Elder Law Update
Georgia Edition
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Vol 2
Issue Three
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August 2008
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PLEASE VISIT MASON LAW
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I WANT TO KNOW
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If you have an idea or comment
that will help me make this a
better newsletter
please send it to me.
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Dear Bob,
Hope you are having a good
summer. For us at Mason Law, it
has been a busy one.
I'll hold my comments down,
because this edition of
Elder Law Update is a big
issue. In fact, it is our
biggest issue yet.
I welcome Penny Louis to
Elder Law Update. Penny
has an interesting article below
on how seniors most often get
into financial trouble. She
should know! Penny is a
financial manager for seniors
who have difficulty managing
their own financial affairs.
I've seen her in action in
Savannah. She can do everything
from "help straighten out some
things" to complete financial
management.
Trusts and FDIC Insurance
A client recently joked that I
could change the name of Mason
Law, PC to "Trusts-R-Us" because
we so often use planning
techniques that involve trusts.
Lately, I have been receiving
many questions about the FDIC
insurance program and how it
applies to trusts. Finally, I
promised the last client who
asked that I would devote an
article to the topic . . . which
appears below.
Brittle Bones and Running From
Hurricanes
Dr. Beth Hodges gives us some
advice regarding a very serious
topic: bone fractures in
seniors. It is well worth
reading . . . and even takes a
dig at lawyers. Beth and I are
friends, so she was worried I
would be offended. I told her
not to worry, because she is
actually down on personal injury
lawyers (as are most doctors),
and I am not a personal injury
lawyer as you all know. In fact,
have you EVER heard an Elder
Lawyer joke? I am sure NOT. We
aren't funny. On the other hand,
if anyone knows any good doctor
jokes, please do send them my
way and I'll forward them to Dr.
Beth.
Part III of Barbara Dunn's
series on emergency preparedness
runs below. Hurricane season is
headed into the busiest three
months, so the article is
timely.
Finally, Warren Coble shows us
how spousal Social Security
benefits are calculated. I
haven't told Warren this, but I
was gratified to hear that at
least one reader has bookmarked
the
Elder Law Update
Boneyard (Archives) and
regularly goes back to look at
Warren's articles for a Social
Security "refresher". So there
ya go, Warren!
Bob Mason
Certified Elder Law Attorney
Certified by the
National Elder Law Foundation,
recognized by the American Bar
Association as the certifying
entity for specialization in
Elder Law. |
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FDIC INSURANCE AND TRUSTS
Bob Mason
Recent bank failures have
rattled a few clients lately. It
would be easy to dismiss these
concerns because the rate of
failures is extraordinarily low
and bank deposits generally are
quite safe. On the other hand,
when it is your money involved .
. . . well . . . .
As many know, I use a variety of
trusts in the many techniques
used to help clients. Naturally,
many clients are concerned about
FDIC insurance coverage with
respect to those trusts.
In a couple of earlier columns
contributor Rose DeVries wrote
about FDIC coverage generally.
It may be helpful to go back and
reread her columns to get a
general orientation. Click
HERE for the first; click
HERE for the second.
. . . .
At this point, either you've
refreshed your memory or you
know the basic FDIC rules. I
will assume that is the case.
Now that you're oriented, here
is a general description of FDIC
rules applicable to trusts. Keep
in mind the limits apply at each
bank . . . in other words if a
trust has coverage limited to
$100,000 only because of one of
the rules below, the limit
applies at each bank in which
the trust has an investment.
First, the FDIC has different
rules that apply to Revocable
Trusts and to Irrevocable
Trusts. As a starting point,
determine which type of trust
you are analyzing.
Revocable Trusts
Revocable trusts, of course, are
trusts over which the settlor or
grantor (a/k/a "The Person Who
Set The Trust Up") retains the
right to freely add or remove
assets, make amendments and even
terminate the trust. Mason Law
uses these often for a variety
of purposes.
To make things really confusing,
the FDIC classifies Pay On
Death, or POD, accounts as one
of two types of revocable
trusts, which is ludicrous
because a POD account isn't a
trust at all. Read Rose's
article on POD trusts by
clicking
HERE.
