Roy Flemons, over ownership of the house. After the court determined Mr. Flemons owned a one-half interest in the property, Ms. Bedford and Mr. Flemons entered into an agreement in which Mr. Flemons paid Ms. Bedford $75,000 and transferred the house to his name.

The state petitioned the court for an order requiring Ms. Bedford to account for her administration of Ms. Mays’s estate. The court determined Ms. Bedford was liable to the state for the amount she received from Mr. Flemons because although she wasn’t formally appointed administrator, she was acting as administrator. Ms. Bedford appealed.

The California Court of Appeal, 3rd Appellate District, affirmed on different grounds. The court ruled that Ms. Bedford cannot be held liable due to her failure as administrator of the estate because she was never formally appointed administrator. The court held, however, that Ms. Bedford is liable as an heir of the estate who received estate property. According to the court, Ms. Bedford’s settlement with Mr. Flemons was “essentially an end-run around the creditor’s claim and the estate process” and “the $75,000 payment represented proceeds of the estate that would otherwise be available to satisfy creditors’ claims.” 

For the full text of this decision, go to:http://www.courts.ca.gov/opinions/nonpub/C070568.pdf

Caregiver Payroll Service

More and more families are hiring private-duty caregivers, meaning that an increasing number are facing a new dilemma – how to deal with the payroll, tax, and labor law aspects of household employment.  While everyone wants to follow the law and do the right thing for the caregiver, it’s a tall task because of the complexities and administrative burdens of being an employer.

Luckily, there is a service -- Care.com® HomePaysm, Provided by Breedlove -- that can guide busy families through all the complex tax and payroll requirements of hiring outside help while eliminating every piece of tedious paperwork.  For more than 20 years, HomePaysm has been handling payroll, tax and Human Resources (HR) obligations for families -- more than 55,000 families to date -- with guaranteed accuracy.  From paydays to tax time and all points in between, these folks take care of—and assume full accountability for—every payroll obligation, including, but not limited to:

• Manage payroll calculations, prepare paystubs, and process Direct Deposit payroll each payday;
• Prepare and file state and federal employment tax returns;
• Prepare and distribute Form W-2;
• Prepare and file Form W-2 Copy A/Form W-3 each January;
• Prepare Schedule H to be filed with Form 1040.

If you would like more information, or would like to receive one of a limited number of coupons that my office received so that clients can start using HomePaysm and receive a waiver of the registration fee (a$100 value), please email us.

There are also many fine bookkeepers, accountants, and payroll services locally.  If you would like a local referral, please let us know! 

Inherited IRA's are not Exempt from Creditors in Bankruptcy

In a unanimous opinion, the U.S. Supreme Court has ruled that funds held in an inherited individual retirement account (IRA) are not exempt from creditors in a bankruptcy proceeding because they are not retirement funds. Clark v. Rameker (U.S., No. 13-299, June 13, 2014).

Heidi Heffron-Clark inherited an IRA from her mother. Her inherited IRA had to be distributed within five years, and Ms. Heffron-Clark opted to take monthly distributions. During the five-year period, Ms. Heffron-Clark and her husband filed for bankruptcy and claimed that the IRA, worth around $300,000, was exempt from creditors because bankruptcy law protects retirement funds.

The bankruptcy court found that the IRA was not exempt because an inherited IRA does not contain anyone's retirement funds. Ms. Heffron-Clark appealed, and the district court reversed, ruling that the exemption applies to any account containing funds originally accumulated for retirement. The Seventh Circuit Court of Appeals reversed, holding that the money in the IRA no longer constituted retirement funds, while the Fifth Circuit Court of Appeals decided in In re Chilton (674 F.3d 486 (2012)) that funds from an inherited IRA should be exempt. The U.S. Supreme Court agreed to resolve the conflict.

The U.S. Supreme Court affirmed the Seventh Circuit's decision in Clark, holding that the funds held in inherited IRAs are not "retirement funds." In a unanimous opinion delivered by Justice Sotomayor, the Court finds that funds in an inherited IRA are not set aside for retirement because the holders of inherited IRAs cannot invest additional money in the account, are required to withdraw money from the account even though they aren't close to retirement age, and may withdraw the entire balance of the account at one time.

If you want to ensure that your IRA's are inherited by your heirs and remain exempt from their creditors, see an elder law attorney.  

For the full text of this decision, go to: http://www.supremecourt.gov/opinions/13pdf/13-299_mjn0.pdf

New Guides Help Those Appointed to Manage Someone Else's Money

Have you been officially asked to manage someone else's money? For example, have you been named as an agent under a power of attorney or appointed trustee of a trust? As our society ages, more and more people are being asked to take on these roles, but they come with both powers and responsibilities, and problems can arise.

If you're not a lawyer (and even if you are), the responsibilities of these positions can seem daunting. Luckily, the federal Consumer Financial Protection Bureau – the only federal office dedicated to the financial health of Americans age 62 and over -- recently released four guides for people who have been given the responsibility of managing money or property for someone else. The guides, which are free, are collectively called “Managing Someone Else's Money.”

The Managing Someone Else's Money guides are designed to help non-lawyers; they walk you through your new responsibilities, teach you how to protect the person in your care from financial exploitation, and give you links to additional resources. For example, the guides tell you, the agent, what to do to avoid problems with family and friends who think you are doing a bad job. The guides also help you coordinate with other agents who may have been assigned to work with you and any outside professionals whose help you may need (such as lawyers, brokers, and financial planners).

