Mishandling of Nursing Home Trust Accounts a Growing Problem

Many nursing home residents have have "resident trust funds" or "personal accounts" managed by the facility. It may be that the residents have no family members or family members do not want the responsibility, or the nursing facility prefers to manage the resident’s income. Recently, USA Today did an investigative report in which 1,500 facilities have been cited for mishandling of funds in such resident trust accounts. Most of the deficiencies were related to failing to pay interest on the money held, inadequate accounting, or failure to give residents sufficient access to their money. However, there were egregious cases where funds were misappropriated by those who were intended to protect them. Go here to read the full article.   

The USA Today article explains the problem, describes specific examples of account misuse, and provides some practical solutions to  minimize the risk of loss associated with these accounts.  In every case, the resident should have an effective General Durable Power of Attorney in place naming a trusted agent and  alternates. Many nursing home residents are unable to monitor their own accounts, or may be unable to monitor their own accounts during periods of illness, disability, or incapacity. An attorney-in-fact empowered by a Power of Attorney document can monitor the resident account, and even minimize its use by keeping a limited amount of funds in the account. If the agent is willing and able to pay the resident’s bills, the use of the account will be limited to small purchases and will be less tempting to those who are using the accounts for their own purposes.

Fortunately, the resident fund accounts are usually insured.  An attorney-in-fact can make a claim against the insurance company is a loss is discovered.  Such a claim may be frustrated if the resident is unable to prosecute a claim.  It is important that losses are identified quickly, and claims made timely.  

The attorney-in-fact should also make sure that ultimate disposition of the account is provided for, either by an assignment of the account to the resident's revocable trust, or by a transfer upon death or payable upon death designation.  Otherwise the account may require probate court disposition.    

Conveyance to Son Is Fraudulent, But Siblings May Also Be Liable Under Filial Support Law

North Dakota's highest court determined that a nursing home resident's sale of property to his son should be set aside as a fraudulent conveyance, and that the son was personally responsible for his parent's debts under the state's filial responsibility law. But the court also held that the trial court should not have declared the son personally responsible for his parent's debt under the state's filial responsibility law without also deciding whether his siblings were liable under the same law. Four Seasons Healthcare Center v. Linderkamp (N.D., Nos. 20120432, 20120433, Sep. 4th, 2013).

Earl and Ruth Linderkamp owned a farm. They leased the land to one of their sons, Elden, who farmed the property. Elden claimed that he had an oral agreement with his parents that they would compensate him for improvements to the land as part of the consideration to buy the property at a later date. In 2006, The Linderkamps sold the property to Elden for $50,000, well below its market value. Elden claimed he had made more than $100,000 in improvements to the property. Soon after, the Linderkamps entered a nursing home where they remained until their deaths, leaving a total of $93,000 in unpaid nursing home charges.

After the Linderkamps died, the nursing home sued Elden to set aside the property transfer as a fraudulent conveyance. The trial court set aside the conveyance, finding the Linderkamps did not receive equivalent value in exchange for the property. The court also determined Elden was personally responsible for his parents' debt under the state's filial responsibility law, but refused to determine his siblings' liability. Elden appealed, arguing the conveyance was not fraudulent and the court should not impose personal liability against him for his parents' nursing home debt.

The North Dakota Supreme Court affirmed in part, holding the conveyance was fraudulent, but remanded the case to determine whether Elden is personally responsible for the debt. According to the court, there was no evidence of an oral agreement or improvements made to the property "and the conveyance was made when there was a reasonable belief the parents would be entering a nursing home and would not be able to fully pay for their long-term care." The court concluded that the trial court erred in finding Elden personally liable for his parents' nursing home debt without deciding the other children's potential liability under the filial responsibility law.

Many Consumers Will Lose Their Insurance Under Affordable Care Act

From Kaiser Health News: 

Rod Coons and Florence Peace, a married couple from Indianapolis, pay $403 a month for a family health plan that covers barely any of their individual medical care until each reaches up to $10,000 in claims. And that’s just the way they like it.

"I'm only really interested in catastrophic coverage," says Coons, 58, who retired last year after selling an electronic manufacturing business. Since they're generally healthy, the couple typically spends no more than $500 annually on medical care, says Coons.

"I'd prefer to stay with our current plan because it meets our existing needs."

That won’t be an option next year for Koons and Peace. In 2014, plans sold on the individual and small group markets will have to meet new standards for coverage and cost sharing, among other things. In addition to covering 10 so-called essential health benefits and covering many preventive care services at no cost, plans must pay at least 60 percent of allowed medical expenses, and cap annual out-of-pocket spending at $6,350 for individuals and $12,700 for families. (The only exception is for plans that have grandfathered status under the law.)

Plans with $10,000 deductibles won’t make the cut, say experts, nor will many other plans that require high cost sharing or provide limited benefits, excluding prescription drugs or doctor visits from coverage, for example.

According to the Department of Health and Human Services, based on the 10 states and the District of Columbia that have so far proposed individual market premiums for next year, the average individual monthly rate will be $321 for a mid-level plan.