In summary, FDIC will insure a
POD account up to $100,000 for
each "qualifying beneficiary"
listed to be paid upon the death
of the primary account holder. A
"qualifying beneficiary" is a
spouse, a child, a grandchild, a
parent, or a sibling. The
beneficiary must be clearly
listed on the books and records
of the bank.
The POD rules, of course, caused
much confusion when applied to
the sort of living trusts
attorneys use. Sort of like
pounding a square regulatory peg
into a round hole.
As a result of the confusion and
in order to "spread around" FDIC
coverage, many people were
setting up accounts owned by
revocable trusts as POD accounts
with the children listed. Others
were setting up trust accounts
as joint survivorship accounts
with children. Because POD and
most survivorship accounts pay
automatically to the listed
beneficiary, the arrangement
might completely frustrate the
careful plans laid out in the
trust.
In 2004, FDIC published new regs
that added some clarity.
A "living trust account", to use
the new regulation's term, is
entitled to up to $100,000 FDIC
coverage for each "named
qualifying beneficiary", which
means the beneficiary must be
related to the Grantor/Settlor
and it must be possible to
determine from the trust
document who the beneficiaries
are (no need to list them at the
bank, although most banks want
to retain a copy of the trust
agreement). It doesn't matter at
all that the Grantor/Settlor has
retained complete authority to
terminate the trust.
If Mom and Dad have set up a
joint revocable trust (which we
at Mason Law often do), each
qualified beneficiary will be
entitled to FDIC coverage of up
to $100,000 with respect to each
of Mom and Dad (i.e., $200,000).
If the bank goes under, the FDIC
will look at the trust document
and pay up to $100,000 for each
beneficiary who would be
entitled to a trust distribution
if the Grantor died on the day
the bank went down. That is in
addition to other accounts Mom
and Dad had in her or his own
name.
Irrevocable Trusts
We also assist clients with
irrevocable trusts. Of course,
an irrevocable trust is a trust
over which the Grantor/Settlor
has surrendered ALL right to
amend or revoke the trust.
Some Grantors completely
surrender any right to receive
any sort of distribution
whatsoever. Others retain the
right to receive all of the
income, but nothing else. This
is an important distinction to
keep in mind.
If the Grantor has not retained
any income interest and if it is
not possible for the trustee to
later shift benefits between
various beneficiaries, then each
beneficiary is entitled to up to
$100,000 FDIC coverage. Again,
it must be possible to identify
the beneficiaries from the trust
instrument. It is not necessary
for a beneficiary to be related
. . . any person, or even a
charity, will do.
On the other hand, if the
Grantor has retained an income
interest, and if the trustee or
others have the discretion to
allow unequal distributions to
others (for example, the
Grantor's children), then the
trust is limited to $100,000
coverage (separate, by the way
from insurance the Grantor may
have under her own name).
That is important to understand.
Many trusts designed by Mason
Law feature an income stream to
the Grantor, and many allow the
trustee (perhaps with others'
cooperation) to make
distributions to one or more
people (other than the Grantor).
If that is the case, the trust
will be limited to $100,000
coverage at each institution.
Final important point. The
features that might limit an
irrevocable trust to $100,000
very likely are worth retaining
(they were put in the trust
because they were valuable
features). If FDIC coverage is a
concern, then the trustee simply
needs to make sure to "spread
around" the investments between
a number of different banks.
Confused? Send me an email!
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BRITTLE BONES
Beth Hodges, MD
I try with each article to write
about issues that are current,
and since five of my
patients have fallen and
suffered hip fractures this
month, osteoporosis wins.
Osteoporosis, or abnormal
thinning of the bones, is
actually the third leading
cause of mortality (death) in
our elderly population and is an
even higher cause of morbidity
(decline in function.)