The guides include help for agents under a power of attorney, court-appointed guardians of property and conservators, trustees under a revocable living trust, and representative payees and VA fiduciaries (a person who manages someone else's government benefit checks). All four types of agents are fiduciaries, which means they owe four special duties to the people for whom they are managing money or resources: the duty to act in the individual’s best interest, the duty to manage the individual’s money and property carefully, the duty to keep the individual’s money and property separate from their own, and the duty to keep good records. Every guide includes detailed information about these four duties.

If you have been assigned to be an agent for someone, that assignment should come with a document (power of attorney, trust document, court order, etc.) that will tell you what you can and cannot do. It is important to stay within the limits that document sets for you. These four guides, which were developed for the Bureau by the American Bar Association Commission on Law and Aging, are not a substitute for legal counsel, but they can help keep you on the straight and narrow.

To download one or more of the guides, go to:
 http://www.consumerfinance.gov/blog/managing-someone-elses-money/

The Obligations of a Fiduciary

When you need someone else to care for money or property on your behalf, that person (or organization) is called a fiduciary.  A fiduciary is a person or entity entrusted with the power to act for someone else, and this power comes with the legal obligation to act for the benefit of that other person.

Many types of positions involve being a fiduciary, including that of a broker, trustee, agent under a power of attorney, guardian, executor and representative payee. An individual becomes a fiduciary by entering into an agreement to do so or by being appointed by a court or by a legal document.

Being a fiduciary calls for the highest standard of care under the law. For example, a trustee must pay even more attention to the trust investments and disbursements than for his or her own accounts. No matter what their role is or how they are appointed, all fiduciaries owe four special duties to the people for whom they are managing money or resources. A fiduciary’s duties are:

• to act only in the interest of the person they are helping;
• to manage that person's money or property carefully;
• to keep that person's money and property separate from their own; and
• to keep good records and report them as required. Any agent appointed by a court or government agency, for example, must report regularly to that court or agency.

Remember, your fiduciary exists to protect you and your interests. If your fiduciary fails to perform any of those four duties or generally mismanages your money or affairs, you can take legal action. The fiduciary will probably be required to compensate you for any loss you suffered because of his or her mismanagement.

Medicaid Applicant's Retirement Benefits May Be Counted as Available Income Despite Contrary Court Ruling

A New York trial court upheld a Medicaid agency's finding that an applicant's Social Security and pension benefits should be included in the applicant's available income even though the court had ruled in a guardianship proceeding that the benefits were unavailable for Medicaid eligibility purposes. Freedman v. Commissioner of the State of New York Dept. of Health (N.Y. Sup. Ct., Richmond Cty., No. 85037/13, March 6, 2014.

The court appointed Gay Lee Freedman as guardian of the person and property of her sister, Mary Backer. The court ordered that the funds in the guardianship account and any income the guardian received, including Social Security and pension benefits, would be "deemed" unavailable for purposes of Medicaid eligibility.

Ms. Freedman applied for Medicaid benefits on Ms. Backer's behalf. The state determined she was eligible subject to a net available income that included her Social Security and pension benefits. Ms. Freedman appealed, arguing her net available income should not include those benefits. After a hearing, the state upheld the decision, and Ms. Freedman appealed.

The New York Supreme Court, a trial court, affirmed the decision, holding that the court must show deference to the state's interpretation of its rules. According to the court, as long as the agency's decision is neither legally impermissible nor violates "the petitioner's constitutional rights and protections, the court is powerless to alter that determination on the strength of what...the court might do in a similar situation."

For the full text of this decision, click here.

Elderly Couple Awarded $1.6 Million over Failed Investments

A financial arbitration panel has ordered  a subsidiary of John Hancock Financial Network to pay nearly $1.6 million to an elderly California couple and the estate of their now-deceased mother.  The sum includes a $454,000 award for attorneys’ fees under California’s elder abuse statutes.

Edward Blank and Doreen Baker Blank, along with Della Baker, who died in 2012 at age 103, placed their entire retirement savings in the hands of James Glover, a broker with Signator Investors, owned by John Hancock. Glover invested $1 million of the money in a Texas real estate venture that Glover said would generate a steady income but that suspended payments in 2012.  Glover did not disclose that he was a managing member of the venture. 

The Blanks are among more than 40 clients who claimed they were hurt financially by Glover. Signator has maintained that it was unaware that Glover was investing in securities not held or offered by them, a practice called “selling away,” and that it was not responsible for his actions.

In March, an arbitration panel of the Financial Industry Regulatory Authority (FINRA) awarded the Banks $954,000 in compensatory damages and $181,000 in interest, plus the legal fee award. The binding award also granted Signator's cross-claim against Glover for breach of contract, fraud and negligence and ordered him to pay Signator $1.35 million.

“The FINRA arbitration panel awarded our clients almost $1.6 million for the losses they suffered in this selling-away case,” said the Banks’ attorney, Lance McCardle, as reported in Investment News. “Our clients lost all of their retirement savings as a result of Glover's breach of fiduciary duty and fraud and Signator's failure to supervise Mr. Glover during the 14 years he worked at Signator in the Towson, Md., office.”

To read the arbitration panel’s ruling, Docket No. 13-00579, click here.

For a Wall Street Journal article on the award, click here.

For a discussion of the award by Prof. Katherine Pearson of Penn State Dickinson Law School, click here.