Law Tips: Preventing Financial Exploitation of Your Elderly and Disabled Clients

Welcome back. Thanks to the generous contributions of Jim Voelz, Voelz Law Firm, Columbus, Indiana, Law Tips is looking into the “hidden epidemic” of financial exploitation of the elderly and disabled. This week Jim’s counsel delves into advising clients on gifting of assets and limiting their financial power of attorney. He will also recommend protective steps clients can take to avoid being financially exploited.      

To Gift Or Not To Gift:

Elder law attorneys are frequently asked to give advice about whether the client’s home and other assets should be gifted. Many of our clients and their families know about the high costs of care in the home, an assisted living facility, and a nursing home. They have heard about other folks who have lost their homes, farms, and other assets to pay for the costs of their care, and they do not want that to happen to them. So how are we going to help these clients, and what are we going to advise them to do about their concerns?

I want to focus on the situation where you are asked to give your client advice about gifting when your client is elderly with no immediate health issues that would require care at home, in an assisted living facility, or in a nursing home at any time in the foreseeable future. The issue is whether the client should gift their home and/or other substantial assets now to protect them.

One  option is to advise the client to gift the home and/or other assets now in the hope of getting past the five year lookback from the date of a future Medicaid application that requires the reporting of uncompensated transfers that give rise to a period of ineligibility to receive Medicaid benefits (“transfer penalty”). An argument for this could be that gifts that are made more than five years prior to the filing of a Medicaid application are protected and have no effect on Medicaid eligibility.

What advice should you give?

Your advice should protect the best interests of your client. I suggest that you review in detail all of the potential risks and disadvantages of gifting with your client.

(Law Tips note: The Voelz Law Firm outlines issues for clients in a firm letter describing the potential problems that can arise as a result of gifting assets, such as estate planning problems, loss of control of property and tax consequences. The letter is shared during Jim’s CLE presentation.)

We keep copies of this letter in our conference rooms, because we use these letters often. We give a copy to our client and a copy to each of the family members or other persons who are attending the conference with the client, and we keep a dated copy in our client’s file as documentation of our advice.

After this review, in almost all of our cases, our client decides not to make any gifts. However, if a client still wants to make a gift of their home or other assets, then we usually ask our client to think about what we discussed and schedule a second appointment to have further discussions. If, at that second appointment, the client still wants to gift, then we meet with the client alone, if other family members or others attend this conference, to make sure this is really what our client wants to do without being influenced by other persons who are attending the conference.

We always advise our clients to have a Financial Power of Attorney in place, and we have discussions with our clients about whether they should include certain provisions in their Financial Power of Attorney that could lead toward protecting some of their property if it would make sense to qualify them for Medicaid or other governmental benefits, such as the VA Aid and Attendance Pension, in the future. (See Indiana Code 35-46-1-12.)

If an attorney prepares a Financial Power of Attorney that gives the attorney-in-fact unlimited and unrestricted authority to gift or loan in unlimited amounts, then these provisions can subject your client to the risk of being financially exploited by the attorney-in-fact.

I would suggest the following to reduce or eliminate this risk:

1. Prepare power of attorney provisions that require other persons to agree before gifting or loaning can be done and/or that require the prior approval of an attorney in conjunction with a plan to qualify the client for Medicaid or other governmental benefits.

2. Meet with the client and with the attorney-in-fact to explain the power of attorney and its provisions. This will serve to educate the attorney-in-fact and will also provide an opportunity for you to introduce yourself to the attorney-in-fact, as your client’s attorney, so that you will be consulted in the future.

3. Provide the attorney-in-fact with instructions on how to properly use the power of attorney.

Advice For Your Clients On How To Avoid Being Financially Exploited

An elder law attorney should also be able to advise a client about how to avoid being financially exploited. Here are some suggestions that could be made to a client:

– You should establish your safety net of trustworthy and reliable persons. Sign a Power of Attorney that appoints a person who is 100%trustworthy and who will always act in your best interests. Do this before you have a serious health issue or impairment. If you do not have such a person, then appoint a bank or credit union who has a trust department who will agree to be appointed to handle your financial affairs, if necessary.

