Helpful Q&A Tips

Nursing Homes

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Disabled Persons (Rights & Benefits & Trusts)

Wills, Probate & Estates

Powers of Attorney

Real Estate

Senior Citizen Tax Benefits & other Senior Citizen Benefits

Medicare

Medicare Part D Prescription Assistance

General Legal Questions

Legal Websites and other Resources

Veteran Information

Q: I must enter a nursing home, but I do not want to sell my home at this time. I know that ordinarily to qualify for my real estate tax senior citizen homestead exemption and senior citizen freeze exemption I must actually live in the home; these exemptions really help to reduce my real estate taxes. Will I lose these exemptions since I am in the nursing home?

A: You will not lose your exemptions if your spouse still lives at home or if the house is unoccupied. Recent changes to Illinois law allow you to keep these exemptions on your home if you enter a nursing, supportive living facility, a qualified assisted living facility or certain group homes for the disabled. In most counties you can also continue to qualify for the general homestead exemption if you qualify for these senior citizen exemptions. If you rent out the house to others it then becomes income producing property and the exemptions will no longer apply. 35 ILCS 200/15-170 and 200/15/172; the general homestead exemption, 35ILCS 200/175 does not include this explicit language – thus it becomes a discretionary matter for the County Supervisor of Assessments

Q: Can I deduct nursing home insurance premiums from my income taxes?

A: The IRS allows you to deduct part of nursing home insurance premium or “eligible long-term care premiums.” Medical expenses can be deducted only if you itemize your deductions and only if your eligible medical deductions exceed 7.5% of your adjusted gross income. These insurance premiums are counted toward that 7.5%. The maximum deduction for these insurance premiums increases with your age, for example persons between 60 and 70 can deduct up to $2,720. The ability to deduct the nursing home insurance premium will benefit people with income high enough to itemize their income tax deductions, but these people will benefit by using this insurance to protect their assets. There are many other questions to consider when selecting nursing home insurance, including the financial stability of the insurance company, coverage at home, the amount of daily benefit and exclusion periods. If you have questions, please make an appointment.

IRS Issues Long-Term Care Premium Deductibility Limits for 2005

The IRS has given the 2005 inflation adjustments for "eligible long-term care premiums." Under the Internal Revenue Code, the maximum amount that taxpayers may deduct each year for qualified long-term care insurance premiums rises with medical care costs.

The largest deduction that can be taken for qualified, long-term care insurance premiums paid in 2005 will be:

Attained age before the close of the taxable year

Maximum
deduction

40 or less

$270

More than 40 but no more than 50

$510

More than 50 but no more than 60

$1,020

More than 60 but no more than 70

$2,720

More than 70

$3,400

Premiums for "qualified" long-term care policies will be treated as a medical expense and will be deductible to the extent that they, along with other un-reimbursed medical expenses (including "Medigap" insurance premiums), exceed 7.5 percent of the insured's adjusted gross income.

For details on these and other tax law changes of interest for 2005, see IRS Rev. Proc. 2004-71 .

Rev. Proc. 2004-71
Table of Contents

SECTION 3. 2005 ADJUSTED ITEMS



Code Section

.19 Eligible Long-Term Care Premiums

213(d)(10)

.19 Eligible Long-Term Care Premiums. For taxable years beginning in 2005, the limitations under § 213(d)(10) (regarding eligible long-term care premiums includible in the term "medical care") are as follows:

Attained Age Before the Close of the Taxable Year Limitation on Premiums

40 or less

$ 270

More than 40 but not more than 50

$ 510

More than 50 but not more than 60

$1,020

More than 60 but not more than 70

$2,720

More than 70

$3,400

.36 Periodic Payments Received under Qualified Long-Term Care 7702B(d)
Insurance Contracts or under Certain Life Insurance Contracts

.36 Periodic Payments Received under Qualified Long-Term Care Insurance
Contracts or under Certain Life Insurance Contracts.
For calendar year 2005, the stated dollar amount of the per diem limitation under § 7702B(d)(4) (regarding periodic payments received under a qualified long-term care insurance contract or periodic payments received under a life insurance contract that are treated as paid by reason of the death of a chronically ill individual) is $240.

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Q: What should I do to protect my disabled son when I die?

A: Here are five planning points:

  1. Buy enough life insurance. Insurance that pays when the second parent dies can be helpful and inexpensive.
  2. Set up a trust. This allows the child to receive benefits. If you give the money to another child, too many things can happen so that the money is there for the disabled child.
  3. Create a will and appoint a guardian that you trust.
  4. Write down the care plan. This helps the caregiver provide a continuous level of care for your child.
  5. Coordinate with other family members so that they know what to expect.

While an outsider may think that a disabled child is a burden, many parents value the relationship that they have with these special persons. Planning can improve the quality of life of all concerned. Please feel free to make an appointment if you have further questions.

 

Five Planning Pointers for Parents with Disabled Children

  1. Buy enough life insurance. A parent is irreplaceable, but someone will have to fill in if the worst happens. It may be siblings or other relatives. In all likelihood, that family will have to pay for at least some services the parent or parents had provided when able. If the estate is not large enough for this purpose, it can be made large enough through life insurance proceeds. Premiums for second-to-die insurance (which pays off only when the second of two parents passes away) can be surprisingly low.
  2. Set up a trust. Any funds left for a disabled child, whether from an estate or the proceeds of a life insurance policy, should be held in trust for his or her benefit. Leaving money for anyone with a disability jeopardizes public benefits. Many people with disabilities cannot manage funds – especially large amounts. Some families disinherit disabled children, relying on their siblings to care for them. This approach is fraught with potential problems. Siblings can be sued, get divorced, disagree on their responsibilities, or run off with the funds. It can also cause tax problems for the siblings. The best approach is a trust fund set aside for the disabled child.
  3. Create a will and appoint a guardian. While a will and the appointment of a guardian is important for anyone with minor children, it is doubly so if the child is disabled. Finding the right guardian can be difficult. In some cases, the care needs of the child may be so demanding that he or she will need a different guardian from his or her siblings. The parents need to make these determinations while they can. The will is the vehicle for the appointment of a guardian.

    An adult child may also require a guardian when the parent can no longer serve in this role (whether officially appointed or not). It will probably not be legally possible to officially appoint a successor guardian once the parent is out of the picture. So, it may make sense to begin making the transition to a new guardian while the parent is able to assist in the process. This can be in the form of a co-guardianship, or passing the baton to a successor guardian.
  4. Write down the care plan. All parents caring for disabled children are advised to write down what any successor caregiver would need to know about the child and what the parent’s wishes are for his or her care. Should the child be in a group home, live with a parent, be on his or her own? Usually, the parent knows best, but needs to pass on the information. The memo or letter can be kept in the attorney’s files with the parent’s estate plan.
  5. Coordinate with other family members. Even a carefully developed plan can be sabotaged by a well-meaning relative who leaves money directly to the child with a disability. If a trust is created for the benefit of the child, grandparents and other family members should be told about it so that they can direct any bequest they may like to leave to that child through the trust.

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Q: What web sites provide a good introduction to the law?

A: The Internet is a very valuable source for legal information for lawyers and ordinary citizens.

The Madison County Web site has information about the value of your home. Also, the Circuit Clerk portion of that site will guide you for small claim, eviction and wage garnishment cases. http://www.co.madison.il.us/

Equip for Equality has information for people with disabilities. http://www.equipforequality.org/

Elder Law Answers has information for senior citizens. http://www.elderlawanswers.com/

Concerned about privacy? See the Privacy Rights Clearinghouse at http://www.privacyrights.org/

Practical summaries of Illinois law are found at Prairie State Legal Services http://www.pslegal.org/ and Illinois Legal Aid http://www.illinoislegalaid.org/

These web sites are among the many helpful sites that give you a good introduction to the law. The knowledge that you gain is still no substitute for the review by an attorney who can provide a more detailed review of your situation and raise issues that may not have occurred to you.

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Q: I am a widow with no children. One niece and a nephew have been very good to me. How can I give my estate to them without a big expense or aggravation?

A: Your executor is required to notify each of your closest relatives. These are the people who would have received your wealth if you did not have a will.

Often you do not have addresses for nieces and nephews. The executor will spend a lot of time and expense locating these long lost relatives so that they can receive copies of the probate papers.

Placing your property and accounts in a revocable living trust is easier. There is no need to notify the long lost relatives. Your successor trustee simply pays your final bills and transfers the money to your favorite niece and nephew. The slightly higher cost of preparing a trust and transferring your assets into the trust will save time and money.

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Q: I have lived a full life and I am not afraid of death. How can I make sure that I will not linger on life support machines?

A: It is important that you express your wishes in writing. This can be done with a “living will”. It can also be done with a health care power of attorney. The living will gives information to your doctor but does not place anyone in charge of that decision. The agent under your health care power of attorney has the power of make decisions for you. However, it is equally important for you to express your wishes to your children or loved ones and you must feel comfortable that they will follow your wishes. If your agent disagrees with your wishes, much time and effort could pass until your wishes are followed. Even though your agent may find it uncomfortable to talk about these issues, it is extremely important for the conversation to occur.

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Q: A salesman came to our senior citizen center declaring that veterans could receive a monthly check if we bought one of his annuities. This sounds too good to be true. Don’t people have to be accredited before they give advice about VA compensation and pension benefits?

A: Yes, accreditation is required and the advice may be too good to be true. Many combat era veterans with honorable discharges, and their widows, may be entitled to VA pension benefits. These are different than service connected compensation benefits. Pension benefits can offset medical expenses so that you can stay at home or receive help if you are confined to a nursing home. The simple purchase of an annuity might disqualify you from other benefits. The VA requires non attorneys and attorneys to be accredited before they can offer any advice regarding VA benefits. I am an accredited attorney with VA and you may make an appointment to discuss a plan that will be appropriate for you.

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Q: I am a widow. My late husband served in the US Navy during World War II. I need some help with cleaning, cooking, bathing and being reminded to take my medications. I do not have a lot of money, but if I have a little bit of help I can make it at home without going to a nursing home. Is any help available to me?

A: The most common benefits are available through the Illinois Department on Aging. The old Public Aid office, now the Illinois Department of Human Services, can help you apply for their home care program. Also, you might be eligible for help with a medical card and prescription benefits. But the Veteran’s Administration might also be able to help. As the widow of a combat era veteran who received an honorable discharge, you might be entitled to a form of “pension” benefits that can offset some of your medically required expenses. Each program has its own income and asset limits. Sometimes you can qualify for VA benefits even though you do not qualify for State benefits. You may make an appointment for more information.

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Q: Getting up to $23,396.00 per year for a veteran (qualified widows get less) to help pay for home care, assisted living or nursing home care sounds like a great idea. What's the catch?

A: Many veterans overlook this "improved pension" or "aid and attendance" benefit, which may be available to veterans who have an honorable discharge and served in "combat eras." The Veterans Administration declares that these benefits are meant to help provide dignity and care for veterans or their widows, but the benefit is not designed as a means of transferring wealth. Too often people are encouraged to sell off their assets and purchase annuities or give away money to their children. While these techniques often work to help the veteran who is in assisted living, these plans often backfire if the person's health becomes worse and they then transfer to a nursing home. The techniques that work for VA benefits can have very negative consequences for income tax, early withdrawal penalties and Medicaid penalties. As a VA accredited attorney I can help you evaluate the wisdom of pursuing those benefits.

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Q: Before my mother went to the nursing home she signed a power of attorney (POA). She can no longer make her own decisions. She wanted me to have her house. Why can’t I use the POA to sign her name on the deed?

A: The POA allows you to take care of almost all of your mother’s business affairs without the need for a court guardianship. If the house is given away, your mother has less money for her care and taxpayers must pay for her care.

A POA can be written to give you the power to make a gift to yourself. Without this gifting power, it is illegal to use the POA to transfer the house to yourself without paying for it.

In recent years, Public Aid agencies and other family members have filed suit against agents who used the POA to transfer real estate and money to themselves, so you must be careful. In some circumstances, you can open a guardianship and ask the court for permission to make a gift to you.

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Q: My disabled mother named me as her agent under a power of attorney. What kind of records must I keep?

A: Illinois law requires that agents keep a record of receipts, disbursements and significant actions taken as the agent. Keeping careful records allows agents to prove that they are in fact using proper care and discretion on behalf of the disabled person. If possible the agent should pay all bills with a check or other method that leaves a paper trail. In a recent court case an agent failed to keep copies of the front and back of checks. The court ordered the agent to pay the bank out of her own pocket to obtain copies of the front and back of checks. Agents should keep canceled checks, bank statements, check registers and receipts.

Future Advantage article

755 ILCS 5/24-1 Duty to Account. Shall present a verified statement of the receipts and disbursements which shall be accompanied by such evidence of disbursements as the court may require.

755 ILCS 45/3-3 Intro para for Prop POA says that the agent must keep a record of receipts, disbursements and significant actions taken as the agent.

ELDER LAW FAX -- August 18, 2003
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A free weekly newsletter by Timothy L. Takacs, Certified Elder Law Attorney

This issue: Guardian Pays $3300 for Canceled Checks
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A Florida court has ordered the guardian of a disabled man's money to pay $3300 out of her own pocket for canceled checks.

In1994, Barbara Keithly, a professional fiduciary, was appointed by a Florida probate court to serve as guardian for the estate of Donald Crosley, a disabled man. In November 2001, the court appointed Carol Vance as "Special Monitor" -- a procedure that courts will use from time to time to
see that to ensure that a guardian is held accountable for her actions.

The court's order required Ms. Keithly to make available to the Special Monitor a variety of financial records including all bank statements and the front and back of all canceled checks, from the inception of her embarking on her duties as guardian of the estate.

Ms. Keithly was unable to produce the front and the back of the checks because she did not have them. According to Ms. Keithly, the bank did not return the canceled checks with the monthly account statements but, rather, provided a photocopy of the front side of the checks.

She informed the probate court that she could obtain copies of the backs of the checks from the bank at a cost of approximately $3300. The probate court ordered her to obtain the copies at her own expense. Rather than pay for the checks, Ms. Keithly appealed the probate court's order to the Florida Court of Appeals.

The appeals court upheld the lower court's order, citing Florida law to support its decision: a "guardian must obtain a receipt or canceled check for all expenditures and disbursements made on behalf of the ward." The statute, explained the appeals court, "unequivocally requires" the
guardian to obtain canceled checks and that copies of the front sides of checks do not fulfill that requirement.

Ms. Keithly was a professional guardian, observed the court. She should have been well aware of the requirements imposed on her under the guardianship laws.

Moreover, had Ms. Keithly asked the bank to do so, it would have returned the actual canceled checks with the monthly account statements for a fee of $2 per month. Under these circumstances, concluded the appeals court, the probate court did not abuse its discretion in ordering Ms. Keithly to obtain copies of the backs of the checks at her own expense.

Although this requirement seems picky, a moment's thought convinces that possessing the originals of the canceled checks is important in holding the guardian of the disabled person's accountable for her actions.

As a fiduciary, Ms. Keithly is held to the highest standard of upright conduct and good faith in handling Mr. Crosley's money. From the very limited information set forth by the Florida Court of Appeals in its opinion, there is no inference raised that Ms. Keithly had not handled Mr.
Crosley's money properly.

Nonetheless, the best evidence of a receipt or canceled check is always the original instrument. That, of course, is the reason for the law in the first place, that the court need take no one's word that the copy matches up with the original. The originals would reveal, for instance, whether the payee of a check was actually the endorser or someone else was.

If the same question were put to a Tennessee court, the result would likely be the same. Under Tennessee law, the court-appointed guardian of the ward's money must provide the original of each canceled check with the accounting unless the "fiduciary account is maintained in a financial institution which does not return the canceled checks but provides a printed statement showing the date the check cleared, the payee and the amount, in which case the fiduciary shall submit a printed statement from the financial institution."

Estate of Donald Crosley, July 25, 2003.

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The NAELA E-Bulletin -- August 19, 2003

A weekly newsletter by Tim Takacs, CELA; Robert Fleming, CELA; and Professor Rebecca C. Morgan. The E-Bulletin is published by the National Academy of Elder Law Attorneys via email and on the Web at http://www.naela.org/applications/ebulletins/.