Yes, I did say death. It
happens like this: Aunt Suzy
falls outside Walmart and after
the personal injury lawyers
descend and take down all the
pertinent information an
ambulance is called and
transfers her to the local
hospital, where an overworked
emergency room physician
determines she has a broken
hip. The orthopedist marches in
to the rescue and whisks Aunt
Suzy off to surgery, where he
does a simply splendid job
fixing her hip. However,
postoperatively, Aunt Suzy
develops a) severe anemia
leading to a heart attack from
the stress on the cardiovascular
system, or b) pneumonia, or c)
kidney failure, or d) some
severe hospital-acquired
infection, or e) just doesn't do
well in rehab, falls and breaks
the other hip, and starts the
whole process over. We in the
medical community do all we can
to watch over Aunt Suzy in the
perioperative period, but a
better solution is to keep Aunt
Suzy's bones strong, so she
bounces off that curb like an
Olympic gymnast.
How, you ask? First, check the
status of Aunt Suzy's bones with
a test called bone
densitometry. Guidelines call
for screening every two years in
women 65 or over OR
postmenopausal with risk factors
(Caucasian race, slight of
build, history of smoking,
family history of osteoporosis,
sedentary lifestyle, chronic use
of corticosteroids, history of
broken bones with minimal
trauma.) Men also can be prey
to osteoporosis and are
overlooked for screening
purposes.
Next, all women and some men
over age 50 need at least 1500mg
calcium with Vitamin D daily.
That is the MINIMUM DAILY
REQUIREMENT, so getting extra
calcium in the diet is generally
not a problem.
Then, make sure Aunt Suzy's
doing some daily weight-bearing
exercise, like walking. If she
can handle some light hand
weights, too, all the better.
Mild stress on the bones makes
them stronger.
If osteoporosis is present,
treat it. There are oral
medications that can be given
once weekly or monthly. They
work very well, but have to be
taken correctly to be safe, so
if Aunt Suzy's faculties went to
lunch in the 90's and never came
back, pick something else. That
same medication can be given
intravenously in the doctor's
office once yearly, which is a
good option for some people.
Alternatively, there is a
medication called a selective
estrogen receptor modulater,
which has to be taken daily, but
is effective. It is not a good
choice for someone at risk for
blood clots, as it does thicken
the blood. Also, the most
common side effect is hot
flashes, so Aunt Suzy might be
hunting you down for that one.
Lastly, there is a nasal spray
that pushes calcium back into
the bones, but it has the least
impressive data, so I usually
reserve it for patients who
cannot tolerate any of the other
options.
I hope this has shed some light
on a poorly recognized issue and
its prevention. Osteoporosis
generally isn't painful but it
is serious. Take your Aunt Suzy
to see her doctor today.
Beth Hodges, MD, is a principal
in Hodges Family Practice, with
offices in Asheboro and Ramseur,
North Carolina.
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Evacuation Planning for Older
Adults - Part III
Barbara J. Dunn,
RN, MSN
 Editor's
note: This is the third (and
final) installment in a three
part series telling you how to
begin devising an emergency
evacuation plan for the elderly.
We are in the middle of
hurricane season. Often the
victims of an evacuation fiasco
are unprepared older adults. In
the previous two issues of Elder
Law Update I stressed the need
to work with your older loved
ones to draft a written
evacuation plan, and I discussed
a number of critical areas. In
this last installment, I'll
address one last usually
overlooked (but very important)
issue, and give you a few
summary pointers.
Pet Needs
Don't laugh! We
all know how elders feel about
leaving pets behind. A cherished
pet. It is imperative to have
proof of the pet's rabies shot.
Other pet health records are
important too. Is there a pet
carrier for the pet? A carrier
is required in order to
transport a pet on public
transportation and to enter a
shelter. Is a supply of pet food
listed in the evacuation plan?
Talk with your vet about your
pet's evacuation needs.
And Finally . . .
Share your evacuation plan with
all who need to know it. If your
loved one lives in a senior
living facility, be sure to
provide the administrator in
charge with a copy. Make an
appointment with the
administrator to discuss the
plan. Senior living facilities
have their own evacuation plan
and it may not be consistent
with your wishes or with the
needs of your loved one.
If your loved one
lives alone, and at a distance,
communicate with local emergency
management authorities about the
best approach. Many communities
maintain a list of older adults
who will need help evacuating.