Many policyholders don't realize their plans won't meet the standards set by the Affordable Care Act next year, say experts.

Read the rest of the article here.

Woman Prevails in Guardianship to Protect Her Wishes

Momentous news from the Washington Post:

In a victory for the rights of adults with disabilities, a judge declared Friday that a 29-year-old woman with Down syndrome can live the life she wants, rejecting a guardianship request from her parents that would have allowed them to keep her in a group home against her will.

The ruling thrilled Jenny Hatch and her supporters, who included some of the country’s most prominent disability advocates.  For more than a year, Margaret Jean Hatch, whom everyone calls Jenny, had been under a temporary guardianship and living in a series of group homes, removed from the life she knew. Hatch wanted to continue working at a thrift store and living with friends Kelly Morris and Jim Talbert, who employed her and took her into their home last year when she needed a place to recover after a bicycle accident.

                                                             *      *     *

Legally, Hatch’s case came down to two questions: Was she an incapacitated adult in need of a guardian, and, if so, who would best serve in that role — her mother and stepfather, or Morris and Talbert?

But for national experts on the rights of people with disabilities, several of whom testified on Hatch’s behalf, the case was about much more. It was about an individual’s right to choose how to live and the government’s progress in providing the help needed to integrate even those with the most profound needs into the community.

In the end, Newport News Circuit Court Judge David F. Pugh said he believed that Hatch, who has an IQ of about 50, needed a guardian to help her make decisions but that he had also taken into account her preferences. He designated Morris and Talbert her temporary guardians for the next year, with the goal of ultimately helping her achieve more independence.

“For anyone who has been told you can’t do something, you can’t make your own decisions, I give you Jenny Hatch — the rock that starts the avalanche,” her attorney, Jonathan Martinis, exulted after the decision.

The decision is momentous because it is so rare that a person deemed incompetent or incapacitated is given any legal ability to direct his or her guardianship, or direct decisions of the guardian.  Guardianship, unfortunately, impacts the disabled, including the aged as they confront short-term and long-term disabilities.  Too often, seniors do not consider carefully this issue in crafting an estate and financial plan.

For a prior article regarding this case, go here. 

For more information regarding guardianship, see the following articles:

• Estate Plans Should Consider and Attempt to Resolve Guardianship;
• Illinois Permits Guardian Authority to Petition for Termination of a Ward's Marriage; 
• GAO reports on Guardianship Abuse;
• National Groups Acknowledge Need for Guardianship Reform;
• Report on Abuse by Guardians and the Guardianship Process Released;
• Another Reason for Guardianship Planning: Guardian Convicted of Homicide in Death of Ward 

Woman Prevails in Guardianship to Protect Her Wishes

Momentous news from the Washington Post:

In a victory for the rights of adults with disabilities, a judge declared Friday that a 29-year-old woman with Down syndrome can live the life she wants, rejecting a guardianship request from her parents that would have allowed them to keep her in a group home against her will.

The ruling thrilled Jenny Hatch and her supporters, who included some of the country’s most prominent disability advocates.  For more than a year, Margaret Jean Hatch, whom everyone calls Jenny, had been under a temporary guardianship and living in a series of group homes, removed from the life she knew. Hatch wanted to continue working at a thrift store and living with friends Kelly Morris and Jim Talbert, who employed her and took her into their home last year when she needed a place to recover after a bicycle accident.

                                                             *      *     *

Legally, Hatch’s case came down to two questions: Was she an incapacitated adult in need of a guardian, and, if so, who would best serve in that role — her mother and stepfather, or Morris and Talbert?

But for national experts on the rights of people with disabilities, several of whom testified on Hatch’s behalf, the case was about much more. It was about an individual’s right to choose how to live and the government’s progress in providing the help needed to integrate even those with the most profound needs into the community.

In the end, Newport News Circuit Court Judge David F. Pugh said he believed that Hatch, who has an IQ of about 50, needed a guardian to help her make decisions but that he had also taken into account her preferences. He designated Morris and Talbert her temporary guardians for the next year, with the goal of ultimately helping her achieve more independence.

“For anyone who has been told you can’t do something, you can’t make your own decisions, I give you Jenny Hatch — the rock that starts the avalanche,” her attorney, Jonathan Martinis, exulted after the decision.

The decision is momentous because it is so rare that a person deemed incompetent or incapacitated is given any legal ability to direct his or her guardianship, or direct decisions of the guardian.  Guardianship, unfortunately, impacts the disabled, including the aged as they confront short-term and long-term disabilities.  Too often, seniors do not consider carefully this issue in crafting an estate and financial plan.

For a prior article regarding this case, go here. 

For more information regarding guardianship, see the following articles:

• Estate Plans Should Consider and Attempt to Resolve Guardianship;
• Illinois Permits Guardian Authority to Petition for Termination of a Ward's Marriage; 
• GAO reports on Guardianship Abuse;
• National Groups Acknowledge Need for Guardianship Reform;
• Report on Abuse by Guardians and the Guardianship Process Released;
• Another Reason for Guardianship Planning: Guardian Convicted of Homicide in Death of Ward