10. Guardian of Estate Ordered to Secure Copies of Checks at Personal Expense (FL)
--------------------------------
Professional fiduciary was appointed guardian of estate. When her bank gave her the option of receiving original canceled checks or photocopies of only front side of checks, she elected to save the $2.00 per month and chose copies. Court later appointed Special Monitor, who requested front and back of all checks; guardian protested that securing copies would cost $3,300. Probate Court ordered guardian to secure copies as ordered by Special Monitor, and to bear the expense personally. In a short, unpublished opinion, intermediate state appellate court affirms the Probate Court order, noting that state statute requires the guardian of the estate to retain copies of canceled checks and finding that copies of the front side only fails to satisfy that statutory requirement.

Full case: Keithly v. Vance
District Court of Appeal of Florida, Second District, July 25, 2003

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Q: Are Illinois attorneys required to keep malpractice insurance?

A: No. But beginning next year attorneys must tell the Attorney Registration and Disciplinary Commission whether we have such insurance, and you can then check the web site http://www.iardc.org/ to see if an attorney is insured. An attorney is required to give the insurance company a lot of information about good office procedures and continuing legal education. If an attorney follows these procedures and continues their education, the attorney can provide better service to his clients. I am proud to say that I have been insured for more than 20 years and I take pride in my continuing legal education and membership in professional organizations, such as the National Academy of Elder Law Attorneys. Also, please note that we are moving effective July 14, 2004 and our new information appears below. We look forward to serving you.

Rule to call for liability disclosure

Attorneys throughout state will be required to reveal insurance status

By CHRIS DETTRO
STAFF WRITER

Later this year, Illinois will become one of a handful of states where attorneys will have to disclose whether they carry professional liability insurance.

The state Supreme Court announced last week that it has amended its rule dealing with attorney registration to require the disclosure. The rule takes effect Oct. 1, and the information will be available to the public on the state Attorney Registration and Disciplinary Commission's Web site beginning in January.

"Anything that gives the public more information, I would think, is a good thing," said Peter Rotskoff, ARDC senior counsel.

The rule change was hailed by HALT, a Washington, D.C.-based legal consumer watchdog group, as a meaningful move.

"Responsible lawyers have always carried professional liability insurance as a matter of course," said HALT associate counsel Suzanne Mishkin. "We applaud the Illinois Supreme Court for taking this long-overdue step in protecting clients, who are entitled to know whether they will have meaningful recourse if an attorney mishandles a case."

Lawyer malpractice insurance was the subject of public hearings by the high court's rules committee in 2002 and 2003.

The ARDC, in conjunction with the 2002 registration process, asked attorneys to voluntarily disclose whether they had what is commonly called errors and omissions or legal professional liability insurance, and more than 60,000 responded, said James Grogan, ARDC chief counsel.

The survey showed that 40 percent of solo practitioners did not carry malpractice insurance. The percentage of uninsured attorneys dropped dramatically in private firms with two or more attorneys. Only 4 percent of lawyers in firms with two to 10 attorneys didn't have insurance, and less than 1 percent were uninsured in firms with 11 or more attorneys.

An overwhelming majority of government attorneys and judges, as well as corporate in-house attorneys, reported they did not carry insurance. Generally, only attorneys in private practice who deal with clients need malpractice insurance.

"But 40 percent (of solo practitioners without insurance) is a high number, and that's essentially why the court took the action it did," Grogan said. "It is the product of substantial debate."

HALT urged the court to adopt a requirement that would, at minimum, allow clients to determine whether a lawyer carried insurance before deciding to hire a lawyer or sue a negligent attorney.
The Illinois State Bar Association has proposed the court require "mandatory financial responsibility" for attorneys, be it by requiring a bond, malpractice insurance or some other means, said ISBA spokesman David Anderson.

"We think this (the current rule change) is a step in the right direction," he said.

Another proposal would have required lawyers to disclose directly to prospective clients whether they carried insurance.

"This (the current rule change) in no way precludes the Supreme Court from doing more," Grogan said.

After the requirement becomes effective, the ARDC will be able to conduct random audits to confirm the information provided by attorneys. If the information isn't provided, the lawyer's name will be removed from the master roll and the attorney will be unable to practice in Illinois.

Grogan said the state of Virginia, which has a similar reporting requirement and posts the results on a Web site, has about 1,250 "hits" on that information each month.

"It's a popular page in that jurisdiction," Grogan said.

HALT's Mishkin said the rule will encourage uninsured attorneys in Illinois to purchase coverage. Once South Dakota started requiring lawyers without insurance coverage to disclose their status on letterhead, that state saw a marked increase in the number of insured attorneys, as well as lower insurance rates, she said.

The cost of a malpractice insurance policy in Illinois is based on several factors, including how long an attorney has been practicing, volume of work, in what areas of law he or she practices and where the practice is located.

A typical policy for an attorney just starting practice costs about $2,000 per year, while an established attorney who handles a lot of cases might have to spend $9,000 annually.

To establish a valid malpractice claim, a plaintiff usually has to prove that the attorney owed the plaintiff the duty of professional care and breached that duty, and that the breach resulted in quantifiable damage.

Mishkin said she hopes Illinois eventually will follow Oregon's example and require all practicing attorneys to carry malpractice coverage.

"You wouldn't let a doctor perform surgery if he wasn't backed by an insurance policy," she said. "We should expect the same safety measures from lawyers, whom we entrust with our deepest confidences and our most valuable assets."

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Q: When my son in law’s business failed, the bank used our savings to pay his loans. Can the bank do this?

A: Yes. Your daughter was a co-signer on her husband’s loans. The loan papers said that if the loan was not paid, the bank could take the money from any account of your daughter or her husband. You added your daughter to your accounts to help you pay bills and avoid probate. Unfortunately, you also signed an agreement allowing the bank to take the account to pay the loans of any of the owners. This included your daughter. This could have been avoided if your daughter was named as agent under a power of attorney and if she had been named as the payable on death beneficiary. These steps would have met all of your goals without making your daughter a co-owner of the account.

http://www.lbergelderlaw.com/


ELDER LAW FAX -- May 3, 2004
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A free weekly newsletter by Tim Takacs, Certified Elder Law Attorney

This issue: Elderly Couple Lose Life Savings Due to Joint Bank Account
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This item appears in the April 26 Wilkes-Barre (Pennsylvania) Times Leader:

Holding a check for $22.99 in one hand and the accompanying form letter in the other, John DeStefano had a hard time deciding which was more insulting.

The letter from PNC Bank thanked him for his business and asked him to consider using its services again for his financial needs.

The check was all that remained of the $77,362.20 in savings and checking accounts DeStefano and his wife, Adeline, had at the bank.

"It's not enough money to bury us," said the 79-year-old retired electrician.

On Feb. 26, the bank took money from the DeStefanos' accounts to cover loans taken out by their daughter and her soon-to-be ex-husband.

"They cleaned it right out," DeStefano said.

The couple had neither cosigned the loans nor had any interest in the corporation Cindy and Scott Opdyke created for their over-the-road trucking business, Oldie & Opdyke Dev. Co. Inc.

But the couple had added Cindy's name to their bank accounts because they have health problems and needed someone to pay their bills in case they become incapacitated.

Unfortunately, the story of John and Adeline DeStefano -- adding a son or daughter to their bank account as a joint owner -- is depressingly common. Fortunately, for most people who add children to bank accounts, the story has a happy, or at least not unhappy, ending: nothing bad happens.

Elder Law FAX recently featured a case involving a joint bank account in which the court set aside the creation of the account because one of the account owners was mentally incapable of consenting to the act (see our March 15, 2004, issue). In that instance, it was pretty clear that one
child was trying to deprive her sister from inheriting from their father.

By contrast, there does not seem to be any question that John and Adeline DeStefano knew exactly what they were doing when they added their daughter Cindy to their bank account. They just didn’t understand the risks of doing so, or what others options they had.

Many people, particularly those who are elderly or disabled and fear that “no one will be able to pay my bills if something happens to me,” believe that adding children to a joint account is the best way to allay these fears.

From the news account, the DeStefanos appear to blame the bank for their plight. However, the bank defended its actions in a letter to them:

"On February 26, 2004, PNC debited money from PNC Bank deposit accounts that were titled in the names of John and Adeline DeStefano, and Cindy Opdyke. Each of the persons had a unilateral ability to withdraw funds from the accounts.”

Titling Opdyke to her parents' accounts essentially made their money hers, John Hall, a spokesman with the American Bankers Association, a bank trade group in Washington D.C., told the Times Leader. "She owned the account," said Hall and the bank went after money that legally belonged to Opdyke as well as her parents.

In hindsight, the DeStefanos made a “fundamental planning mistake when they added their daughter's name to their bank accounts,” said Jeffrey Marshall, a certified elder-law attorney in Wilkes-Barre and Williamsport, Pennsylvania.

Doing so put the bank account assets at risk to their daughter's creditors, Mr. Marshall told the Times Leader. It also could create an added tax problem with the possibility of their daughter preceding them in death and throw off their estate planning.

"Here's what they should have done," Mr. Marshall said. "They needed to put her on as power of attorney, not as co-owner." Under Tennessee law, giving someone power of attorney on a bank account is as simple as having the person sign the bank signature card.

Power of attorney authorizes the daughter to act for her parents and would have permitted her to write checks and have access to the accounts without being a co-owner, attorney Marshall said.

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ELDER LAW FAX -- May 10, 2004
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A free weekly newsletter by Tim Takacs, Certified Elder Law Attorney

This issue: Joint Account Not Subject to Execution for Non-Contributor's Debt
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Joint accounts are often established for the convenience of one of the account owners, but they can be dangerous. Ask John and Adeline DeStefano, who were featured in last week's Elder Law FAX.

The money in the DeStefano's bank account, to which they had added their daughter as a joint owner, was taken by the bank to cover loans taken out by their daughter and her soon-to-be ex-husband.

The bank justified its action by saying that because the daughter had a unilateral right to withdraw all of the money in the account, the money in the account was subject to her debt to the bank.

How this rule is applied may differ depending upon the facts of a particular situation, however. In another case involving a joint account, the Pennsylvania Supreme Court held that the funds in the account were not available to a creditor who had a court judgment against a non-contributing
owner to the account.

In 1994 Ruth Libros opened up a brokerage account at Morgan Stanley Dean Witter. This was a joint account among her, her daughter Joyce Johnston, and her son Joel Sarner. At the time Ms. Libros opened the account, she told her account executive that she wanted to retain full control over the account. She added her son and daughter to her account so that they could make withdrawals if she became incapacitated and so they would own the account immediately on her death.

All funds placed in the account belonged to Ms. Libros. Neither her son nor her daughter ever contributed any funds to the account.

Meanwhile, Joyce Johnston worked for the law firm of Deutsch, Larrimore & Farnish as a bookkeeper. Unbeknownst to her employer, from time to time she was dipping into the law firm's kitty; by the time she was caught and convicted of theft and forgery, she had embezzled $300,000 from the law firm, which obtained a civil judgment against her for that amount.

For some reason -- perhaps in partial payment of restitution for her daughter -- Ms. Libros gave the law firm a check from the joint account for $60,000. Armed with the knowledge that Ms. Johnston was named as a joint owner of the account, the law firm caused a levy of execution on the account.

Ms. Libros intervened in her daughter's case, arguing that none of the money in the account was contributed by either of her two children and that she had never intended to make a gift of any part of the account to them. She convinced the trial court and the appellate court of the rightness of her
cause; the Pennsylvania Supreme Court affirmed both courts.

This case arose under the Pennsylvania Multiple-Party Accounts Act. Pursuant to that law, "a joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sum on deposit, unless there is clear and convincing evidence of a different intent."

On the death of a party, however, the amount in the account "belongs to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account was created."

Looking at the intent of the Multiple-Party Accounts Act, the Pennsylvania Supreme Court opined that the legislature assumed that a person who deposits funds in a joint account does not intend to make an irrevocable gift of the funds to the other parties to the account; and, indeed, does not intend to change his or her ownership of the funds in the account.

Applying this rationale, the supreme court concluded that Joyce Johnston had no ownership interest in the joint account. And, because she lacked an ownership interest in the account, there was nothing therein that the law firm could execute on.

Deutsch, Larrimore & Farnish, P.C. v. Johnson, April 29, 2004

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Q: My brother and I want to buy an apartment building. Should we be owners as tenants in common? Then when one of us dies the estate of the dead brother will own that half. If we buy it in joint tenancy the surviving brother gets the entire value of the apartment with no requirement to pay anything to the family of the first brother .

A: No one likes to think about death, but you and your brother should make plans. If your family or beneficiaries of your brother decide not to be landlords, they can force you to sell the real estate. You and your brother could agree that when one dies, the survivor shall buy out this half share. Each of you can buy a life insurance policy on the other’s life. This money can be used to buy out the share of the dead brother. Remember, if you fail to plan, the law will make its own choices, namely giving you unwanted partners or having a forced sale.

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Q: When my parents were divorced, my father was required to name me as a beneficiary of his life insurance policies. He died. But he cashed in one policy and named his girlfriend on the other policy. When I called another lawyer, she said I could do nothing. This isn’t fair .

A: First, do not rely on legal advice over the phone. In your case the attorney did not have all of the facts. If you made an appointment and allowed the lawyer to see your papers she would have seen that the court order was very clear.

You could have filed a claim against your father’s estate. This was a valid debt.

Also, it might have been possible to sue the person who actually received the money.

Unfortunately, you waited too long to seek advice. Every claim must be filed within its statute of limitations. Since these time limits have expired you have lost your claim. It is important to see a lawyer promptly when you think you have a claim.

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Q: I have lived with my companion for many years. We own all of our accounts, automobiles and real estate in joint tenancy, so that the survivor will receive everything. Why should we worry about powers of attorney?

A: Many people are closer to their long time companions than any other person. However, if one of you becomes ill doctors and hospitals may fell that they cannot share information with a companion unless the sick person has signed a Health Care Power of Attorney. This Health Care Power of Attorney allows the agent to receive and exchange information, to authorize the doctors to perform various medical procedures and also allows the agent to make decisions concerning life support machines. If no power of attorney or other written authorization has been signed the doctors may feel required to limit their contact to the closest blood relatives of the sick companion. My office can help you prepare these documents.

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Q: After my husband died I took his name off the bank accounts, car titles and placed the proper names on my car insurance and homeowners insurance policy. What else should I do?

A: This is an opportunity to review your estate plans and related documents.

An attorney should review your will. Even if the same persons will inherit, a different executor may be advisable.

You can name one or more children as the payable on death beneficiary on your savings or brokerage accounts. You should review the names of beneficiaries on your life insurance policies, annuities and other benefits that are paid at your death. This will avoid probate at your death. A lawyer can help you coordinate these POD beneficiaries with your overall estate plan.

Your powers of attorney should be reviewed. Have you named an agent who can help you if you become disabled? As explained in previous columns, a POA should be drafted to meet your particular needs.

Widows face many challenges. An attorney’s objective review can ease some of your concerns.

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Q: My husband died. How do I get his name off the deed to the house, bank accounts and car titles?

A: If the house was owned in joint tenancy, you became the sole owner upon his death. You should change your homeowners insurance to reflect the proper ownership. It is OK if his name remains on the tax bills. An attorney can prepare a quit claim deed to yourself, but it is not necessary.

Banks can remove the name of a joint tenant. This is important since all future interest earned on the account should be reported under your social security number, not his.

You can take the motor vehicle title and his death certificate to the Secretary of State’s office. They will issue a new title in your name. Again, you should contact your insurance agent to adjust any coverage.

The death of a spouse is an emotional experience. An attorney can help guide you through the many little steps that are required to put your affairs in order.

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Q: My sister is 50 years old and suffers from severe depression. She has a tough time financially. She would like to use part of her IRA money to help with her bills, but she is worried about the penalties and taxes that she would have to pay.