Contact James Drinnon at Chatham
Emergency Management Agency (CEMA)
at (912) 201-4500 for
information on assisting older
adults with evacuation. CEMA's
web site is full of up to date
preparedness info. Check it out
by clicking
HERE.
We've skimmed the surface of a
vast topic. For further help
with planning, call you local
chapter of the American Red
Cross with your planning
questions and for two excellent
publications: #A4499 and
#A4497. Publication A4497 deals
with planning for people with
disabilities and other special
needs. YOU MAY REACH THE
SAVANNAH CHAPTER OF THE AMERICAN
RED CROSS BY CALLING
912-651-5371 or stop by 906
Drayton, Savannah, GA 31412.
Both CEMA and the Savannah
Chapter of the American Red
Cross offer speakers on all
emergency preparedness topics.
Barbara Dunn, MSN, is owner of
Elder Care of Coastal Georgia,
as well as Chair of the Disaster
Services Committee of the
Savannah Chapter of the American
Red Cross. You may email
comments and questions to
Barbara by clicking
HERE.
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SOCIAL SECURITY BENEFITS FOR THE
FAMILY
-Warren Coble
 Previously,
we discussed the categories of
Social Security benefits payable
to family members of retired,
disabled, or deceased workers
who have earned enough credits
to be "insured" for benefits.
This month we will address how
spouse benefits are computed.
Benefit computations under
Social Security always derive
from a computation formula
(Primary Insurance Amount, or
PIA) which is determined from
average annual earnings of the
worker on the record. It should
be noted that any benefits
payable on the record always go
to the retired or disabled
worker first. Any family
benefits payable are in addition
to the benefits of the worker.
The family maximum limit on a
record is usually 150 - 180 per
cent of the worker's benefit.
If the total benefits due to the
spouse and children are more
than this limit, their benefits
will be reduced. Again, the
worker's own benefit will not be
affected.
A spouse who has not worked or
who has low earnings can be
entitled to as much as one-half
of the retired worker's full
benefit. If you are eligible
for both your own retirement
benefits and for benefits as a
spouse, SSA always pays your own
benefits first. If your
benefits as a spouse are higher
than the retirement benefits,
you will get a combination of
benefits equaling the higher
spouse benefit.
If you file for spouse benefits
prior to full retirement age
(currently age 66), you are also
considered to have filed for
reduced retirement benefits.
The amount of the benefits will
be reduced permanently.
However, if you have reached
your full retirement age, and
are eligible for a spouse's or
ex-spouse's benefit and your own
retirement benefit, you may
choose to receive only the
spouse's benefits and continue
accruing delayed retirement
credits on your own Social
Security record. You may then
file for benefits at a later
date and receive a higher
monthly benefit based on the
effect of delayed retirement
credits.
An example: Jane Doe is
eligible for a reduced
retirement benefit of $300.00
per month based on a Primary
Insurance Amount of $400.00 per
month. Her husband, John Doe
files for retirement and his
Primary Insurance Amount is
$1500.00 per month, with a
family maximum amount of
$2400.00 per month. The
potential full spouse's benefit
(at Jane's full retirement age,
66) for Jane would be $750.00
(50% of Jack's full benefit).
From the $750.00 full unreduced
spouse's benefit, Social
Security would deduct Jane's own
full Primary Insurance Amount of
$400.00, leaving $350.00 payable
to her as a spouse. If Jane
files for the $350.00 prior to
age 66, the benefit would be
reduced proportionately. Jane's
eligibility for the spouse's
benefits has no effect on John's
benefits.
Next month, we'll consider
divorced spouse and widow's
benefits.
Social Security expert Warren
Coble welcomes your questions
regarding Medicare, Social
Security and Senior Life in
general! Email Warren by
clicking
HERE.
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Money Management 101: Top 8
Reasons Why Seniors Get Into
Money Trouble and How to Avoid
the Pitfalls
- Penny Louis,
MPA
 I
provide personal financial
management services for seniors.
Often I am called upon to clean
up a financial mess and to put a
client's affairs on a more
orderly basis. Here are the most
common causes of the financial
woes I often encounter.
