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Medicare Part D Prescription Assistance General Legal Questions Legal Websites and other Resources 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.
Rev. Proc. 2004-71
.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
.36 Periodic Payments Received under Qualified Long-Term Care 7702B(d) .36 Periodic Payments Received under Qualified Long-Term Care Insurance Q: What should I do to protect my disabled son when I die? A: Here are five planning points:
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.
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/ ElderLaw 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. 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. 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. 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 This issue: Guardian Pays $3300 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 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 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. 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. ------------------------------------------------------------------ You can subscribe to Elder Law FAX by sending an empty e-mail message to: elderlawfax-subscribe@mlm.tn-elderlaw.com. To unsubscribe to Elder Law FAX, send an empty e-mail message to: elderlawfax-unsubscribe@mlm.tn-elderlaw.com. View Elder Law FAX online at http://www.tn-elderlaw.com/elderfax.html 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) Full case: Keithly v. Vance 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. Welook forward to serving you. Rule to call for liability disclosureAttorneys throughout state will be required to reveal insurance statusBy CHRIS DETTRO 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. "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." Chris Dettro can be reached at 788-1510 or by e-mail at chris.dettro@sj-r.com. 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.
This issue: Elderly Couple Lose Life Savings Due to Joint Bank Account 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 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. ------------------------------------------------------------------ You can subscribe to Elder Law FAX by sending an empty e-mail message to: elderlawfax-subscribe@mlm.tn-elderlaw.com. To unsubscribe to Elder Law FAX, send an empty e-mail message to: elderlawfax-unsubscribe@mlm.tn-elderlaw.com. View Elder Law FAX online at http://www.tn-elderlaw.com/elderfax.html. ELDER LAW FAX -- May 10, 2004 This issue: Joint Account Not Subject to Execution for Non-Contributor's Debt 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 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 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 thelegislature 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 ------------------------------------------------------------------ You can subscribe to Elder Law FAX by sending an empty e-mail message to: elderlawfax-subscribe@mlm.tn-elderlaw.com. To unsubscribe to Elder Law FAX, send an empty e-mail message to: elderlawfax-unsubscribe@mlm.tn-elderlaw.com. View Elder Law FAX online at http://www.tn-elderlaw.com/elderfax.html. 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. 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. 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. 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. 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. 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 This issue: Depression Cause for Waiver of IRA Early Distribution Penalty “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 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. ------------------------------------------------------------------ You can subscribe to Elder Law FAX by sending an empty e-mail message to: elderlawfax-subscribe@mlm.tn-elderlaw.com. To unsubscribe to Elder Law FAX, send an empty e-mail message to: elderlawfax-unsubscribe@mlm.tn-elderlaw.com. View Elder Law FAX online at http://www.tn-elderlaw.com/elderfax.html. 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. 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. 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. 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. 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. 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. 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]. 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. 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:
A lawyer can help you weigh each of these factors. You can then make an informed decision. 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. 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. 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. 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. Q: What do I need to know about the new Medicare Drug Discount Cards? A:
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 youhave 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. 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. 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. 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. 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. 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: 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. 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 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. 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.
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