A: Income taxes must be paid when money is withdrawn from an IRA. These taxes apply to the amount that is withdrawn, and not to the full value of the IRA. Thus if she withdraws $2,000 from her $20,000 IRA balance, she will only be liable for income taxes attributed to the $2,000.00. Usually, an extra 10% penalty is imposed if money is withdrawn prior to age 59 ½. However, if money is withdrawn due to an illness, the 10% penalty can be waived. Clinical depression might be considered as an illness. Government assistance programs consider IRA accounts as available money. If she coordinates the IRS and Medicaid rules, more money will be available to her.

ELDER LAW FAX -- September 22, 2003
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A free weekly newsletter by Timothy L. Takacs, Certified Elder Law Attorney

This issue: Depression Cause for Waiver of IRA Early Distribution Penalty
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Depression is a common illness. Worse, even though effective treatments for it are available, unfortunately it is often not diagnosed, especially in the elderly.

“As a result, persons who suffer from depression do not have the benefits of early medical treatment or the opportunity to make legal and financial decisions while they are still able,” psychiatrist Sanford Finkel of the University of Chicago Medical School told the Congress of the International Psychogeriatric Association last month.

According to a study undertaken by Dr. Finkel, doctors diagnosed only one-quarter of the 25 percent of the participants in his study with symptoms of depression.

Sufferers of the illness often report “I felt that everything I did was an effort” or “I could not get going on anything.” Although not a physical illness, depression can be just as disabling as a stroke or
other affliction.

Recently, a United States tax court in North Carolina ruled that ongoing depression qualifies as a disability exemption under the rules of the Internal Revenue Service governing early distribution from qualified retirement plans.

Under the rules, a 10 percent penalty is levied against taxpayers who take retirement distributions before age 59-1/2 unless a statutory exemption applies, such as a disability that renders the individual “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment [of] indefinite duration.”

Mary Coleman-Stephens is employed by the U.S. Postal Service, but she generally has not been working there since becoming ill on February 19, 1997. She was hospitalized for depression in May 1997 and released in July of that year.

Beginning in September 1997, she began treatment with Dr. Seth Labovitz, a clinical psychologist with the Department of Veterans Affairs Medical Center in Salisbury, North Carolina. Ms. Coleman-Stephens was subsequently determined by the federal Office of Workers Compensation Programs to have an occupational disability -- depression. During her illness, Ms. Coleman-Stephens borrowed money from her retirement plan in order to support herself. She failed to repay the loan, and her retirement plan reported the unpaid balance and interest as a distribution from the plan that was taxable to her.

Ms. Coleman-Stephens filed her income tax return, including the plan distribution in her taxable income, but she did not pay the 10 percent early distribution penalty, claiming that she was disabled due to her depression.

Because she was unable to work during the year the distribution occurred, and had not yet returned to work by the time of trial, the tax court determined Ms. Coleman-Stephens disabled and therefore exempt from the penalty.

The court rejected the IRS’ contention that because Ms. Coleman-Stephens’ illness was not “indefinite” in duration, her condition should not result in an exemption from the penalty.

According to BenefitNews, the decision “goes beyond IRS’s intended definition of a disability and marks a shift in legal and public opinion of depression as a true and sometimes disabling disease.”

Although research is scant on how depression affects employers’ disability costs, a recent study published in the Journal of the American Medical Association finds depression is a leading cause in lost productivity costs for employers, up to $44 billion annually.

Coleman-Stephens v. Commissioner of Internal Revenue, July 16, 2003.

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Q: I let my adult son move in with me. Now he won’t leave. He says that if I put his clothes on the street he will sue me. How can I get my house back?

A: Under Illinois law, your son is a tenant. If you don’t follow the rules when you evict a tenant, you can be sued. You must give your son a written notice to move within 30 days. This can be a simple note saying that you demand that he leave. Keep a copy and mark the day you gave it to him. If he does not move, you must then file an action in small claims court. He could ask for a court hearing. If his name is not on the deed to the house, the judge should give you an order saying he must leave.

If your son is threatening you with harm or taking your money without permission, you can ask for an order of protection. Then the judge can order him out and order that you not be harmed.

Helping a child is good, but they should not take advantage of their parents.

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Q: We sold our house. The buyer says we failed to disclose sewer problems. We did not disclose the root removal on the Residential Real Estate Disclosure form. We thought this was ordinary maintenance. Why does our lawyer tell us that we should pay the buyer some money?

A: The law still says: “Let the Buyer Beware!” However, the law now requires the seller to disclose all material defects in a house so that the buyer can make an informed decision. A court has even said that a seller can be sued for non disclosure although the buyer may have known of the defect. Since you had some work done on the sewers in the two years prior to selling the house, there is a slight chance that a judge would find that you failed to disclose a material defect. Defending a court case can be very expensive. The results are never certain. Sometimes it is better to settle a claim if the settlement is less than the cost of defending yourself.

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Q: My daughter has lived with me for many years and has helped me stay out of a nursing home. However, my doctor says that I cannot stay home. Where will my daughter live?

A: Your daughter can keep the house. Taxpayers pay for Medicaid and the lawmakers want you to use your own assets (“spend down”) before the taxpayers pay the bills. There are several important exceptions to this “spend down” requirement.

Many children provide care for their parents. Taxpayers save money when the care from your daughter keeps you out of a nursing home. If your daughter has lived with you for at least two years providing this care, Medicaid does not require the house to be sold. In fact, you may transfer the house to her without a Medicaid penalty. As a word of caution if she receives the house at your death, Medicaid may have a claim. You can avoid that claim if you transfer ownership while you are living.

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Q: How can I make sure that my grandmother's bracelet is given to my granddaughter when I die?

A: The most difficult part of any estate can be the distribution of jewelry, pictures, china and other similar items. If these items were sold to an outsider very little money would be received. On the other hand these same items have great personal and sentimental value. Many Wills never mention these items but most families are able to reach an agreement. If family members can not reach an agreement then technically all of these items must be sold and the money put into the estate. Experience has shown that the worst thing is not to mention this topic to your children or other family members. Too often disputes about the distribution of these items have consumed unnecessary attorney's fees and have caused hard feelings. Next time I will discuss how you can deal with this topic.

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Q: I am the guardian of my mentally retarded daughter, who lives at home with me. I must have surgery followed by several weeks in a nursing home for rehabilitation. How can I appoint someone who can make decisions for her while I am out of the home?

A: You can appoint a short term guardian for your daughter without going to court. This short term guardian may act for 60 days. This document must be signed with the same formality as a Will. If your own illness or even death will not allow you to continue as guardian, you can sign a different document designating a standby guardian. Caring for a loved one with disabilities results in many challenges. Please feel free to contact my office for legal assistance.

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Q: My parents are in the hospital. Why did the hospital staff say that they are prohibited by HIPAA from giving me any information?

A: HIPAA is an abbreviation for the regulation adopted by the Federal Government pursuant to the Health Insurance Portability and Accountability Act. HIPAA now prevents doctors and medial staffs from releasing information under most circumstances. Therefore, many people will no longer be able to call the hospital and ask about the condition of their friend unless the friend has clearly signed permission to release that information.

Your parent’s situation clearly illustrates the need for people to have a Health Care Power of Attorney. If your parents had signed that power of attorney naming you as their agent the HIPAA regulations would allow the doctor to release and exchange information with you. My office can help in preparing those documents.

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Q: Does Illinois offer any protection for Identity Theft?

A: The Identity Theft Law appears as Article 16G of the Criminal Code. The law recognizes that ID theft occurs in many ways. This law says it is illegal for someone to use your personal identifying information to buy stuff in your name. These definitions make it easier to prosecute the offenders. The police are now required to take a police report and investigate reports of ID theft. Now you can sue the ID thief for your attorney’s fees, lost wages, court costs and actual damages; it may still be tough to collect this money, but at least you can try to get something more than the cost of the item charged against your credit card. People also steal an ID and then get arrested. The law now provides a simplified process to allow the victim to clear up their name. Be careful not to give out personal information unless it is really necessary.

S 242: 720 ILCS 5/16G-1 et seq, The Criminal code is amended to rename the Financial Identity Theft and Asset Forfeiture Act the Identity Theft Law and to expand its application beyond the use of information to the counterfeiting of documents to effectuate thefts. [P.A. 93-0401; effective July 31, 2003].

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Q: The Internet has a lot of great legal sites. Lawyers prepare many of these sites. Why should I pay a lawyer rather than doing the legal documents myself?

A: There are many good legal sites on the Internet. These can give you very helpful information about many legal topics. These sites allow you to learn more about a legal topic at your own time and leisure. With this knowledge from the Internet it should be easier to understand why certain actions or documents are recommended. These sites can help you become a more informed legal consumer.

However, not all sites are well grounded in the law. The site may focus on one area of the law. It may not explain how other areas of the law are related.

Often the law offers you several choices. Each choice has a different cost or other consequence. The role of an attorney is to identify those choices and consequences for you. The attorney offers this advice after speaking with you, reviewing your documents and listening to your concerns and objectives. The attorney also draws upon his or her own prior knowledge and experience to suggest things that may not have even entered your thoughts. Legal Internet sites are very advanced and helpful. However, you may miss an issue or choice without knowing it. Many times documents from Internet sites or even stationary stores work fine since the parties do not have a problem. Once you encounter a problem that was not anticipated in the document you realize how expensive it was to avoid seeing the attorney.

At this point these Internet sites are still not a substitute for the advice of your individual attorney.

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Q: I am a widow. Should I add my children to the deed of my house to avoid probate?

A: This would be placing your house in joint tenancy or as joint tenants with the right of survivorship. When one joint tenant dies, the surviving joint tenants own the house. No probate is necessary.

However, these are some of the complications that I have seen with joint tenancy deeds:

  • If the children are on the deed, they are co-owners. If one of these children are sued or file bankruptcy, the house may have to be sold to pay those debts.
  • Mom cannot sell the house, or even get a home improvement loan, without the signature of each child on the deed. Sometimes the children refuse to cooperate.
  • If there are many children it may not be practical to put all of their names on the deed.
  • If Mom goes to a nursing home, Medicaid still considers the house to be entirely hers. It may have to be sold to pay the bills.
  • If you put only one child on the deed and she sells the house after your death, the daughter might be required to file a gift tax return when she gives the share to her siblings.

A lawyer can help you weigh each of these factors. You can then make an informed decision.

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Q: My insurance agent wants me to buy a life insurance policy on the life of my disabled daughter, but then transfer that policy back to me. I can receive the income from that policy, which I need. Otherwise my daughter cannot get life insurance. Should I first talk to my lawyer?

A: Recently I have seen several life insurance policies sold on the life of a disabled child. The parents and the insurance agents were trying to help the families. Unfortunately, when one person, for example a parent, buys life insurance for another, such as a disabled child, there can be unintended consequences. In the case above, the value of the life insurance policy was included in mom’s estate. The family had to open a probate estate. In another case the daughter’s ownership of the policy may have caused the disabled daughter to lose government benefits. In another case, the policies may have disqualified the parents for government benefits. The lesson is that a lawyer can work with the agent to develop a plan that will coordinate benefits and achieve your other financial goals.

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Q: Can I just give $10,000.00 to my minor grandchildren without worrying about the gift tax?

Each year you can give up to $10,000 to a person without worrying about the gift tax. (This amount is about to be raised to $11,000 per year). A husband and wife can each give $10,000 to a grandchild or any other person. If you give more than $10,000 within a year you must file a gift tax return. Depending upon the size of your estate, you will then either pay a tax on the amount of the gift above $10,000 or you will reduce the value of your estate that will be exempt from estate taxes at your death. If the total value of all of your assets (including life insurance and money in a trust) is less than $1,000,000 (and you die in 2002 or later) it probably would not hurt you to reduce the exempt amount of your estate at death.

A grandparent should not try to avoid this $10,000 limitation per year of gifts to a child by putting the name of a minor grandchild on a check. As indicated above, in most cases the grandparent will not incur any gift tax liability if he or she gives more than $10,000 per year. If the grandparent puts the name of that grandchild on the check and the parent then cashes the check and applies it toward a purchase in the parent’s name, then that parent has improperly converted the money of that minor grandchild. When the grandchild becomes an adult that grandchild might be able to sue the parent for the return of that money.

Depending on the assets of the grandparent and their own children, there are a variety of ways that a grandparent can give money to their grandchildren. Sometimes the grandparent must consider estate taxes of the grandparent or parent. Other times the grandparent must consider the impact of the gift on the grandchild’s eligibility for college financial aid. Other grandparents must be concerned about the impact that money will have on the right of a disabled child to receive government assistance. These are each topics for another day. In all cases, it is not proper for a grandparent to try to evade the gift tax limitations for gifts to a child by putting the gift in the name of a minor grandchild.

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Q: I have been paying my mother’s medical expenses. Can I deduct these expenses on my income tax return?

A: If you itemize deductions, instead of taking the standard deduction, you might be able to include the medical expenses that you paid for your mother, even if you did not otherwise claim her as a dependent.

You must meet each of these conditions:

She must be related to you (obviously this applies to your mother, but this same rule also applies to other relatives). It is not necessary for a relative to live with you. However, the benefit also applies if a non-relative has lived with you the entire year.

She is a U.S. citizen or a legal resident.

You provided more than one-half of her total support for the year.

Medical expenses can be deducted only if you itemize and only to the extent that the medical expenses of you and your medical dependents exceed 7.5% of your adjusted gross income.

There are more details at page 143 of IRS Publication 17.

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Q: Last month you explained how to file an appeal if Medicare refuses to pay some of my medical bills. But I am overwhelmed by all of these forms. Plus, how do I get my Medicare supplement insurance policy to pay?

A: Often the supplemental policy will pay only for an expense that is eligible under Medicare. Thus, as you file an appeal with Medicare you should also keep your insurance company informed.

The supplemental policy may have its own deadlines for filing an appeal or a request to review a denial of benefits. You should keep in touch with your insurance company and follow their rules.

Senior citizens can also contact the Senior Health Insurance Program for help. The local office is at Alton Memorial Hospital, 463-7182. This State program can also help process Medicare and insurance claims for other hospitals and doctors.

Ask for help. Act within the deadlines. Keep copies. In most cases your claim will be covered.

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Q: What do I need to know about the new Medicare Drug Discount Cards?

A:

  • These cards will be available from June 2004 until the Part D Medicare benefit begins in January 2006.
  • In May 2004 qualified persons, someone who is enrolled in Medicare Parts A & B, will receive offers to buy these cards.
  • Private companies will issue the cards, but each card must be approved by the federal government and have its seal.
  • Each card will cost $30.00/year.
  • You will receive discounts on prescription drugs.
  • The amount of the discount will depend on the drug and the plan.
  • Benefits will be coordinated with the Circuit Breaker program.
  • You must follow the rules of the plan, for example, generic drugs might be required.
  • Each plan will have its own list of pharmacies in the area.
  • Participation is voluntary.
  • Low income persons might qualify for additional benefits.

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Q: I had many tests at the ER. Now Medicare says that the tests were not needed and refuses to pay. What can I do?

A: Ask the doctor or hospital for help. Also, read the forms carefully and act quickly to preserve your rights.

Medicare will only pay for treatment that is “medically necessary.” Sometimes a claim will be rejected due to a missing report or misunderstanding.

The notice will tell you how many days you have to file an appeal. Before the deadline expires, you should sign the form and write on the bottom “please review.”

The notice will say why the claim was denied. Use simple words to explain why you believe the claim should be covered. Include any notes or doctor’s orders that might help explain your case.

Keep a copy of your reply. Send it by certified mail to the address on the form.

If the bill is still denied after this review, do not give up hope, another appeal can be filed. In most cases your claim will be paid.

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Q: Our Medicare Part B premium will increase by 17%. We only have Social Security and a small pension. It is tough paying for our doctor and hospital co-pays. Can we get any help with these medical bills?

A. There are at least 3 Medicare Savings Programs, including the Qualified Medicare Beneficiary Program (QMB), Specified Low Income Beneficiary Program (SLMB) and Qualified Individual Program (QI-1). You can benefit if your monthly income is less than $1,426 for a couple and $1,068 for an individual and your savings are less than $6,000 for a couple and $4,000 for an individual. You can keep your home. The lower your income, the greater your benefits. Those with the lowest incomes ($1,061 for a couple and $796 for an individual) can have all of their Medicare co-pays paid by the program. These programs, which are administered by the Department of Public Aid, are different than the Circuit Breaker programs. Please contact my office for a free fact sheet on these programs.