– You should establish relationships with experienced professionals who have a good reputation such as an accountant, financial advisor, and attorney and consult with your appropriate advisors before you engage in any questionable transaction.

– Sign-up for the “do not call” list to help stop telephone solicitations at www.in.gov/attorneygeneral (Register For Do Not Call). This does not eliminate all telemarketing calls so do not talk to unknown persons who are trying to sell or give something to you.

– Do not keep a large balance of money in your checking account, arrange for direct deposit of your income, and set-up automatic bill pay for your utility bills and other regular expenses.

– Do not hire caregivers or others who would work in your home without a background check.

– Do not leave your mail in an unsecured mailbox and shred documents with personal identifying information.

– Do not give any stranger or new acquaintance your birth date, Social Security number, or any information regarding your accounts or financial information.

– If you lack mental capacity or become impaired, then allow someone who is 100% trustworthy and reliable and who will always act in your best interests to take over management of your financial affairs.

– Report any questionable request or solicitation to your trusted relative or person.

– Report any suspected or attempted financial exploitation to law enforcement and/or to the Adult Protective Services officer in your area.

 

Thanks again to Jim Voelz for sharing his expertise in the prevention of financial exploitation of elderly and disabled clients.  If you missed his first Law Tips column, you will find it below.  For a comprehensive update in elder law from an outstanding panel, check out the 2014 Elder Law Institute on October 9-10, 2014.

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About our Law Tips faculty participant:
James K. Voelz, Voelz Law, LLC, Columbus, Indiana. Mr. Voelz ‘s law practice primarily involves estate and disability planning, estate and trust settlement, elder law, and Medicaid qualification services. Jim is a member of Hoosier Hills Estate Planning Council, National Academy of Elder Law Attorneys and its Indiana Chapter, and the Indiana State Bar Association’s Elder Law and Probate, Trust and Real Property Sections. Mr. Voelz serves on the Committee on Character and Fitness of the Indiana Supreme Court.  And he is also the author of “Senior Moments” newsletter.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Law Tips: The Problem of Financial Exploitation of the Elderly and Disabled

Financial exploitation of the elderly and disabled has been called “the hidden epidemic.” Attorneys who represent the aged and disabled frequently encounter acts of financial exploitation. And attorneys must do what they can to protect their clients from the risk of being financially exploited.

This statement from James Voelz, ICLEF’s Elder Law Institute faculty member, is a reflection of his ongoing concerns about the elderly and disabled clients he serves. I am grateful that Jim agreed to share his expertise on protecting clients in the expanding elder law arena with Law Tips readers. This week he provides background on the “problem” and the applicable law. Then, as we go down this road, we’ll hear Mr. Voelz’s further advice on steps elder law attorneys may want to take to prevent exploitation of clients.

Jim Voelz’s thoughts on the financial exploitation problem:

The Indiana Adult Protective Services (“APS”) program received 41,334 reports, of which 10,506 reports were investigated during 2012. The reports were classified as follows: Abuse- 2,689, Neglect- 3,176, Self Neglect- 3,198, and Financial Exploitation- 1,443. How many cases of financial exploitation are reported? The estimates range from 1 in 5 to 1 in 44.

I recently met with an APS investigator who has almost 25 years of experience. He said that reports of financial exploitation are increasing, and voiced extreme frustration that he has never seen criminal charges filed against a person who financially exploited an elderly or a disabled person! He said that we have the tools to protect people in Indiana, but these tools are not being used effectively. He said the exploiters are getting away with financial exploitation when they are not being prosecuted. He said prosecutors do not file charges, because victims suffer from dementia or other health issues making it difficult to prove that a crime has been committed.

I also contacted Patrick D. Calkins, who is the Program Director for Adult Protective Services. Mr. Calkins told me that APS does not keep statistics about the number of financial exploitation reports that result in criminal charges being filed against the alleged perpetrator. He did verify that the most common excuse for failure to prosecute is “that the victims make bad witnesses.” But he said that his take on this is that homicide victims make bad witnesses also, but prosecutors still file charges for murder.