1. Clutter!
Are you an "accumulator"? Can't
throw anything away? This
results in piles of papers with
no system to keep track of the
important papers you really
need. Develop a simple filing
system for these, check current
guidelines on retaining
financial records and shred
excess documents you don't need.
2. Paying late
Create a system to keep track of
bills and when they are due.
Open mail every day and mark due
dates on bills and file in order
of when they are due. Schedule
at least 2 days a month to pay
bills. Late payments result in
higher interest rates on credit
cards and negatively affect your
credit score limiting your
ability to borrow money.
3. Failure to reconcile
accounts
Get familiar with your bank
statement and use it to balance
each month. Accurately record
all transactions, particularly
ATM and check card transctions
which are easy to lose track of
if you don't record them as they
happen. Don't get caught paying
overdraft charges. It's just
throwing money away.
4. Double payment of bills or
paying bills you don't owe
Look back in your checkbook to
make sure the bill you are
paying is a new charge and not
one already paid-sometimes
payments cross in the mail and
are not posted when the new bill
is issued. Medical bills and
Medicare and supplemental
insurance explanation of
benefits forms often are not
bills at all but have been
billed to insurance.
5. Responding to Telemarketers
and phone solicitations
Seniors are especially
vulnerable to phone
solicitations either to purchase
or contribute to something.
Don't feel obligated to say yes
to everyone who calls, or even
to listen to their pitch. If
you're not interested, say so
politely and hang up. If you
are interested, never give your
personal information over the
phone. Ask them to mail you the
offer in writing to give you
time to review it. If it is a
legitimate organization they
will do this. If they say they
can't send you anything, don't
commit over the phone. They
probably aren't "legit".
6. QVC, Internet and Catalog
shopping-Your Enemy!
Many Seniors watch QVC and other
infomercials out of boredom or
loneliness. They buy
merchandise impulsively that
they don't necessarily need and
probably can't afford. If you
must watch, establish a "waiting
period" before "pulling the
trigger". Often what seems like
a good deal on TV actually
carries hidden charges in the
form of "Shipping and Handling"
which are not advertised and can
cost as much or more than the
merchandise itself! Get off
catalog mailing lists to avoid
the temptation of impulse
buying. Contact the Direct
Marketing Association's Mail
Preference Service at
abacusoptout@epsilon.com or by
writing to Abacus, Inc., P.O.
Box 1478, Broomfield, CO
80038.
7. Failure to make and adhere
to a budget.
Most people don't have a budget
of what they can afford and
don't keep track of what they
spend. Credit card use and
abuse is rampant. It's easy to
get deep into debt if you use a
credit card and don't pay it off
each month. Further, fixed
expenses go up periodically and
such increases in utilities,
phone, rent, food and gas need
to be factored into your budget
periodically. It may mean less
money for discretionary
spending, especially for those,
who like most Seniors, are on
fixed incomes.
8. Failure to protect your
credit rating and protect
yourself from identity theft.
Refrain from giving personal
information, especially your
social security number, out over
the phone or internet. Elder
abuse is rampant and can be
abuse by "outsiders" (phone
solicitors that prey on the
elderly) or "insiders"
(caregivers or unqualified
advisors-can even be family
members!). You are entitled to
a free credit report from the 3
major credit bureaus, Equifax,
Experian and TransUnion once a
year. This enables you to check
your credit score, dispute
inaccuracies, and monitor your
credit for suspicious activity.
For access to your free credit
report visit
www.annualcreditreport.com or
call 877-322-8228.
Penny Louis, MPA is the Managing
Partner of Financial Care for
Elders, LLC which provides
personal business assistance to
clients who have difficulty
managing their personal monetary
affairs. She is a member of the
American Association of Daily
Money Managers. You may email
Penny by clicking
HERE.
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The Usual Disclaimer:
This newsletter is for general
information only. Please do not
rely on anything you read in
this email as definitive legal
advice applicable to you. All
situations are different,
including yours. Nothing you
read in this newsletter is a
suitable substitute for
professional advice you may
receive from your attorney, your
accountant, or your tax advisor.
All contents copyrighted 2008 by
Mason Law, PC. Contents may be
republished with written
permission of Mason Law, PC
(which permission will usually
be given!). |
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