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Q: Unfortunately, my mother’s health is failing and she may need to go to a nursing home. I am not sure how to pay for it, but the people at the nursing home will help me apply for Medicaid. Why should I contact a lawyer before placing mom in the nursing home?

A. Placing a loved one in a nursing home can be a very difficult decision. The child or spouse facing this decision often has feelings of guilt or betrayal. The family does not know what to look for in a nursing home. While the attorney cannot help with all of the emotional issues the attorney can provide information to the family to help them make an informed decision.

An attorney can review with the family the resources in the community. The client may have overlooked all of the real estate tax exemptions available to them. The Circuit Breaker program can help low income seniors with most of their prescription costs. Low income seniors might qualify for home health care through the Illinois Department on Aging. Senior citizens whose income is at or near the federal poverty line may qualify for additional help with their medical expenses. These programs may free up enough income or resources to allow the senior citizen to stay in the community for a longer time.

The attorney can also make the family aware of other programs such as day programs for Alzheimer’s patients or even placement for a few days in a nursing home. These programs can provide stimulation to the patient and can give the caregiver much needed rest. Once refreshed, the caregiver is better able to help their loved one at home.

However, if nursing home placement is required, there are many issues to be addressed. The attorney can review the necessary papers. For example, is the loved one capable and willing to sign a property and health care power of attorney? These documents can make it much easier to help a loved one if their condition becomes worse. Although forms are used for these powers of attorney, care should be taken to include the proper features in the forms and to name the proper persons to act as agent. If the client is no longer competent to sign a power of attorney it may be necessary to open a guardianship.

There are many factors to consider when choosing a nursing home. The attorney will often have a checklist of items that the family can use as part of their decision making process.

Paying for a nursing home can be a real challenge. The government will pay for nursing home care only under limited circumstances; after all tax dollars are limited. On the other hand the government does allow you to keep certain resources and still qualify for assistance. A qualified attorney can inform you of those rights. This will be addressed more fully in a later column.

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Q: When I visit my mother in the nursing home I try to help her eat. I am afraid that she does not eat properly when I am unable to be there. Is there anything I can do?

A: Your mother might have a swallowing disorder. Many conditions contribute to swallowing disorders including dementia, heart attacks, strokes, reactions to medicines and poor dental health. You can ask the nursing home to hold a care planning meeting and ask for an evaluation of a multi-disciplinary team of health care professionals including your mother's attending physician and a speech pathologist, if appropriate. A swallowing evaluation can be performed. The nursing home can work with you to prepare a plan that might include changes in diet or using a qualified feeding assistant.

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Q: I used a power of attorney to sign my aunt into a nursing home. Do I have to use my money to pay the nursing home?

A: Ordinarily, when you act as an agent under a power of attorney, you do not have to use your money to pay the bills of the principal (your aunt). The law says that you are standing in the shoes of your aunt, and only her assets and income are used. On the other hand, if you improperly use the power of attorney to give your aunt’s money to yourself, then the nursing home might sue you for the money. Do not give away money of a disabled person without consulting a lawyer.

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Q: I am a senior citizen. My social security check is very small. My real estate taxes are so very high. I do not know if I can pay them.

A: Depending upon your age and income, Illinois law has several programs that may be able to help you. First, if you own your own home, you should receive a homeowner’s exemption (SB 1790). This will reduce your assessed valuation by $3,500.00. If you are 65 or older, you should receive a senior citizen (homestead) exemption, which will reduce your assessed valuation by another $2,000.00.

If your total household income is less than $40,000.00 you should qualify for the senior citizen freeze. Each year that you qualify your assessed valuation will be frozen. Your taxes may still go up, but much slower.

Senior citizen centers and my office can help determine if you are qualified.

April 22, 2005

This is not part of the article:
Senior Citizen Assessment Freeze Homestead Exemption, 35 ILCS 200/15-172

Beginning with the 2004 real estate tax bill, payable in 2005, the homeowners real estate tax exemption has been raised to $4,000 per year and the senior citizen real estate tax exemption has been raised to $5,000.00 per year. Each year the homeowner must complete a card or other notification for the County to verify that the senior citizen still resides in the house.

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Q: I know that you said that as a senior citizen with low income, I can qualify for homeowners, senior citizen (homestead) and senior citizen freeze exemptions to reduce my real estate taxes. However, my social security check is so small that I still need help. Is there anything else I can do?

A: If your total household income is less than $40,000.00 you can delay the payment of your real estate taxes. When the real estate taxes come due the bill is presented to the County Treasurer, who has the application form. He makes a note with the County Recorder that you are participating in the program. Your taxes will not be sold. You will not lose your house. When you die or move the unpaid taxes, plus interest at 6% per year, will then be paid. You can stay in your home.

If your income is slightly higher, up to $28,480.00 for a married couple, the Circuit Breaker program may also give you a small rebate for your real estate taxes.

Senior citizen centers and my office can help determine if you are qualified.

April 22, 2005

This is not part of the article:
Senior Citizens Real Estate Tax Deferral Act, 320 ILCS 30/1, Amended by P.A. 92-639, § 5, eff. Jan. 1, 2003.

Senior Citizens and Disabled Persons Property Tax Relief and Pharmaceutical Assistance Act, 320 ILCS 25/1

Beginning with the 2004 real estate taxes payable in 2005, the income limit for a household for the Senior Citizen Freeze is $45,000.00. This is an annual application.

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Q: Can I give real estate to my grandson, who is six years old?

A: Attorneys will usually try to talk you out of this, primarily because minor children do not have the ability to sign contracts for the sale, mortgage or other documents that might be related to real estate. If these legal documents were required a guardianship must opened with the court so that the court could appoint a guardian to act on behalf of the child. This is an expensive and cumbersome process. However, a title insurance company attorney recently pointed out that this process can be streamlined if you deed the real estate to a custodian for the benefit of the child pursuant to the Illinois Uniform Transfer to Minors Act. The adult custodian acts on behalf of the child until he or she becomes an adult. This would simplify the process and allow you to accomplish your goals with little difficulty.

Q: I am a Senior Citizen. It is tough to pay my real estate taxes, any help available?

A: Senior Citizen Real Estate Tax Deferral Program may be helpful. Basically the State of Illinois will loan you money to pay your real estate taxes if you qualify. You must be at least 65 years old, have a household income of less than $50,000, own and occupied your home for at least 3 years, your property taxes are current and you have homeowner’s insurance. When your house is sold the accumulated real estate tax plus interest at 6% must be paid. It is important to act quickly since the deadline is March 1, 2010. If you are interested you should contact your County Treasurer’s Office as soon as possible.


Real Estate Law Practice Flash Pointssm
September 2004

By Steven B. Bashaw
Steven B. Bashaw, P.C.
1301West 22nd Street, Suite 1012
Oak Brook, Illinois 60523
Tel.: (630) 472-9990
Fax.: (630) 472-9993
(Copyright 2004- All Rights Reserved)

9. From The Title Insurance Company’s Perspective; Uniform Transfers To Minors Act
I recently received a phone call from someone who asked me to look over a file; the title examiner told me that the property had been conveyed to a minor. I sighed into the phone; I had visions of someone falling for some Internet babble about how one can convey one's home to his or her child for estate planning purposes. I was about ready to offer up the "pound sand" endorsement when I decided to first see what she was talking about.

Well, was I chagrined, humbled, and generally put in my place! It seems that the entire transaction was done pursuant to 760 ILCS 20/1, et seq., which is the Illinois Uniform Transfers to Minors Act. This Act regulates the transfer of property to minors. Real property (including the necessary deed language) is discussed at 760 ILCS 20/10(5). This statute provides that "custodial property is created and a transfer is made whenever . . . real estate or an interest therein is the subject of an executed and delivered deed, assignment or similar conveyance into the name of the transferor, an adult other than the transferor, or a trust company, followed in substance by the words: ‘as custodian for ___ (name of minor) under the Illinois Uniform Transfers to Minors Act.’"

This property can later be conveyed without requiring a court order or the appointment of a guardian. 760 ILCS 20/14 provides that "a custodian, acting in a custodial capacity, has all the rights, powers, and authority over custodial property that unmarried adult owners have over their own property, but a custodian may exercise those rights, powers, and authority in that capacity only." See also 760 ILCS 20/13.

If a title company is conducting a closing of the transfer of custodial property, the examiner should first review the deed to the custodian to make sure that it conforms to the statute. It seems to me that any deed from the custodian would have to be executed by the named custodian (e.g., Jane Smith), "as custodian for ___ (name of minor) under the Illinois Uniform Transfers to Minors Act." Any proceeds check would probably have to be made payable to, e.g., "Jane Smith, as custodian of John Jones, a minor."

Dick Bales, Chicago Title Insurance Company, Wheaton

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Q: My spouse’s Medicare benefits are exhausted. Do I need to take any special steps to transfer his IRA to me before I apply for Medicaid?

A: Medicaid will pay for nursing home care if you have used or “spent down” most of your savings. Medicaid allows the nursing home spouse to transfer to the community spouse, the house, car, prepaid funeral plans, plus savings of approximately $90,000. If most of your spouse’s savings are in an IRA, you will pay income taxes on that money when you withdraw it before you transfer it to yourself. This large lump sum might put you into a higher income tax bracket. However, if you ask the court for a legal separation, it is possible to transfer the IRA into your own name without immediately paying income taxes. In future years you can withdraw from the IRA in small amounts. Since these amounts are smaller, the income tax will be lower. Please make an appointment if you would like more details.

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Q: One friend said that she took her lawyer’s advice and put their children’s name on all of their property and accounts and that I should do the same. Another friend said that I should still have a will. Still, another friend says that I should have a revocable living trust to save estate taxes and avoid probate. I am so confused. What should I do?

A: It would be nice to give you one simple answer or even one checklist to help you with your decision. It is clear that the worst decision is to do nothing. If you die without a will or any other plan, the law will say how your property will be divided up. The state will not take everything if you do not have a will. The intestate rules may give your property to persons that you do not like or trust. You may also loose important tax savings or increase costs without a proper plan.

While you may think that your situation is the same as your friends or family members, your attorney may advise you that an entirely different plan and documents are appropriate for you.

If you have a large amount of property and insurance policies, such as $675,000 or more, special rules may require you to set up trusts during your lifetime (revocable trusts) or in your will to avoid estate taxes. If you have less money, the costs of setting up a revocable trust, transferring assets to the trust and administering the trust may cost you far more than any will and probate proceeding. Family or personal circumstances may make a revocable trust advisable, even though it has higher initial costs.

“Joint tenancy with the right of survivorship” allows the survivors to have the money or property at the death of the original owner without any probate. However, since joint tenants are considered as joint owners of the property or accounts, the money in these accounts or even the real estate may be used to pay the debts of that child or other joint owner even though the account was entirely from the parent’s money. If the parent wants to sell the house, the child who is a joint owner may refuse to sign the deed without getting their share immediately. If a child is disabled or goes bankrupt, the money in the joint account may be used for their care or other bills. If one child is the joint tenant, he or she may not want to share with his or her brothers or sisters.

If you have most of your money in IRA accounts, 401(k) plans or other retirement savings accounts, special rules apply for distribution. If you do not meet those rules, your family may pay unnecessary income taxes.

Do you like your son-in-law? If your daughter happened to die before you, do you want this son-in-law to control the inheritance that you have left for your granddaughter?

These are only a few of the issues that your attorney will review with you. If even one of these facts are changed, the attorney may recommend a plan that is much different than your friends. Hopefully you can rely upon the experience and knowledge of your attorney to prepare a plan that meets your needs.

Written for The Advantage October 2001

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Q: When I saw my attorney to write a Will, he suggested that I have a Power of Attorney, too. I am healthy and my wife signs for me all of the time. Why do I need a power of attorney? Can’t I wait until I really need it?

A: Powers of Attorney give someone the power to sign your name. Since they are very powerful documents, the law wants to make sure that you understand that you are giving someone this power.

If you wait to sign a power of attorney until you really need it, you may not have the legal capacity to understand what you are signing. In fact, Illinois law now requires that before you sign a power of attorney for property (the power to sign your name to things that you own) a notary public must witness your signature and another person must sign as a witness. This witness verifies that you have a sound mind and free will when you sign the document. If you are too ill to understand the document, the power of attorney cannot be signed. Your family or friends may then be required to ask the court to appoint a guardian for you. A guardianship can be much more expensive and intrusive. The court may appoint someone that you do not like as your guardian.

Although spouses, children and even persons who share a joint account with you can do many things on your behalf, many times they will not have the power to sign your name and take care of your important business without a power of attorney.

In most cases, a separate health care power of attorney is signed. The agent under a health care power of attorney has the authority to consent to most medical procedures on your behalf. This agent also has the authority to review your medical records and speak to the doctors and hospitals on your behalf.

In most cases, signing a power of attorney does not mean that you are immediately giving up the right to make your own decisions. A power of attorney can always be revoked.

Attorneys do not always recommend that powers of attorney be signed. Sometimes there is no trusted person to serve as agent. Other times close family members or “friends” may be putting pressure on the client. The attorney should be told all of the facts so that the attorney can give you the best legal advice.

Like your Will, powers of attorney can be an important part of your estate plan. A bit of preparation now can make life easier for your family to help you in the event of an emergency or illness.

Written for The Advantage October 2001

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Q: My grandmother died and left all of her money to my cousin. This is not fair. How can I contest her will?

A. One purpose of a will is to allow your grandmother to say who will get her money when she dies. This is a very important principal in the law. People want to know that they can decide who will receive their property when they die. Even though a person may have difficulty making some decisions, the law may still say that they are competent enough to make a will. The law makes it very difficult to set aside a will.

The law describes the procedures to contest a will.

You have only a limited period of time to file a will contest. In Illinois, a will contest must be filed within seven months after the will has been admitted to probate. If you waited longer than that, there would be too much uncertainty about who owned what property.

You have limited reasons to ask the court to set aside a will. You simply cannot claim that the decedent’s will is unfair.

Occasionally, the will of a parent will not refer to a child. The omitted child might be able to argue that this was simply a mistake and therefore the child should be included in the distribution. If the parent has identified that child in the will but states that he or she will get nothing, it will be extremely difficult for the child to be included in such a will.

The person making the will may be coerced or tricked into making the will. The person making the will may be persuaded that something bad will happen to them or to a loved one, or that the State will take all the money if the will is not written in favor of someone. The testator (the person making the will) may also not be competent to make his or her own decisions. These can be conditions for setting aside the will.

In most cases, the plaintiff wins a lawsuit if they can prove that their case is more likely true than the defendant’s case. However, in will contests, the plaintiff must prove its case by clear and convincing evidence. This is one more way that the law protects the wishes of the testator.

If you truly believe that your grandmother was not able to make her own independent decisions, you should investigate a will contest. Your best bet to be included within your grandmother’s will is to visit her, help her and provide her with love and respect while she is alive.

Written for The Advantage October 2001

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Q: My son died without a will. His father abandoned us many years ago but now demands half of my son’s estate. Can he do that?

A: Recently a California court said that a father could claim his one half share of his son’s estate even though the father walked out 42 years ago. The court said that without a will it was required to obey the law and give the share to the father. In Illinois the result might be different if the deceased child was under the age of 18 or was disabled. In those special cases the estate can object to the father receiving a full or partial share of the estate.

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Q: We gave our daughter and son-in-law the down payment for their house. They are now getting divorced and our son-in-law is demanding that he keep half of the equity in the house. Since we paid for that equity can we get our money back?

A: Probably not. Your daughter told the bank that this money was a gift. If it was a loan the lender probably would have denied the loan to buy the house on the grounds that the total debt owed to the lender and to you would be too much of a debt burden. Unless your daughter put something in writing to repay you, your son-in-law can probably get his money before you receive yours. Your daughter can ask the divorce judge to declare that the amount from you be considered as a marital debt which your son-in-law should repay, but recent cases suggest that judges are unlikely to do so. Family members should clearly indicate when money is a gift or a loan.