Mr. Calkins also told me that the victim’s attorney is often the victim’s last line of defense. Consequently, it is important that we do what we can to help our clients not become victims of financial exploitations, and if our client does become a victim, then to help stop the continuation of financial exploitation and to help our client seek appropriate remedies.

Adult Protective Services

Indiana has had an adult protective services (APS) law since 1985. See Indiana Code 12-10-3-1 through 12-10-3-31. Indiana is the only State in which the APS program is a criminal justice function.

The Division of Aging of the Indiana Family and Social Services Administration oversees the APS program. There are 16 APS unit geographic boundaries. APS has 42 field investigators who are employed by “hub prosecutors” who have a contract for services with the Division of Aging, and they are paid from State funds.

A person who believes or who has reason to believe that another person is an “endangered adult” shall make a report to the adult protective services unit, a law enforcement agency, or the Division of Aging on its statewide toll free telephone number (1-800-992-6978), as required by Indiana Code 12-10-3-9.

So what should an attorney, who knows that his client has been financially exploited, do?

Is the attorney required by law to report this? Yes, Indiana Code 35-46-1~3(a) does require a report to be made to the Division of Aging, APS, or a law enforcement agency.

But, what duties does the attorney have pursuant to the Indiana Rules of Professional Conduct?

Rule 1.14(b) and (c) outlines these responsibilities. (Law Tips note: Here is a link to specific language of Rule 1.14: Indiana Rules of Professional Conduct. Consult the Rules for guidance on when a lawyer is permitted or required to take protective measures. One comment to the Rule concludes as follows: “The lawyer’s position in such cases is an unavoidably difficult one.”)

Suspicious Activity Reports

The Financial Crimes Enforcement Network of the United States Department of the Treasury issued an Advisory to financial institutions regarding the filing of suspicious activity reports regarding elder financial exploitations on February 22, 2011. Please refer to http://www.fincen.gov/statutes_regs/guidance/html/fin-2011-a003.html. The Advisory lists potential indicators of elder financial exploitation.

If the financial institution has a reasonable explanation for the transaction based upon the available facts, including the background and possible purpose of the transaction, it is relieved of the obligation to file a Suspicious Activity Report.

Attorneys who are representing clients or other agents who are involved in an activity with a financial institution that could result in the institution filing a Suspicious Activity Report should provide the financial institution with a reasonable explanation for the transaction. This may prevent a visit from Federal or State law enforcement.

Senior Consumer Protection Act

Indiana has a new law called the Senior Consumer Protection Act that became effective July 1, 2013. The Act provides civil remedies involving financial exploitation of a person who is at least 60 years of age. The Act can be found at Indiana Code 24-4.6~6-1 through 24-4.6-6-6.

We’re breaking here in Jim Voelz’s discussion of financial exploitation of the elderly and disabled. But he continues to share his expertise next week in areas such as the right timing for a person to gift their assets and the amount of power given to the attorney-in-fact.

For a comprehensive update in elder law from an outstanding panel, check out the 2014 Elder Law Institute on October 9-10, 2014.

_________________________________________________________________________________

About our Law Tips faculty participant:
James K. Voelz, Voelz Law, LLC, Columbus, Indiana. Mr. Voelz ‘s law practice primarily involves estate and disability planning, estate and trust settlement, elder law, and Medicaid qualification services. Jim is a member of Hoosier Hills Estate Planning Council, National Academy of Elder Law Attorneys and its Indiana Chapter, and the Indiana State Bar Association’s Elder Law and Probate, Trust and Real Property Sections. Mr. Voelz serves on the Committee on Character and Fitness of the Indiana Supreme Court.  And he is also the author of “Senior Moments” newsletter.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Law Tips: More Ways Technology Has Changed Employment Law

How has an employer’s obligation increased with speedier electronic reporting capabilities? Which side has the tactical advantage in electronic communication? What are the causes of action available to employees based on modern technology?

