Account Management Complicated By New Banking Rules

Every Account Holder Should Be Aware of Changes

Americans write about 40 billion paper checks each year. In addition, for the first time that number recently was eclipsed by the annual number of automated transactions involving checking accounts. Checking account transactions are such a widespread part of our lives that consumers of banking services are well advised to become acquainted with major changes affecting banking laws. Federal legislation called the Check Clearing for the 21st Century Act, or "Check 21" for short, went into effect on October 28, 2004.

Check 21 will allow financial institutions to process "substitute" checks--high-quality paper reproductions created from electronic images of both sides of an original check. In time, check processing will be faster, and this is where there will be ramifications for check writers and depositors.

While it has always been prudent to have enough money in your account to cover a check the moment you write it, who has not used the lag time in check processing to make a necessary deposit? That will soon become a riskier strategy as electronic check processing becomes more prevalent. It will also be more important than ever to keep checkbooks up to date, especially bearing in mind deductions for ATM withdrawals, bank fees, and debit-card purchases.

The risk is merely financial if you unintentionally "bounce" a check from time to time. But, if you have come to rely upon the float, and particularly if you use the float from two different accounts, you may find your problem is criminal in nature. The increased speed with which banks process checks may mean more charges of check "kiting." Check kiting is among the most common, and most dangerous, forms of check fraud foisted upon financial institutions. A kite is a form of shell game using at least two accounts at separate financial institutions. The common practice of allowing depositors to have immediate use of uncollected funds facilitates the scheme. Indeed, Regulation CC mandates early access to deposited funds. In the typical scheme, an NSF check is written by on one account and then deposited into an account at another institution. A check drawn on the second account is then used to cover the resulting overdraft on the first account. Taking advantage of the float caused by normal delays in the collection system, the wrongdoer creates fictional balances in each account and uses these balances to obtain cash advances.

Asset Protection Entities Suffer New Assaults

Reverse Piercing of Corporate Veil Reaches Entity Assets

Generally, business entities such as corporations or limited partnerships are legally separate and distinct from the shareholders and members of such entities. When justice requires, however, courts have ignored the separation of the business and the individual and have allowed a creditor of the business to satisfy the debt from the assets of an individual closely connected to the business. This concept is known as "piercing the corporate veil."

A variation on the idea, called "reverse piercing of the corporate veil," allows someone to reach the assets of the business entity to satisfy a claim or judgment obtained against a corporate insider. In both instances, a court disregards the normal protections given to a business structure in order to prevent abuses of that structure.

National Groups Acknowledge Need for Guardianship Reform

Advocacy Groups Meet To Discuss Reform

 Leading advocacy groups for seniors are meeting this week to continue the process of addressing guardianship reform and implementation. Hundreds of thousands of Americans are under the care of a guardianship system in desperate need of repair, according to a report from Washington’s General Accountability Office (GAO). The National Academy of Elder Law Attorneys (NAELA), along with other national groups, will address the surprising nationwide deficiencies in the guardianship system across the United States.

NAELA, The National College of Probate Judges (NCPJ) and the National Guardianship Association (NGA) are convening a Joint Conference with a Wingspan Guardianship Implementation Session at The Broadmoor in Colorado Springs. The three groups will discuss guardianship issues during the Conference that brings together guardians, elder law attorneys, case managers, social workers, healthcare professionals and state judges from around the country.

We would all like to think that we will be protected by ethical professionals or loving family members if we are ever faced with the need for guardianship as we age. The truth is that in many states across the country little is being done to ensure the necessary funding, training, accountability and monitoring of guardians that could prevent the horrific abuse that continues to occur against our older Americans. This Conference and Session is another step towards a remedy.

Hospice Costs Medicare Less Notwithstanding that Hospice Patients Live Longer

McKnight's reports that patients enrolled in hospice care cost Medicare less, according to the study "Medicare Cost in Matched Hospice and Non-Hospice Cohorts" published in the September 2004 issue of the Journal of Pain and Symptom Management.  Medicare savings ranged from $1,115 for patients diagnosed with rectal cancer to $8,879 for patients with congestive heart failure. 

The study also revealed that the hospice patients on average live longer than similar patients who are not under hospice care. The prolonged life spans ranged from 20 days for those patients with a diagnosis of gallbladder cancer to 69 days for those with breast cancer.

Conducted to identify cost differences between patients who do and do not receive Medicare-paid hospice care, the study examined patients with 16 of the most common terminal diagnoses. The report is significant because hospice care analysis has been debated since the Medicare Hospice Benefit was introduced in 1982, according to PR Newswire. 

Almost 30 percent of Medicare payments go to patients at the end of their lives, said J. Donald Schumacher, president and CEO of the National Hospice and Palliative Care Organization, the organization that commissioned the study.

Most Retirement Accounts Mismanaged by Investors

Consider Death Tax Planning Before Its Too Late!

American Express recently reported the results of a national survey seeking to evaluate the management of retirement accounts by American investors. The survey, completed by Amex’s Global Marketplace Insights unit uncovered some disturbing facts. The survey found that one-third of those surveyed maintained three or more retirement accounts, while one out of every six people owned five or more accounts. The survey discovered bad habits and misperceptions by investors in their management of retirement accounts.

The survey, for example reveals that many investors have a false sense of being well diversified, mistakenly believing that owning different accounts equates to diversification. Of course, management of multiple accounts makes management more difficult for the investor. This difficulty is nowhere more evident than in the shocking statistic that almost one-fourth of Americans spent no time at all reviewing their retirement accounts. Half of the investors surveyed spent less than one hour reviewing their investments.