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Q: What should I look for before I purchase a prepaid funeral or burial contract?

A: Prepaid funerals can provide the family with peace of mind. Also properly qualified prepaid funeral plans are exempt for Medicaid planning purposes. Most life insurance policies and “dedicated” savings accounts are not Medicaid exempt. There are several important things to consider: (1) Who will be holding the money? Funeral homes sell insurance policies, but some of those insurance companies have become insolvent. Look at the insurance company’s AM Best rating. (2) Your rights and obligations should be written in plan English with all goods and services listed. (3) If goods and services in the contract are not available at the time of the funeral, a substitution policy should be clearly stated. (4) If the funeral or burial will occur at a distant place, that should be specified in the contract. (5) A price of goods and services should be guaranteed or the contract should say who will be responsible for any additional amounts. (6) The right to cancel should be described, but Medicaid planning requires that the contract be irrevocable.

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Q: I am a small business owner. How long must I keep records?

A: Ordinarily you should keep records for 3 full years. However the recent amendments to the Illinois Equal Pay Act of 2003 now require you to keep pay records and other personnel records for at least 5 years. The Act made other changes as well. The employee now has 12 months instead of 6 months to file a complaint with the Illinois Department of Labor. The rules have also been strengthened to make it more difficult for people to ignore the DOL enforcement proceedings. It is always best for an employer to keep good records explaining why one employee is paid differently then another.

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Q: I thought it was great when my boss gave me a BlackBerry so that I could receive and reply to messages and email when I am out of the office. But now it seems like the work never stops. Is there anything I can do?

A: This is a developing area of the law. If you are an “exempt” employee such as a manager or supervisor, you may not be able to do anything. The extra time may simply be considered as part of the duties under your salary. On the other hand, if you are a “non-exempt” employee, which is someone who is eligible to receive overtime pay, then an argument can be made that you are entitled to be paid for this extra time “on the clock” responding to the BlackBerry messages. Complaints can be filed with the IL Dept. of Labor and the U.S. Dept. of Labor. In addition, a private lawsuit or claim might be filed.

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Q: I am being sued by my credit card company. I know that I missed some of my payments, but how can they tell me that I do not have any right to tell my side to a judge?

A: Your credit card company sent you many notices in the mail. The fine print described how any future disputes between you and the credit card company would be handled by arbitration; you can no longer go to court. Legally, when you used your credit card after receiving this notice you agreed to these changes. After you missed several payments the credit card company sent you another notice that they were filing for arbitration. When you failed to respond to that notice the arbitration panel found in favor of the company and said that you owe all of the money. Now the court action is limited to a court judgment to confirm the arbitration award so that they can garnish your wages. It is very important to pay attention to those notices.

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Q: There is a lot of talk about same sex couples being permitted to marry each other. I do not see how this can affect me.

A: Marriage has many benefits and burdens that we take for granted. Husbands and wives are legally responsible for the ordinary and necessary expenses of health and living. For example, landlords, funeral directors and hospitals can usually pursue one spouse for goods and services provided to the other spouse. Under current law these same creditors cannot pursue a long term partner for these same expenses without that partner signing a contract or guarantee. If one person owed you money you might have a greater chance to collect on a bankruptcy court claim if the long term partner cannot claim additional protection that is available to a spouse. Through “little” examples such as this all of us can see how our rights and obligations might be changed if there is a change in the laws of marriage.

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Q: My old boss was very unfair to me. Before I was fired, I deleted programs and information. I figured that he could hire someone to reconstruct the data within a few days.

A: Your employer may be able to sue you in federal court for your misconduct. A federal court has recently held at the Computer Fraud and Abuse Act allows the employer to sue former employees. The employer may be able to recover the cost of hiring someone to restore the information on the computer, other direct expenses and the employer’s attorney’s fees and court costs. A few minutes of angry behavior by you could cost you a lot of money.

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Q: Can I use my IRA to benefit charities?

A: For a limited time, until December 31, 2007, certain people can make contributions from their IRA. You must be at least 70 ½ to take advantage of this rule. The money must be transferred directly from the IRA to a qualified charity – this includes most churches and most charitable organizations. You are limited to $100,000 per year. As an example, if you accepted a distribution of $2,000 from your IRA, and then made a $2,000 contribution to your church, you have increased your income by $2,000; this might cause your Social Security to be taxed at a higher rate. Not all people have enough deductions to allow them to file an itemized income tax return; if you cannot itemize then your income taxes are not reduced. On the other hand, if you transferred $2,000 from your IRA directly to your church, this counts toward the minimum that you must withdraw each year and you have not added to your income, thus possibly avoiding extra taxation of your Social Security. Even people of modest means can thus do a good thing and save taxes. Please consult your tax advisor before making these transfers.

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Q: Can I find out whether my doctor or hospital is sending my personal health information to other people?

A: Yes, the Health Care Portability Insurance Act (HIPAA) regulations allow you to make a written request to your doctor or hospital each year. Once each year the health care provider must give you a free written report that includes the name of the person receiving the information, the date, a summary of the information and the purpose of the disclosures. Health care providers can disclosure your records without your direct knowledge, for example to another doctor that is treating you. But your request for an accounting of disclosures can reveal whether an unauthorized person has asked for your records. Unauthorized persons can commit identity theft by using your medical records to obtain treatment under your name and your insurance. More helpful privacy information can be found at the government HIPAA web site http://www.hhs.gov/ocr/hipaa/ This right of accounting of disclosures is found at 45 CFR 164.528.

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Q: My son took my checkbook and forged my name. My bank says that they are not liable and charged my account. Is the bank right?

A: Generally, if someone forges your name you are not liable. But the law requires you to take several steps to protect yourself. You must use ordinary care to prevent your son from taking your checks and you might be required to file a police report. Once your bank statements arrive you have a duty to promptly review them to see if there are any unauthorized checks or withdrawals. If you fail to open your statements within 30 days or fail to report the loss to the bank, the bank will probably be allowed to withdraw the money from your account. You could still sue your son and the person who accepted the forged check, but that is often an expensive process. It is always best to act quickly to notify the bank to prevent the funds from being withdrawn from your account.

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Q: How can I get visitation with my grandson?

A: This seemingly simple question is actually a matter of constitutional law. The US Supreme Court has held that parents have the right to control the destiny of their children and that most of the time they can refuse visitation by a grandparent. If the parents are married and living with the child a grandparent basically has no rights. If the parents are not living together a newly amended Illinois law gives grandparents slightly more rights to visit a grandchild that is at least one year old, but even then the grandparent has the burden of convincing the judge that the parents are being unreasonable in withholding visitation and that visitation is in the best interests of the grandchild. If you cannot afford an attorney you can try to file your own court petition, but this is not an easy case. In most cases it is best to use the help of a pastor, another family member or someone else that your own child trusts to mediate a compromise.

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Q: My daughter is mentally retarded. Soon she will be 18 years old. Why should I ask the court to appoint me as her guardian?

A: You may need the guardianship to speak with her doctors and other health care providers. While she was younger the HIPAA (health care privacy) rules and other laws allowed you to receive information and make decisions on her behalf. But when she becomes 18, the law declares that she is an adult and able to make her own decisions. The HIPAA law may even prevent her doctor from speaking with you. Health care providers can exchange information with you after your appointment as guardian. Our judges recognize that your appointment as guardian of the person is very similar to your responsibilities as the parent of a minor child. The judges try to streamline the process as much as possible when the parent is seeking to become guardian of a clearly impaired child. Please contact our office for more information.

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Q: Who do I contact if someone is abused?

A: In an emergency when the life or health of an individual is in danger, call 911 or the local police department.

The Illinois Department of Public Health investigates abuse and neglect of nursing home residents. Voice (800) 252-4343 TTY (800) 547-0466

If you or something you know is being abused, neglected or financially exploited, report it to one of the following agencies:

For individuals with disabilities, age 18 or older in a group home, CILA, day or residential program, or state-run mental health or developmental disability facility, and for individuals ages 18 to 59 in a private home call:

Office of Inspector General; Department of Human Services (Investigates financial exploitation in private homes)

Voice/TTY (800) 368-1463

For children from birth to 17 years old, call:

Department of Children and Family Services
Voice (800) 25-ABUSE
TTY (800) 358-5117

For seniors age 60 or older, in a private home or in the community call:

Department on Aging (Investigates financial exploitation)

Voice (866) 800-1409; TTY (800) 544-5304

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Q: Does Medicare cover preventive services?

A: Medicare recognizes that preventive health services can actually save money. You are entitled to a one time routine physical examination, which includes an EKG, within 12 months of your enrollment in Medicare Part B. Your annual wellness visit updates your medical history and current prescriptions, creates a screening schedule for the next 5-10 years and the doctors screens for cognitive issues. Other regular preventive services include screenings for breast cancer, heart disease, osteoporosis, diabetes, glaucoma, prostate cancer, cervical cancer and colon cancer – each of these has a different schedule. Flu shots are covered each season. There is help with smoking cessation. Most of these services are covered without co-insurance or deductible starting in 2011. My office can send you a copy of the chart listing these services.

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Q: As a retiree my income is very limited. Should I enroll in a Medicare Advantage plan?

A: Medicare Advantage plans appear to be very attractive since your Part A Medicare premium, presently $97.50 per month, is used to pay the Medicare Advantage premium. Most participants in the Medicare Advantage plan do not purchase Medicare supplement insurance, which seems to save you money. The coverage provided by a Medicare Advantage plan must meet the minimum standards of standard Medicare coverage. However, the Medicare Advantage plan usually has a network of doctors and specialists within their plan. Your participation in the Medicare Advantage plan might require you to switch your primary care doctor, make certain medical specialists unavailable and may require you to change the hospital that you will use. You should carefully consider these limitations before you enroll in a Medicare Advantage plan.

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Q: My husband is about to be discharged from the hospital. He needs skilled nursing care for rehabilitation that would be provided in a nursing home. Will his Medicare Advantage plan pay for this rehabilitation skilled nursing care?

A: A Medicare Advantage plan is provided through a private insurance company. It is not traditional Medicare. The Medicare Advantage plan must provide skilled nursing care. Regular Medicare can provide for nursing home placement if your husband was in a hospital for at least 3 days and needs skilled nursing care or rehabilitation after the hospital visit. Original Medicare can pay for up to 20 days of skilled nursing care and can pay part of the cost for an additional 80 days. The Medicare Advantage plan is allowed to establish different definitions for eligible conditions prior to confinement, different co-pay and deductibles and different number of days of treatment. The Medicare Advantage plan can also force you to use a nursing home within their plan even though it is located many miles from your house. Before your husband faces hospital discharge, you should contact the Medicare Advantage plan and receive clear instructions regarding the procedures necessary for coverage.

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Q: I am not eligible for my full Social Security payment until 8 months after my 65th birthday. Am I eligible for Medicare before then?

A: Yes, you become eligible for Medicare at age 65. You are not automatically enrolled in Medicare. Three months before your 65th birthday you should contact your local Social Security office to enroll. You can also enroll during the month of your birthday and during the 3 months after the month of your birthday. This seven month period is called your initial enrollment period (IEP). If you do not enroll during this IEP you may have to wait until the beginning of the following year to enroll. There are special circumstances if you were covered under a group health insurance plan. But as a general rule, if you fail to enroll in Medicare during the IEP you may have to pay a penalty for your Part B and Part D coverage for the rest of your life.

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Q: Who will pay for my prescriptions under Medicare Part D?

A: Beginning next year, Medicare Part D allows insurance companies or drug companies to provide coverage to you.

Each month you will pay a monthly premium. This is determined by the insurance company, not Medicare. The government hopes that the monthly premium will be about $37, but it could be higher.

Each year you must pay the first $250 of your prescription cost. The insurer will then pay 75% of the cost of your prescriptions and you will pay 25%. However, once your total prescription cost is $2,250, the insurer will stop paying. This reflects the limited benefit that the government was willing to authorize.

Some people will need many more prescriptions. When the total cost of prescriptions reaches $5,100, the program will resume benefits and then pay 95% of the prescription cost above $5,100.

There are many more details, including benefits for low income seniors. Watch for further details.

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Q: I have a fixed income. I cannot afford the new monthly Medicare Part D premium plus pay for the first $250 of my prescriptions. This begins January 1, 2006. Can I get any help?

A: Illinois has suggested that the Circuit Breaker program will continue, but it may be coordinated with Part D.

Medicare Part D will have a separate set of benefits for low income seniors. Your monthly premiums will be reduced and you can receive other discounts if your annual income, including Social Security, is less than $14,355 ($19,245 for a couple) and your savings are less than $12,500 ($25,000 for a couple). An enrollment form must be completed. This will be in addition to your Circuit Breaker application.

People with very low income who are receiving Medicaid benefits will be automatically enrolled in the savings program.

Hopefully these different programs will be coordinated so that you will not lose any current benefits.

Seniors must choose which plan to purchase, which will be explained later.

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Q: How will I know which insurance program to pick when Medicare Part D becomes effective on January 1, 2006?

A: Some people are already receiving help with their prescriptions from insurance plans provided from their current or former employers or unions. If so, you may receive a letter from that plan saying that your current coverage can continue.

However, most other people must enroll in a plan. As explained in a prior column, you will pay a monthly premium. The insurance company will then pay for part of your prescription costs.

The insurance companies will set the amount of your monthly premium.

Each company will have its own formulary. This is a list of drugs and the prices to be charged for each drug. You must decide which plan has the best selection and discounts for the prescriptions that you use. The company can amend this formulary at any time, but you can only switch plans once each year.

Please make an appointment if you have other questions.

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Q: I get help with my prescriptions from my insurance plan. Why enroll in the Medicare Part D benefit program?

A: Medicare Part D is voluntary; some beneficiaries may choose not to enroll during the initial enrollment period, which will run from November 15, 2005-May 15, 2006. Individuals who delay enrolling in a Part D plan will have to pay a late penalty on their monthly premium. However, individuals who have drug coverage through a retiree health plan or through a Medigap policy with prescription drug coverage and who delay enrolling in Part D will not be assessed a late penalty if their other coverage is deemed to be "creditable," i.e., to be as good as or better than the Medicare Part D benefit. Employers and unions that offer employment-related drug coverage, as well as insurance companies that offer Medigap policies with drug coverage, must notify people enrolled in their plans by this month whether the coverage they provide is creditable. If you do not receive that letter, please consider enrollment in a plan.

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Q: I already have a Medicare HMO that is covering my hospital and doctors expenses, and the same insurance company is now offering separate drug coverage. But when I tried to sign up, I was told I could not have both. Is that true?

A: It is true. You generally cannot have both. The first question you should ask when considering the Medicare Part D private drug plan is whether it will work with your current Medicare health plan coverage. If your current drug plan is offering Medicare drug coverage, find out if it will cover the drugs you take and will work at the pharmacies you use, as well as if it is affordable. No matter which drug plan option you choose, you generally can only change your drug plan once a year, between November 15 and December 31, so do your homework before signing up!

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Q: I was eligible for Medicare Part D, but it was so overwhelming that I simply did not sign up before the May 15, 2006 deadline?

A: You now must wait until January 1, 2007 to enroll. The application can be filed after November 15, 2006. You will have a 7% penalty to pay for the rest of your life due to your enrollment delay. This is 7% of the national monthly average premium, which is determined by the government each year. This is an illustration of the need to enroll within a program as soon as you are eligible. For example, if you turn 65 in October 2006 you can enroll without penalty when you first sign up for Medicare. Also, certain people will not have to pay these late penalties, including certain low income persons and those who lose their prescription benefits from other plans; each case must be carefully reviewed. I can help review your circumstances.

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Q: If I die before my wife can I set aside money for her care and quality of life but still have some money left for our children at her death?

A: Yes in many cases you can use a testamentary trust for this purpose.