Donna Panich, our Law Tips employment law contributor, is in the midst of sharing her expertise on several technological advancements that are impacting her area of practice. (Scroll down for her tips from last week.) Following are other interesting challenges that have emerged during Ms. Panich’s 35 years of advising employment law clients:

The Tactical Advantage of Asymmetrical Discovery Has Been A Powerful Weapon For The Plaintiff’s Bar

The proliferation of electronically stored information (ESI) has provided the plaintiff’s bar with a powerful weapon. Up to this point, most of the data in employment cases has been in the hands of the employer. The burden associated with the preservation, collection, review and production of that data has sent many an employer to the settlement table. If the plaintiff is able to assert a colorable claim of spoliation, the weapon becomes that much better.

Proposed amendments to the Federal Rules of Civil Procedure may have some impact on tempering the risks of spoliation. The advent of social media has created a source of ESI which may increase the amount of ESI controlled by plaintiffs and thus reduce the incline on the playing field. However, the tilt remains and will likely remain until (a) courts actively enforce the limits on discovery currently in the Federal Rules, (b) litigants and the courts recognize that the requirements of Rule 34 are not met by a discovery request for all documents hitting upon a set of search terms, and (c) everyone places greater emphasis on the speedy resolution of the merits rather than fulsome disclosure of “all” ESI on any topic remotely related to the litigation.

Employer Obligations, Investigations Of Failures To Meet Those Obligations, And Class-Based Litigation Have Expanded To An Enterprise Level

In a paper world, decisions were usually localized. Analysis of employment statistics was painfully slow. Cross country incidents were difficult to track. Electronic databases have changed all this. Not only is centralized control of decision making much easier, documentation of those decisions, and data relating to all those decisions, is centralized as well so that collection of the information, and tracking information is much easier.

As a result, the Occupational Safety and Health Administration tracks every citation issued at every facility of the employer or its affiliates. It can determine whether any patterns exist. It can escalate the severity of a violation to repeat or willful without regard to where a prior citation had been issued.

EEOC is able to conduct analyses across the entirety of a company’s workforce, as is plaintiff’s counsel. Moreover, an employer’s claim that producing data on a broad, enterprise level is overly burdensome is less appealing when the data can be requested and obtained in the form of an electronic report requiring only a few hours of programming time.

Given the trend in enterprise-wide investigation and litigation, employers may wish to emphasize localization of decisions while concurrently asking in-house counsel, or human resources, under the guidance of its counsel, to look at decisions on a broad basis. If patterns of adverse impact or underutilization are detected, corrective action may avoid broad liability. Likewise, it is imperative that the company maintain adequate inter-facility awareness of legal developments. Ignorance regarding problems at a sister plant a thousand miles away will not be a defense to a repeat or willful citation.

“Concerted Activity” Is Redefined And Enabled Through Social Media And Email

The National Labor Relations Act protects employee rights to engage in concerted activity regarding workplace issues such as wages and working conditions. Before the advent of electronic communications and social media, concerted activity usually involved employee meetings, strikes, boycotts, picketing, or other physical shows of disagreement, most of which were contained to the immediate environs of the dispute, were limited in message content, and largely involved only unionized workplaces. Now, employees can express disagreement with their wages and working conditions with little effect or inconvenience and can reach a diverse, widely scattered audience by using social media. Moreover, most of the cases coming before the National Labor Relations Board have arisen in non-unionized work environments.

A union seeking to organize a group of employees has traditionally been barred from directly communicating with employees on the employer’s work site. However, recent rulings from the National Labor Relations Board, as well as proposed new election rules, would give the union access to the target employees via email -perhaps even through the employer’s own email system.

Because of these new realities, most employers are actively rethinking and revising their social media and computer usage policies, unions are developing new organizing strategies, and plaintiff’s counsel should always consider the potential new cause of action available to an employee who is discharged or reprimanded based on the content of his or her communications.

Thank you again to Donna Panich for providing her dynamic update on technological advances impacting employment law. Her presentation on this topic is a segment of the seminar entitled, 54 Practical Issues, Tips and Traps for Employment Lawyers check out the On Demand Seminar or Video Replay Seminar by Clicking Here.

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About our Law Tips faculty participant:
Danuta (Donna) Bembenista Panich, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, has a varied practice dealing with all aspects of labor and employment law. However, since 1995, she has focused primarily on defending employers – including many of the nation’s largest companies – in class actions, multi-plaintiff and collective actions, pattern and practice claims, and other “bet the company” matters such as investigations of catastrophic industrial accidents. Ms. Panich has dealt extensively with electronic discovery and litigation preparedness. Since she joined Ogletree Deakins in 2007, she established, and has since served, as chair of Ogletree Deakins’ Record Retention and E-Discovery Practice Group.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

Posted in Law Blogs, Law Tips0 Comments

5 Hot Tips On Trust Administration

If you are involved in trusts, this is your opportunity to brush up. I have five tips for you on trust administration from Ellen Deeter, a lawyer with extensive background in the area. Ms. Deeter spent most of the past 35 years working in bank trust departments, including as senior trust counsel.  Ellen generously agreed to share her expertise with Law Tips readers.

Tip #1 – Read the entire trust agreement!

• After you have read the trust agreement from beginning to end, including the “boilerplate”, read it again. And then a third time.

• Next, write out a synopsis of the trust agreement, highlighting key provisions. Pay particular attention to the provisions identifying the beneficiaries (current and future), noting mandatory and discretionary distributions, termination provisions, and allocations between principal and income.

• Every time you receive a request for a distribution refer back to the document and make sure that the request is:

1. from someone entitled to receive it.

2. for a purpose that is allowed in the document.

Tip #2 – Read and know the Indiana statutes on trusts (make Indiana Code Title 30 your friend).

• In addition to the Indiana Trust Code, also become familiar with the Indiana Probate Code, the Uniform Principal and Income Act, Total Return Unitrusts. Don’t forget the Internal Revenue Code and the provisions governing the taxation of trusts.

Tip #3 – Establish a process, follow it consistently; communicate.

• Don’t wait until you get a request from a beneficiary for a discretionary distribution to let him or her know the type of information you will need to evaluate the request. Establish ground rules ahead of time for how the request is to be made and the types of documentation that they will need to provide.

• Explain to beneficiaries that the trustee has a duty to both income beneficiaries and remaindermen.

• Let beneficiaries know how the trust (and beneficiaries) are taxed on income earned in the trust and when to expect to receive their Schedule K -1s.

Tip #4 – Understand the difference between accounting income and accounting principal.

Become familiar with the Indiana Uniform Principal and Income Act. Read the document to detennine if the trust agreement makes provisions contrary to the act (which it may) or whether the trust agreement gives the trustee discretion on allocating receipts and disbursements between income and principal.

• Explain to the beneficiaries what the term “net income” means. General (simplified) rule: interest, dividends, rents, royalties less 1/2the trustee fee.

Tip #5 – Document your files.

• Beneficiaries are entitled to inspect your files. Remember that as you write notes to the file.

• Beneficiaries have been known to be litigious (surprise, surprise). Keep copies of all correspondence and emails. Make written, contemporaneous notes of telephone conversations and meetings. Follow meetings up with letters confirming the discussion

Ms. Deeter’s bonus tip: Realize what you DON’T know and engage professionals to assist you. 

I hope you polished your trust administration skills through Ellen Deeter’s review. If you would like to take advantage of the CLE program that includes her discussion of trusts, look for the Video Replay or On Demand Seminar of 120 Hot Tips in Probate, Guardianships, Trusts and Tax by Clicking Here.

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About our Law Tips faculty participant:
Ellen M. Deeter earned her J.D. magna cum laude from Indiana University School of Law at Indianapolis in 1982. She started her career as an inheritance tax examiner for the Indiana Department of Revenue in 1978. Since that time Ms. Deeter has spent most of her career with bank trust departments, including Indiana National Bank, Wachovia Bank, N.A. and Merchants National Bank. She recently retired from The National Bank of Indianapolis, where she worked in various roles over 18 years, including serving as the Manager of the Personal Trusts and Estates Group and as Senior Trust Counsel.  She also is a Certified Trust and Financial Advisor.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

Posted in Law Blogs, Law Tips0 Comments