Many long term married couples own their houses, vehicles and accounts in joint tenancy with the right of survivorship. They also name each other as the beneficiary of retirement accounts and life insurance policies. When one spouse dies, this is a fairly easy process for the surviving spouse to have the money, pay the bills and go on with their life.However, if the surviving spouse becomes ill and enters a nursing home or supportive living facility, almost all of that money must be spent before the surviving spouse will qualify for Medicaid or other government programs. This means that the surviving spouse will have a very tiny nest egg for quality of life purposes and there will certainly be very little for the children at the death of the surviving spouse.

Instead the law allows you to write a special kind of Last Will and Testament. A trust is created within this Last Will and Testament and thus it is often called a "testamentary trust". A bank or a very trustworthy child can be the trustee of this testamentary trust.

While the surviving spouse is alive, the trustee must use the money for the benefit of the surviving spouse. In some cases the trustee can help pay for utilities, homeowner’s insurance, real estate taxes and repairs to the house. If the surviving spouse is in a nursing home, the trustee can purchase items that will enhance the quality of life such as a television set, comfortable clothes, eye care, dental care, a bed with special features that will reduce the possibility of bed sores or even pay for a van with disabled person access so that the surviving spouse can be taken to a wedding or other social function. The trustee should not give cash directly to the surviving spouse, but the surviving spouse benefits by having bills paid or goods and services purchased for the benefit of the surviving spouse.

It is also possible for a testamentary trust to receive an IRA account or other retirement accounts. For income tax reasons, the trustee must spend at least the Required Minimum Distribution (RMD) each year for the benefit of the surviving spouse. But the trustee has the discretion to spend more than that if appropriate.

While the surviving spouse is alive, the money held in the testamentary trust is disregarded by Medicaid and other government programs. This means that the surviving spouse can receive help to pay for a nursing home or supportive living facility.

At the death of the second spouse, the money is then paid to the children or to the other persons that you designate in your Will.

Every case is different. Sometimes couples will place some money into a testamentary trust, such as a life insurance policy or retirement policy, but the couple may also decide to keep some money in joint tenancy. If the surviving spouse receives money as a joint tenant or otherwise receives it directly outside the testamentary trust, the surviving spouse has more freedom to spend the money. Some couples do not like the idea of having vast sums of money within the testamentary trust since they do not want to ask their child or a banker, as trustee, for money.

Using a testamentary trust is a tool that can benefit many couples. If you have more questions you can contact my office and make an appointment.

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Q: Can I make gifts to my children if I am about to enter a nursing home?

A: Congress has just passed new laws that severely restrict your ability to make gifts to your children if you plan to ask Medicaid to pay for your nursing home care. In fact, some people believe that your gifts to churches, charity and grandchildren could result in long periods of ineligibility if you applied for Medicaid nursing home assistance. This is probably an exaggeration, but the law is very harsh. It is also important for you to keep very detailed records about your financial transactions for at least 7 years to comply with the new law. Spouses can still prevent total impoverishment if one of them must enter a nursing home. It is important to know that the law has changed and that you should not make substantial gifts without consulting a qualified elder law attorney.

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Q: Should I have a survey before I buy a parcel of land?

A: While most sellers of houses must disclose known boundary disputes, this obligation does not always apply to sellers of vacant lots or commercial property. A survey that is conducted prior to your closing can disclose the location of any utility easements, the location of any building, fence or other structure that might be across a property line or other easements. For example, if a sewer district has a 20 foot wide easement across the middle of your property, you might be prohibited from building on that parcel. Also a neighbor's fence or their long term violation of the property line might cause you to lose that strip of ground. These types of defects are not covered by your title insurance policy unless you have a specific survey and ask for a rider to be added to your title insurance policy. Without proper title insurance you might have to pay for your own loss.

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Q: Can I pay my daughter who provides care to me?

A: Yes, but you should take several steps to protect you and your daughter. If you apply for VA benefits or Medicaid benefits it is okay to pay a family caregiver if she is treated as an employee of yours. The best practice is to have a written contract to describe her pay and duties. You are an employer. Therefore you should pay employer taxes. An accountant or qualified bookkeeper could help set up your status as an employer. If you simply write checks or give cash to your daughter this will be considered as a gift and may delay your ability to receive needed benefits in the future. My office can help draft the employment agreements.

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Q: How can I help my parents with their finances but still let them have some control?

A: There is no single answer for every situation but these approaches might help:

  • Offer to help in paying bills. Each month the child can write out the checks but permit the parent to sign them.
  • Use the internet with online access to monitor accounts.
  • Segregate accounts. Allow the senior to keep control of the checking but reduce the risk by having the child in charge of larger investments.
  • Prepare appropriate wills, trust or powers of attorney now while the parent is competent.
  • Emphasize that sharing control can put the parent and child at ease.
  • If all else fails it might be necessary to seek a guardianship.
    • Type of Policy: Is it just for you or can your spouse also use it?
    • What the policy should cover: Does it cover home care, adult day care, assisted living and not just nursing home coverage?
    • Daily benefit: If you pay part of the cost, perhaps $50 per day, you can reduce your premium.
    • Benefit period: Consider 36 - 60 months of coverage instead of life time.
    • How does the policy pay: Reimbursement for your expenses or payment of cash directly to you?
    • Elimination period: does coverage begin after 30, 60 or 180 days of disability?
    • Inflation protection: are you protected?

In all of these situations the freedom and dignity of the parent must be preserved.

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Q: I rely on the Illinois Circuit Breaker program to help pay for many of my prescription drugs. They had a simple application form. Why are they now asking about my bank accounts?

A: The new Medicare Part D prescription benefit program begins January 1, 2006. This new federal program has a subsidy for seniors with limited income and limited savings. A four page application is being sent to current Medicare beneficiaries. However, Illinois will continue to offer its own benefit plan, but it will be called "Illinois Cares Rx." It seems that it will keep the current Circuit Breaker program income limits ($21,218 for a single person and $28,480 for a married couple.) The new Illinois Cares Rx program will require you to enroll in Medicare Part D. You can be eligible for Illinois Cares Rx even if you do not qualify for the Medicare Part D subsidy. You can receive more information about these new programs from my office or contacting the Senior Help Line at 1-800-252-8966.

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Q: I receive help with my prescriptions from the Illinois Circuit Breaker program, which will be known as Illinois Cares Rx. Which Prescription Drug Plan should I choose?

A: Illinois Cares Rx will coordinate benefits through the PacifiCare Saver Plan (800-947-9185 http://www.prescriptionsolutions.com/) and the United HealthCare AARP MedicareRx Plan (800-352-7783 http://www.aarpmedicarerx.com/). The State web site suggests that if you are enrolled in the Circuit Breaker program for 2005 you will assigned to one of these two plans. But you still have a choice. Each plan has a different list of drugs that it will cover (formulary) and not all pharmacies are working with both plans. If you choose one of these plans and you participate in Illinois Cares Rx you will not have to pay your monthly premium, deductible and coinsurance. You will still pay something. If you choose a different plan Illinois Cares Rx may not pay for your monthly premium and it will not pay for your deductible or coinsurance. You are strongly encouraged to contact the Area Agency on Aging 800-326-3221 for assistance and directions to make an appointment with a trained counselor to help you with your choice. More information about plans is available at 800-MEDICARE or www.medicare.gov

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Q: What features should I consider if I buy a long term care insurance policy?

A: Some of the features that you should consider are:

You should also consider your income, history of illness within your family, your income, the other assets and money that are available to you and whether you need to leave more money for your family at your death. I can review your proposed policy.

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Q: My prescription benefit plan says that $2,250 has been paid this year by me or on my behalf, and thus I am now in the "donut hole." Is there anything I can do to reduce my prescription costs?

A: If you are in the donut hole, you must pay the next $3,600 of prescription costs during the remainder of the year. If you spend this $3,600 before the end of this year, "catastrophic" coverage begins; then you will pay only 5% of the eligible cost. Next year, the whole process starts over. In the meantime, you must continue to pay your monthly prescription benefit insurance premium.

For immediate relief ask your pharmacist to order all of your prescriptions from the formulary; prescriptions that are not on the formulary are usually more expensive and you will not receive credit toward the $3,600. If your doctor approves use generic drugs.

When you enroll next year consider a plan that provides donut hole coverage, but the monthly premium will be higher.

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Q: When should I review or revise my will or estate plan?

A: Circumstances often change after wills, trusts and powers of attorney are prepared. Marriage, divorce, the birth or death of a child or other loved one can change your plans. People often forget that other documents can change their estate plans. For example, if your will was written when you were first married, you may now have a significant portion of your savings in 401(k) plans or other retirement accounts. At your death these retirement accounts may be payable to people who are not named in your will. Also some people wrote fairly elaborate wills before 2001 so that they could avoid the estate tax. However since the estate tax exemption is now much higher, $2,000,000, these elaborate documents may no longer be necessary. As a general idea, it is good idea to review your documents with your attorney every 5 years. This also allows you to take advantage of any changes in the law that might benefit you.

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Q: Why should I pay a lawyer to prepare a simple will?

A: A recent case is a good example of the perils of preparing your own forms. For many years two daughters failed to keep in touch with their father. Quite naturally the father wanted to leave his estate to the son who had helped him. Dad told the son to buy a preprinted form and fill in the blanks. Dad signed the form in front of witnesses as required by law. After Dad died the daughters attempted to overturn the will by claiming that their brother exercised undue influence over Dad. Ultimately the courts rejected the claims of the daughters, but the son spent a lot of money in his defense. If Dad had used a lawyer, steps would have been taken to discourage the daughters from challenging the suit including a declaration of the reasons for Dad's choice, using independent witnesses and other steps. While nothing is guaranteed it is very likely that the court fight could have been avoided with the help of a lawyer.

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Q: Do I need a lawyer to write a living will?

A: No. But a lawyer can help you draft documents that truly reflect your wishes.

Living wills have many different forms. They declare that you do not want life sustaining measures to be taken. They differ in the definition of life sustaining measures and when those measures may be withheld or withdrawn.

A health care power of attorney (POA) also includes instructions for end of life care. Unlike a living will, a health care POA appoints someone, called an agent, to make these decisions for you. Your agent will be your advocate if you are disabled. The agent also has the power to receive information, which is very important under the health care privacy laws.

Living wills and health care POA are advanced directives whose language should reflect your religious and personal values.

If you have further questions, please feel free to make an appointment.

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Q: Do I need a private lawyer to get my boyfriend to pay child support for our daughter?

A: The State of Illinois will help you establish paternity and obtain a court order requiring the father to pay child support. The State's Attorney Office has several tools that are not available to private attorneys. For example, they can intercept income tax refunds, track people down by Social Security Numbers, enforce orders in other states and take child support payments from unemployment benefits. On the other hand, private attorneys can help you obtain better orders for the payment of uninsured medical bills, child care expenses, college expenses and naming your child as a beneficiary for life insurance and other benefits paid at the death of the father.

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Q: I know that if I am disabled the agent under a Health Care Power of Attorney can make decisions for my medical care and end of life decisions, but does the agent have other powers?

A: The agent has many other powers. While you are alive HIPAA allows your agent to speak with your doctors. If you are not able to make decisions for yourself the agent can admit you to a nursing home. You should discuss end of life decisions with your agent since the language in the form cannot anticipate all of the changes in medicine. If an agent knows your own faith based or other values the agent will feel more comfortable to make decisions on your behalf. Unless you have signed a written objection to being an organ donor, the agent can make anatomical gifts at your death. The agent can agree to an autopsy. An agent might be able to arrange your funeral. This "simple" form deserves your careful consideration. Our office can prepare a document that actually addresses your needs.

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Q: I have a terminal illness. I have read articles on the Internet that an experimental drug may be able to help me, but my doctor says that for the moment that drug can only be used for participants in a test program. I am dying. How can I be harmed by some drug? Isn't this denial a violation of my constitutional rights?

A. Recently a federal appeals court said that you do not have a constitutional right to receive these experimental drugs. The court agreed with the US Food and Drug Administration that waiving the normal approval process for potentially life saving drugs will result in long term unacceptable risks of harm. The court said that the right to access to experimental drugs was not rooted in our history of constitutional rights. The court recognized that its ruling may cause suffering for many people, but it ruled that people must persuade Congress to change the law. The court ruled that this type of policy change should not be made by judges.

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Q: What makes Elder Law attorneys different?

A: We find that clients rely upon us for more than traditional legal advice. We help clients and families put together the "aging puzzle" with its many ill-fitting pieces of frail health, caregiving needs, survivor care concerns, financial decisions, residential options, family relationships, insufficient assets, substitute decision-makers, cumbersome probate, end-of-life decisions, and more. In fact, the legal advice we provide may be the least complicated piece of the client's aging puzzle. Though children are often part of the planning process, we view the senior as the client. When clients get information from other sources, whether it is the government, a care facility, their banker, or even another family member, the person giving the answers may be well-meaning, but it is not their job to put the senior-client's interests first. In fact, most advisors must put their employer's (or their own) interests first. The elder law attorney is the filtering advocate for the frail senior. Our code of legal responsibility demands that we place our client's interests first. Thanks to elder law attorney Dennis Toman, of Greensboro, NC for these thoughts.

As elder law attorneys, we undertake a law practice that we see as a calling. We did not choose elder law as a calculated business decision; rather, due to the frailty of someone we love... elder law chose us.

We find that clients rely upon us for more than traditional legal advice. We help clients and families put together the "aging puzzle" with its many ill-fitting pieces of frail health, caregiving needs, survivor care concerns, financial decisions, residential options, family relationships, insufficient assets, substitute decision-makers, cumbersome probate, end-of-life decisions, and more. In fact, the legal advice we provide may be the least complicated piece of the client's aging puzzle.

Due to the nature of our typical elder law representation, it is particularly important that we spend time educating our clients and their families to understand the attorney-client relationship. We have a duty to represent our client. Our client is usually the senior. Many times the client's adult children have an agenda which conflicts with that of the senior. We strive to mediate those conflicts and seek our client's best interests.

By contrast, when clients get information from other sources, whether it is the government, a care facility, their banker, or even another family member, the person giving the answers may be well-meaning, but it is not their job to put the senior-client's interests first. In fact, most advisors must put their employer's (or their own) interests first. The elder law attorney is the filtering advocate for the frail senior. Our code of legal responsibility demands that we place our client's interests first.

*** This blog was originally written by my friend, elder law attorney Dennis Toman, CELA, of Greensboro, North Carolina. His website is www.elderlawfirm.com.

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Q: Will Medicare pay my medical bills if I get sick while traveling outside of the country?

A: Basically, the answer is no. The exceptions include care in Canada, but only if you are traveling to or from Alaska from the "Lower 48." The other exception involves care given aboard a cruise ship registered in the US, but most cruise ships are registered in other countries. Some, but not all, Medicare Supplement policies will pay for the medical care that you receive in foreign countries. But these policies usually require you to pay for the bill yourself and then request reimbursement from the insurance company (not Medicare). It may be possible to purchase a special policy for a particular trip. Before you leave on a trip out of the country you should contact your Medicare supplement insurance company to learn about their procedures. You should also carry an internationally recognized credit card that can be used to pay for your medical care in case of an emergency.

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Q: I am retired. Can I keep my COBRA health insurance and Medicare?

A: You can't, but your family can. Basically your COBRA rights end when you become entitled to Medicare. COBRA is a federal law that gives certain employees and their families the right to keep health insurance from their former employer. You can be eligible for COBRA for up to 36 months; but some people are only eligible for up to 18 months. You pay for your own health insurance during this COBRA period. Although you may no longer qualify for COBRA, your other family members may still be eligible. There are also certain services not covered by Medicare such as dental coverage. If your former employer permits, you can continue COBRA coverage for dental services after you are eligible for Medicare.

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Q: My mother is entering a nursing home. I am her agent under her health care power of attorney. Should I have a lawyer review her contract?

A: Nursing home contracts are very important documents. They involve tens of thousands of dollars of care. They also concern the most intimate aspects of your mother's life. There are many parts of a nursing home contract that you might not easily understand. These include attempts to make you personally responsible for the bill, prohibiting you from transferring your mother's money, losing your right to a jury trial and making it difficult for you to return your mother to the nursing home if she has a short hospital stay. Our office can suggest changes and help you understand your rights and obligations. This should be done BEFORE any contract is signed.

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Q: My father is about to enter a nursing home. What happens to his Medicare Part D prescription plan?

A: Ordinarily, you can change Medicare Part D plans only at the end of the year. However, if you enter a nursing home, it may be advisable to change your Part D plan. The law allows you to change Part D plans when you enter a nursing home, once a month while you live in the nursing home and once during the two months after you leave a nursing home. Change may be important since nursing home residents often have many additional prescriptions that were not covered under the Part D plan that you used at home. If you have questions, you may make an appointment at our office.

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Q: What can I do to reduce my prescription costs under my Medicare Part D plans?

A: First when your doctor writes you a prescription, find out if that drug will be covered before you go to the pharmacy. Ask the doctor to check for you. If your doctor does not have time, call your plan yourself. Ask your doctor if generic alternatives are suitable for you. Make sure to use a preferred in-network pharmacy. If a drug is not listed on the formulary, ask your doctor to change your prescription to a drug covered by your formulary. If your formulary does not have a drug that will work for you, ask the plan for an "exception" to its formulary so it will cover the drug you need.

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Q: I am a 50 yr. old man living in my own home. I can not work and I can not pay my medical bills. My application for Medicaid was denied. What can I do?

A: If you are living outside of a nursing home and you do not have any children, Medicaid will help you with your medical bills only if you are disabled and if you have very limited savings. If Medicaid has given you a written notice of denial it is important to act quickly. Sometimes there is a misunderstanding regarding the amount of money you have available. Other times Medicaid needs additional information from your doctors to prove that you are disabled. Appeals can be filed within the Medicaid program to give them additional information or more accurate information. This is a separate process from your application for disability benefits from the Social Security Administration. If you have more questions please call my office for an appointment.

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Q: When my mother recently entered the nursing home, I signed a lot of papers. Am I responsible to pay for her care with my own money?

A: The federal Nursing Home Reform Act says that any nursing home that accepts Medicare or Medicaid cannot require a family member to sign a personal guarantee to personally pay for the care of their loved ones. The law believes that your mother's own savings and income should pay for her care. When those funds are exhausted the Medicaid program should pay for her care. It is illegal to sue you if the nursing home required you to sign the guarantee. On the other hand, some nursing homes require you to pledge that you will promptly file a Medicaid application and also pledge that the patient's money will be used for her care; if you violate these promises it is possible that a nursing home can sue you for failing to keep those separate promises. If you have more questions, please make an appointment.

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Q: I am about to enter a nursing home. I have just enough income to pay my way, but I am worried about losing my Senior Citizen Homestead Exemption and my Senior Citizen Freeze Exemption. These exemptions really reduce my real estate tax bill. How can I keep the real estate tax bill low?

A: Ordinarily these two exemptions are available only if you live at your home. But the law [35 ILCS 200/15-170 and 200/15-172] now permits you to keep these exemptions even if you move to a nursing home or to facilities that are licensed for Assisted Living or Supportive Living. Each year you must still complete your applications for these exemptions. If you rent out your home or allow someone other than your spouse to reside at the home, then you might lose these exemptions. If the exemptions are lost your real estate tax bill could greatly increase the next year.

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Q: Can the nursing home deny my mother skilled nursing care because she has reached a “plateau”?

A: This is a common belief and practice, but it is not the law. Medicare coverage can not be denied because: “your underlying condition will not improve,” “you have plateaued,” “you are not likely to improve,” “you are chronic and stable” or “you need maintenance services only.” The nursing home is required to give you a written notice when services are terminated; this includes your right to appeal. Unfortunately you must privately pay for the services during the appeal. The appeal process should be quick and you will be eligible for reimbursement if you win. If you have questions or complaints about this practice please contact the Center for Medicare Advocacy at 860-456-7790. This private advocacy group is conducting a study on this mistake in the law; they need examples from ordinary people.

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Q: Can a senior citizen or a disabled veteran get a check under the new economic stimulus laws?

A: Yes, but you must file an income tax return, even though you are not required to pay any taxes. In the blank space at the top of Page 1 of Form 1040A, eligible individuals should write the words "stimulus payment" above the title of the form. You should complete the form indicating all of your other income and then mail it in. An individual or married couple who does not have to pay any income tax for 2007 may receive a minimum of $300, with $600 being possible in the case of a joint return. These checks will not reduce your Medicaid or other government benefits. If you need help preparing your income tax return, and you have limited income, there are several free services available; these include Senior Services Plus, 465-3298 and the Illinois Employment Training Center office in Alton on Tuesday and Thursdays; you should contact the offices in advance to make an appointment.

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Q: I am a Senior Citizen. It is tough to pay my real estate taxes, any help available?

A: Senior Citizen Real Estate Tax Deferral Program may be helpful. Basically the State of Illinois will loan you money to pay your real estate taxes if you qualify. You must be at least 65 years old, have a household income of less than $50,000, own and occupied your home for at least 3 years, your property taxes are current and you have homeowner’s insurance. When your house is sold the accumulated real estate tax plus interest at 6% must be paid. It is important to act quickly since the deadline is March 1, 2010. If you are interested you should contact your County Treasurer’s Office as soon as possible.

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Q: Does Medicare pay for foot care?

A: The Medicare rules relating to foot care are very detailed. As a basic rule Medicare does not pay for foot care. There are however important exceptions for this rule. If you are diabetic Medicare can pay for one pair of therapeutic shoes per calendar year, as certified by your podiatrist. If your foot problems are related to another health problem, then it is more likely that Medicare will pay for the foot care. Maintaining healthy feet is more than a matter of convenience. There are many illnesses and diseases that show their symptoms in your feet. It is most important that you maintain your health and work with your podiatrist, who is most familiar with these complicated rules.

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Q: My mom reentered the hospital within 60 days. We felt that she did not have clear instructions for her medication and follow up care. How can we prevent this in the future?

A: Medicare recognizes that there is a huge cost to these re-hospitalizations. Medicare and other government agencies have prepared several guides to help patients and their doctors to keep track of their medication schedules, up coming medical appointments and important phone numbers. One guide is "Taking Care of Myself: A Guide for When I Leave the Hospital." It is available at www.ahrq.gov/qual/goinghomeguide.htm. Another helpful guide is "Medicare's Planning for Your Discharge" which is available at www.medicare.gov/caregivers/. You may also contact my office. We can mail or email you copies of these helpful materials.

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Q: I am healthy. Why do I need a power of attorney?

A: Illness or accidents can happen suddenly. Many times people believe that powers of attorney should be signed only when you get sick. But if you have a sudden illness, such as a burst aneurysm, or an accident at work or on the highway, there is simply no time or ability to sign documents. Powers of attorney are signed when you are mentally able to decide who will help you if you become disabled. A power of attorney for property, allows your agent to handle business affairs. A health care power of attorney covers emergencies and end of life decisions. When you sign a power of attorney you declare who will make decisions for you if you become disabled. More importantly you declare your wishes regarding health care, organ donations and maintaining life support decisions. Americans value their right to make their own decisions. Signing a power of attorney is the best way to declare how your most important decisions, concerning life itself, are made.

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Q: I used my Mom’s power of attorney to transfer the house to me. How can the nursing home sue me?

A: When the house was transferred out of your mother’s name Medicaid considers that to be a gift by your mother. Medicaid will calculate a penalty period based upon the value of the house. During this penalty period Medicaid will not pay for your mother’s care. When you received your mother’s house and refused to pay the nursing home during the penalty period, it is possible for the nursing home to sue you and claim that this was a fraudulent transfer, and if so the nursing home can force you to pay her bill.

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Q: I am getting divorced. What do I need to do to protect my disabled child?

A: Court orders and agreements in divorce cases should be carefully written to protect a disabled child. The divorce law says that child support can be ordered to continue after a disabled child turns 18. But if the child is receiving SSI, the child support will usually reduce the SSI. Instead the child support after age 18 can be paid to a special needs trust; the money in that trust can used for the benefit of the child without affecting SSI. The parent can be ordered to keep life insurance policies that will be paid into this special needs trust; this will allow the child to benefit without losing government benefits. If the parent is participating in a group health insurance program coverage for a disabled child might continue for the child's lifetime. When you have a disabled child a "simple" "uncontested" divorce may result in a substantial denial benefits for that child.

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Q: How long do I have to collect the money that somebody owes me? - Debbie

A: If you loan money you are a creditor and the person who promised to pay is the debtor. If the debtor did not sign any paperwork to promise to pay, you have 5 years from the date of the loan to bring a lawsuit. If the debtor signs a note promising to pay you but there is no deadline within that note, you have 10 years from the date of her last payment to file a lawsuit. On the other hand if the promissory note says that the debt will be paid by a specific day, you have 10 years from that deadline to file a lawsuit. If the debtor gave you security, such as lien on their car or house, slightly different rules apply. Next time we will talk about the type of lawsuit and how to collect.

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Q: I have to file a lawsuit to collect the money that my friend owes me, now what do I do? - Debbie

A: The Madison County Circuit Clerk web site has excellent instructions about small claims cases and how to collect. If you are not familiar with the Internet your local librarian can help you or you can go to the courthouse for forms. A judgment is the court order declaring that the debtor owes you money. If a debtor has little money or little income it is very difficult to collect. The Circuit Clerk can give you a certified copy of the judgment which can be filed with the Recorder. This puts a lien against the debtor's real estate and usually becomes part of their negative credit history for seven years. Debtors are given many layers of protection if you try to garnish their wages or bank accounts; it is very difficult for a non lawyer to spend all of the time and expense needed to collect a debt. Even if you get your own judgment you may need to hire a collection attorney to collect.

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Q: I will not get a cost of living adjustment (COLA) in my Social Security benefits in 2010. But every year my Medicare Part B premium continues to increase. How can I afford that?

A: Most people do not have to worry. The different parts of Medicare pay for different services. Doctors are paid by Part B. Hospitals are paid by Part A. Part D is a separate benefit for prescription drugs and it has separate premiums. Part A expenses are paid by the government. You pay about one-fourth of the Part B cost; this goes up each year with inflation. However, the law protects most people from paying a higher Part B premium when the Social Security COLA is zero; your Part B premium should be frozen next year. A small group of people will not have the benefit of this "freeze" and will have to pay a higher Part B premium, including people with income above $85,000 apiece and a smaller group with special circumstances. You should receive a notice at the end of this year explaining your costs for 2010.

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Q: What should I look for before I purchase a prepaid funeral or burial contract?

A: Prepaid funerals can provide the family with peace of mind. Also properly qualified prepaid funeral plans are exempt for Medicaid planning purposes. Most life insurance policies and "dedicated" savings accounts are not Medicaid exempt. There are several important things to consider: (1) Who will be holding the money? Funeral homes sell insurance policies, but some of those insurance companies have become insolvent. Look at the insurance company's AM Best rating. (2) Your rights and obligations should be written in plan English with all goods and services listed. (3) If goods and services in the contract are not available at the time of the funeral, a substitution policy should be clearly stated. (4) If the funeral or burial will occur at a distant place, that should be specified in the contract. (5) A price of goods and services should be guaranteed or the contract should say who will be responsible for any additional amounts. (6) The right to cancel should be described, but Medicaid planning requires that the contract be irrevocable.

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Q: I will select a Medicare Part D prescription plan for 2010. How can I avoid the “doughnut hole” expenses for 2010?

A: AARP has announced a new Doughnut Hole Calculator. This online interactive tool guides consumers to options to reduce their Medicare Part D spending by identifying less costly generic or therapeutically similar alternatives. The users of the calculator do not need to register their private information and the information that you enter is not saved, assuring privacy. The Doughnut Hole Calculator is at http://doughnuthole.aarp.org. Your child or grandchild can help you with this Internet tool. This calculator may suggest therapeutically similar alternatives, not just generics, which can be discussed and approved by your physician. With the information that you receive from this Internet tool you are encouraged to speak to your doctor about potential alternative, less expensive prescriptions. Also, check out possible additional savings; even though your income might be too high to qualify for Medicare “extra help” participation in Illinois Cares Rx might still be possible.

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Q: I have trouble hearing people on the phone.

A: There is help. You can get a free amplified phone through the Illinois Telecommunications Access Corporation (ITAC). To qualify you must be a legal resident of Illinois, have your doctor sign that you are hard of hearing and have standard phone service to your residence. There are no age or income restrictions. To get an application call IMPACT at 462-1411. ITAC programs are required and governed by Illinois law. www.itactty.org.

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Q: My child with cerebral palsy needs help; how can I get the insurance company to pay?

A: A new Illinois law is effective January 1, 2010. At that time the law will require insurance companies to pay for habilitative therapies for disabled children up to the age of 19. Habilitative therapies are designed to teach a child new skills and maximize functioning such as help in learning how to walk and talk. In the past insurance companies only paid for rehabilitative therapies which are designed to help someone recover skills that have been lost. This new law applies to children with Down syndrome, cerebral palsy, autism and other developmental disorders. The new law does not require insurers to offer a minimum level of coverage and insurers may impose restrictions on any kind of habilitative and rehabilitative therapy. This new coverage should allow you to work more effectively with your schools to provide services for your child.

Illinois will extend assistance to parents of children with Down syndrome, cerebral palsy, autism and other developmental disorders under a new law (Senate Bill 101) signed by Gov. Patrick Quinn last week.

For the first time, the law will require insurance companies to pay for these youngsters’ speech, physical and occupational therapies. Specifically, it says insurers must treat so-called "habilitative" therapies for youngsters with developmental disabilities in the same way they treat "rehabilitative" therapies.

The measure, strongly supported by the American Academy of Pediatrics, goes into effect Jan. 1, 2010.

Habilitative therapies are designed to teach a person new skills and maximize functioning; rehabilitative therapies are designed to help someone recover skills that have been lost.

Think of a 5-year-old with cerebral palsy who needs help learning how to walk and talk. Insurers routinely deny reimbursement for physical and speech “habilitative” therapy on the grounds that these are educational, not medical, services, said Dr. Alan Rosenblatt, a Chicago pediatrician.

If, however, a child walked and talked and then became unable to do so because of an accident, the same insurer routinely covers “rehabilitative” therapies to help restore those skills, deeming those medical necessary services.

The new law won’t allow those kinds of distinctions for children with developmental disabilities up to the age of 19. As a result, more children should start receiving habilitative therapies and families that have paid out of pocket for the services will get financial relief.

"Research shows early intervention can make a significant impact on the quality of life and long-term potential for children" with developmental disabilities, Rosenblatt said. "This will ensure that Illinois children with disabilities get necessary treatments to help them reach their full potential."

It’s important to note that the law doesn’t require insurers to offer a minimum level of coverage for either habilitative or rehabilitative therapies. Many insurers impose restrictions on any kind of therapy, and those will still apply.

Illinois becomes the third area to enact this kind of legislation, after Maryland and the District of Columbia.

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Q: I am a small business owner. How long must I keep records?

A: Ordinarily you should keep records for 3 full years. However the recent amendments to the Illinois Equal Pay Act of 2003 now require you to keep pay records and other personnel records for at least 5 years. The Act made other changes as well. The employee now has 12 months instead of 6 months to file a complaint with the Illinois Department of Labor. The rules have also been strengthened to make it more difficult for people to ignore the DOL enforcement proceedings. It is always best for an employer to keep good records explaining why one employee is paid differently then another.

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Q: My daughter is domestic violence victim but now her employer is threatening to fire her since she is protected by an order of protection. Also he will not let her take time off of work to go to court or medical treatment. Can anything be done?

A: If your daughter works for a business that has at least 15 employees, she is protected by the Victims Economic Security & Safety Act (VESSA). VESSA also applies to employees of the State of Illinois and local government employers. Under VESSA your daughter’s employer must give her up to 8 work weeks of unpaid leave during any 12 month period. Also the Illinois Human Rights Act makes it unlawful for an employer to discriminate against an individual because of his or her order of protection status. Your daughter has under gone great trauma; she will appreciate your support at this time.

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Q: When our mother died she had a wheelchair and other items of durable medical equipment that made it easier for her to stay at home. Can anyone still benefit from these items?

A: There are several organizations that will accept donations of equipment such as manual and power wheelchairs, scooters, canes, crutches, walkers, shower chairs, grab bars, toilet seats, portable toilets, lift chairs, seat cushions, back supports, manual and electric hospital beds, ramps and chair lifts. These items can be repaired, cleaned and then lent as needed at no cost. Thus people without a lot of money can benefit. One organization is St. Louis H.E.L.P. (Health Equipment Lending Program) phone: 314-567-4700 or www.stlhelp.org.

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Q: I have owned my annuity for many years and it has grown in value. Are there effective ways to use this resource if I enter a nursing home?

A: For most older annuities, if you withdraw the money while you are alive the earnings or “profit” on that annuity will be taxable income to you. However effective January 1, 2010 you might be able to make a tax free exchange of your current annuity for a new annuity. These new annuities can have a long term care insurance (LTCI) rider; if so qualified withdrawals to pay for long term care costs can be tax exempt. These exchanges can not be done with qualified annuities, which are IRA type annuities. Annuities are very complex products which can have substantial early withdrawal penalties and other complications. You should have independent advice before purchasing any such annuity.

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Q: I have old life insurance policies. Can I use them to pay for a nursing home or other long term care?

A: Life insurance policies can substantially increase in value. The money paid at your death is not taxable income to your family. If you cash in a policy during your life to pay for your care, a substantial portion of that money might be taxable income. Instead you might be able to make a tax free exchange of your current policy to buy a new policy. This new policy can have a rider that allows you to receive an advance on your death benefit. Example, if you have a new $100,000 policy you might be able to withdraw $2,000 per month tax free to help pay for your care costs. Your family receives the unused amount at your death. Life insurance products can be very complicated. You deserve independent review prior to the purchase of a new product.

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Q: I have heard that the State will not help me with my nursing home bills if I have any money. Why can’t I give each of my children $10,000?

A: If you are confined to a nursing home or supportive living facility you can ask Medicaid to help you pay for your care provided that your resources are limited. Medicaid is paid by the tax payers thus Medicaid has strict rules to penalize people who give away their money. The government allows people to give away up to $10,000 per year (with inflation it is now $13,000 per year) to avoid the estate tax at their death. However working class and middle class citizens can be penalized for every dollar they give away before they apply for Medicaid. If you are a senior citizen or if you have serious health problems you should not give away money without receiving advice about the negative consequences of your plan.

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Q: I have several disabilities and my income is low. Can I get any help with my real estate taxes?

A: Yes, the disabled persons homestead exemption can grant you an annual homestead exemption of $2,000. You must complete the forms provided by the County Supervisor of Assessments. The law gives qualified persons a $2,000 reduction in their assessed valuation; basically the assessed valuation is one-third of the fair market value of the property. Your real estate taxes are based on your assessed valuation minus any exemptions. This disabled persons homestead exemption is available to all qualified homeowners, including persons who are older than 65. Senior citizens with disabilities can combine this exemption with their standard home owner exemption, senior citizen exemption and senior citizen freeze exemptions.

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Q: Can I give my children $13,000 a piece each year?

A: The law does not prevent you from giving away your money. But the law imposes consequences on certain gifts. The practice of giving up to $13,000 per year per person is a means of avoiding the Federal Estate Tax which is sometimes called the Death Tax. But if you have modest assets and have to enter a nursing home within 5 years of making the gift, your eligibility for Medicaid might be delayed. Before you make any substantial gifts it is important to learn how the recent changes in Medicaid Law may have a negative impact on you and your family. Please contact my office for more details.

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Q: I do not believe my insurance company has offered a fair settlement for my disaster claim. Is there anything I can do?

A: A true and accurate copy of your homeowner’s insurance policy is an essential document. The policy describes what events, structures, and persons are covered. The policy also describes what the company will not pay. A public insurance adjuster can help you. They should show you their licenses issued by the State of Illinois. The public insurance adjuster will be paid by getting a percentage of your award from the insurance company. The public insurance adjuster is required to be familiar with insurance contracts, calculation of losses and limitations within insurance policies. Before signing a contract with the public insurance adjuster it is best to ask for references.

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Q: Can anyone provide articles concerning a special needs child in language that I can understand?

A: Each month the Special Needs Alliance www.specialneedsalliance.com publishes "The Voice" email newsletter. This year’s topics include: (August 2011) Utilizing the Spend Down Option to Maintain SSI and/or Medicaid Eligibility, (July 2011) The New Medicare Surtax: Will You or Your Special Needs Trust Be Affected in 2013?, (June 2011) Planning for Adult Children with Disabilities, (May 2011) Buying a House for a Special Needs Beneficiary: Proceed with Care!, (April 2011) Decisions Arising with the Death of a Child, (March 2011) The Impact of Special Needs Trusts on Eligibility for Subsidized Housing, (February 2011) The other Special Need: Planning for Those with Severe Mental Illness, (January 2011) Special Benefits for Military Families – Elect with Care.

As a member of the SNA, I can help you and your family with these and other topics regarding a loved one who has special needs.

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Q: Last month you gave samples of articles from the Special Needs Alliance. Are there any other helpful recommended articles?

A: Yes, additional articles include: (December 2010) The Past, Present and Future of Community Living for Persons with Disabilities, (December 2010) What Health Reform Means for Persons with Disabilities, (November 2010) Veteran’s Benefits, (October 2010) Life Insurance on a Child with Special Needs, (August 2010) Your Special Needs Trust Explained, (July 2010) Your Retirement Age can Affect Your Child’s Disability Benefits, (July 2010) Being Prepared for a Disaster, (June 2010) What happens when persons living with disabilities marry?, (April 2010) Life Insurance and Children with a Disability, (February 2010) Taxes and Special Needs Trusts, (January 2010) Estate Planning for People with Disabilities.

As a member of the SNA, I can help you and your family with these and other topics regarding a loved one who has special needs.

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Q: Sometimes I have a simple legal question, but I am afraid of getting a big legal bill. What can I do?

A: Sometimes a “simple” question has more issues than first believed. If you "cold call" a lawyer that you do not know, the lawyer might answer your precise legal question but fail to ask follow-up questions for information that could dramatically change the advice. This follow-up represents value to you. If you have an ongoing relationship with a lawyer, please contact that attorney first. The Illinois State Bar Association sponsors lawyers who give advice in their field of experience. The fee is $25.00 for a 30 minute consultation. Contact IllinoisLawyerFinder.com or 1-800-922-8757 for more information.

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Q: What do I need to know about giving money to my children?

A: Illinois recently adopted new rules that severely restrict the ability of a person to transfer money or property in the five years prior to entering a nursing home or a supportive living facility. In these tough economic times many parents help their children just to get by. The parent does not have any thought of being penalized when the parent needs the money for themselves. The new law allows parents to help, but the law imposes a great burden on the parent to show that the transfers to the kids were not part of a plan to qualify the parent for Medicaid. Parents must be very careful in keeping all of their financial records for at least five years. Parents should also keep a “paper trail” to show the purpose of all gifts. Otherwise the consequences can be dire for the parents when the health of the parent becomes worse. Our office can help you set up a plan and the needed documents.

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Q: I do all of my banking online. Do I need to keep electronic or paper copies of my bank statements?

A: Illinois recently adopted new rules that severely restrict the ability of a person to transfer money or property in the five years prior to applying for government help to pay for a nursing home or a supportive living facility. The government can ask you to produce copies of your financial, tax and bank records for the five years prior to your Medicaid application. If you do not keep copies of those records your bank or broker can charge you a hefty fee to locate and reproduce those records. Under these new rules the government presumes that you are giving away money just to get government help. Carefully kept records allow you to show how you properly used your money. Our office can help you review the needed documents and present your application.

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Q: Must I spend all of my money before Medicaid will pay for my nursing home care?

A: New rules severely limit your ability to transfer money or property in the five years prior to applying for government help to pay for a nursing home or a supportive living facility. But Illinois preserved the right of persons older than 65 to transfer money to a “pooled trust.” Unlike other states, such as Missouri, Illinois does not penalize seniors for setting aside money in this way. Money held in the pooled trust can be used to purchase goods and services to benefit your quality of life. Otherwise you would be left with $30 per month and an account that is under $2,000.00. Yes, if any money remains in that pooled trust account it will be paid to the State or to a charity before it is paid to the family. But if you simply “spent down” your money it would not be available for your quality of life. Our office can help prepare a plan that focuses on maintaining your quality of life.

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Q: Has the government adopted rules that prevent me from helping my kids?

A: Illinois recently adopted new rules that severely restrict the ability of a person to transfer money or property in the five years prior to applying for government help to pay for a nursing home or a supportive living facility. In these tough economic times many parents help their children just to get by. The parent offers this help without having any thought of being penalized when the parent enters a nursing home. The new law allows you to help your kids, but the law imposes a great burden on you to show that you were not trying to qualify for Medicaid. You should be very careful in keeping all of your financial records for at least five years. You should also keep a “paper trail” to show the purpose of those gifts. Otherwise the consequences can be dire for you when your health becomes worse. Our office can help you set up a plan and the needed documents.

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Q: Can the State force me to sell my farm if I enter a nursing home?

A: Illinois recently adopted new rules that severely restrict the ability of a person to transfer money or property in the five years prior to applying for government help to pay for a nursing home or a supportive living facility. But an important exception to the resource rules permits a farmer to keep his or her productive farm ground and possibly still apply for benefits. Although the State can probably be repaid at your death for the value of the care you received, this new rule means that the real estate does not have to be sold during your lifetime; such a sale during your lifetime would usually result in large capital gains taxes, but those taxes are usually avoided if the land is transferred at your death. Our office can help prepare a plan that considers these many choices.

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Q: Why should I have a power of attorney?

A: You keep control when you sign a power of attorney. Accidents or illnesses can strike suddenly. A health care power of attorney allows you to decide who has the legal power to help you. You do not lose your right to make your own decisions when you sign a power of attorney. You are not incompetent. In fact the law declares that you keep your right to make your own health care decisions unless the doctor determines that you lack “decisional capacity.” Your agent can tell the doctors what kind of medical care you want. Your agent can instruct the doctors and hospitals to follow your wishes regarding end of life care. Your personal and religious values can be protected when you sign a health care power of attorney. Prevent unwanted people from making decisions for you – sign a health care power of attorney. April 16th is National Healthcare Decisions Day.

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Q: My mother is about to enter a nursing home. Can we keep any of her money to help my disabled sister?

A: Illinois recently adopted new rules that severely restrict the ability of a person to transfer money or property in the five years prior to applying for government help to pay for a nursing home or a supportive living facility. But if a parent or grandparent has a child or grandchild with disabilities it may be possible to establish a trust for the benefit of the person with disabilities. This will allow money and property to be transferred to the person with disabilities without penalizing the parent or grandparent. Although money cannot easily be transferred to other family members, this process at least preserves the quality of life of the person with disabilities and at the death of your sister the balance can be paid to the other family members. Our office can help establish the proper trust and identify the proper mix of assets that shall be transferred into that trust.

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Q: What can I do if my IL Cares Rx is cancelled?

A: Elimination of IL Cares Rx was part of the Illinois Medicaid “reform” law. Approximately 43,000 senior citizens lost their benefits in September 2011 when the program reduced the income eligibility limits. An additional 130,000 seniors may now lose this benefit. Hopefully you will receive a written notice with suggestions, please act quickly. Your deadline is August 31, 2012 to take action. You may call SHIP [Senior Health Insurance Program] 1-800-548-9034 to locate a counselor near you so that you may make an appointment. SHIP volunteers are trained to provide this free service to you. Some people with limited assets and income may be eligible for “extra help” through the Social Security Administration. Other people may be eligible to switch to a new Part D prescription plan. Please reach out for help.

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Q: Since my son talks about suicide it is true that he is unlikely to act?

A: No. Please seek out help for your son – your doctor, WellSpring Resources and Chestnut Health Services are there to help your son. These are some myths about suicide:

People who talk about suicide are unlikely to do it (FALSE); *Talking about suicide can be a plea for help and a late sign in the progression towards an attempt.

Suicides are impulsive (FALSE); *The majority of suicides are not impulsive acts and have most often been preceded by many clues or warnings.

Suicidal people really want to die and nothing will stop them (FALSE); * Most suicidal people are undecided whether they really want to die. Most just want their pain to stop.

Once a person is suicidal then that person is suicidal always (FALSE); *Suicidal crises are usually short term. With help, a suicidal person might never be suicidal again.

When people seem happy after a period of depression they are no longer in danger (FALSE); *Numerous suicides have occurred when people appear to be getting better. This is especially so if they have not been receiving professional care.

Rich people are more likely to die by suicide than the poor (FALSE); *Suicide is represented roughly equally among all levels of society

Suicidal people are always mentally ill (FALSE); *Suicidal people may be very sad, but they are not necessarily mentally ill.

If there is no note then it cannot be suicide (FALSE); *Many Suicides occur without a suicide note.

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Q: I wanted to help my daughter to set up her own business so I signed a guarantee on her agreement with her supplier for the first $1,000.00 of her goods. She worked very hard, but the business failed. Now the supplier is demanding that I pay the outstanding balance of $4,500.00. Can they do that?

A: Signing a guarantee or co-signing a loan is a very serious matter. If the borrower or original purchaser fails to pay you are probably liable for the debt. Many court cases have enforced liability against a guarantor that is much higher than the original obligation. The courts have held that since it was anticipated that th business, such as your daughter, would have multiple orders it was reasonable for her supplier to believe that you were guaranteeing the future orders as well. Before anyone signs a guarantee or co-signs a loan for another person they should first consult their own attorney.

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Q: Why does my physical exam for a life insurance policy now ask so many questions about my mental health?

A: In the past an application for long term care insurance looked carefully at your mental health, particularly any evidence of your cognitive impairment, which is ability to remember and make decisions for yourself. After all, persons with cognitive impairment were more likely to enter a nursing home sooner. But now these same questions are being asked by life insurance companies. New research suggests that persons with mental illness are likely to have other health related problems and thus are likely to die sooner. This shorter life span also applies to people with mental impairments. If your life span is shorter it is more likely that the life insurance must pay a claim, which makes the company reluctant to issue a policy. It may be best to consider adequate insurance when you are younger and not wait until you are middle age.

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Q: Did the Medicaid reform law require a change in our record keeping?

A: Keeping records for 3 years was the old rule of thumb. But if you ask Medicaid to pay for your long term care 5 years of records are now required. It is difficult and expensive to retrieve bank records that are more than 3 years old, so it is best for you to keep those old statements. Some records should be kept for a longer period of time, for example non deductible contributions to IRA and the cost of buying or improving your home. The law presumes that all Medicaid applicants who made transfers to family members or friends will be penalized. You have the burden to prove that the transfers were made for a purpose other than to qualify for Medicaid. You should keep notes in your check registers, on your checks or as part of your online banking records to indicate the purpose of the check or transfer. A little bit of work now will make life much easier in the future.

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Q: Why does Medicaid say I can’t help my children?

A: You can help your children, but you should keep records. The Medicaid reform laws presume that any transfer or money given to your children in the five years prior to your application was for the purpose of getting taxpayers to pay for your care. But financial conditions these past few years have been tough; many seniors feel that paying the bills or giving money was the only way to keep children and grandchildren from losing their house or car. If you give this help please keep good records. You should avoid giving cash or checks directly to your family members. Instead pay one of their bills directly. If you must give cash or a check, make a note in your check register, on the check or in your online banking for the purpose of the payment. Careful record keeping will allow you to help your family without penalizing your own need for care.

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Q: Medicaid imposed a penalty period upon my mother since we can not provide documents to show how $10,000 in cash was spent in 2008 and 2009. My mother does not have the money. How can we pay for her nursing home bills during the next two months?

A: In the past year the Illinois Medicaid rules have twice been substantially changed. The caseworkers have not been told that most penalty periods for transfers prior to November 1, 2011 can be waived if you file the appropriate Hardship Affidavit. Each affidavit is different. Our office can help you with that application.

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Before he was president, Abraham Lincoln was an honest Illinois lawyer. We strive to uphold the same ideals that honest Abe applied throughout his career.