Can you protect mom from financial exploitation?

“Mom had money in her account last I looked, but now it is gone!  What can I do?”

This is a too common issue for our older population.  Financial exploitation can come in many forms, including scams, theft, cons, and so on.  It can happen by phone or email, or in person.  For example, consider the sales person who offers to paint the house for an outrageous sum, and then does a poor job or simply never shows up.  Mom doesn’t want to complain because “he was nice a nice young man!”  And, she is embarrassed to ask you for help.  Yes, it happens more often than you think, and you don’t have to be incompetent to fall for a scam or a “nice young man”.

But maybe the most common form of financial exploitation (or financial abuse) is when a relative takes money from the elder’s bank accounts.  We have had several clients recently for whom this has happened.  As a family member, how can you prevent it?

Simply put, this is a hard issue.  It is nearly impossible to stop every kind of abuse and exploitation.   You can help best by staying vigilant while she can still make decisions and take advice.  Eventually, she may actually lack capacity to make financial decisions (also known as being “incompetent”).
If she is incompetent, then she cannot sign anything legal.  To get to that point, you have to have her declared incompetent by a doctor.  Then, future documents would be invalid (such as if a person got her to sign a deed or a new POA).  But, you’d still have to prosecute the event, by filing criminal or civil charges to reverse anything done.  In some cases that might be too late because the perp will have spent the money or be unable to comply with a judgment.
And, even if she is actually found incompetent, she can still take actions (like taking funds from the ATM) that could result in problems.
Guardianship is a reasonable solution, but sometimes doesn’t help much more because mom could still wield a pen or an ATM card, or she can give the ATM card to the exploiter.  Even if the banks and everyone else know that she is incompetent, it might be preventable, but, that is about the same result as for the POA document.  The advantage to guardianship is that you would have court oversight, so she would simply not have any ability to spend her own money without court approval.  But, that goes both ways … you are also under that same authority, and would need to manage and get approval for her entire life (literally).  And, it is possible that you would win a full guardianship in most courts … but most clerks prefer to make it limited, it is an adversarial hearing, and she will be defended by a lawyer during the process.  And it has to be held in the county in which she resides, which can be an issue for an out-of-state child looking to help mom.
Further, if she is incompetent, she won’t be of any help in explaining what happened or preventing issues or exploitation.  And she will likely deny any problems even if you bring them up in plain view.
If you wanted to proceed with protecting her more, I could suggest some or all of the following:
  • have her evaluated and found incompetent
  • get a formal letter from a doctor that states that
  • notify the banks she deals with and anyone else she might work with for financial matters that she has been found incompetent and that you are the proper authority, give them copies of the letter and the FPOA
  • Keep an eye on her bank accounts for improper activity
  • If she does sign or spend due to another person’s influence, file for the guardianship and press charges or get Adult Protective Services involved as needed.
Beyond that, you can only remediate, not prevent, when you are not physically in control.
How can you gain control?  If you are her agent under a Power of Attorney, then one way to get control is to move everything to bank accounts that you control and give her an allowance via a check, autodeposit to her existing account, or a reloadable credit card.  Most of this could be automated.
You might also want to apply to be the Social Security representative payee and move the SSA deposits to the bank account you control.  You may have the right to do this as her Financial agent under the POA, and you probably should do this once she is found incompetent.  Sooner, if you can get her to agree.  But be aware that such a move may create issues in the family, or could be closely scrutinized by Medicaid.   Taking control may be required, and it is a big step.
Ultimately, the finding of incompetence is an important first step that starts the ball rolling.
If you have questions, contact us.  We always suggest that you also find a Professional Aging Life Care Manager in her community to help.  Check out our resources pages for more information or this website.

Change the Will when the testator must downsize?

Downsize Needed?

Sometimes, people will have a significant list of items in their home to go to others. But, when it is time to downsize, and move to a new smaller residence or to assisted living, what should a person do with them?

In general, the advice I give is in two parts… sell it, or give it now.  Which choice depends on the answers to a couple of questions:
  1. Does the testator (the person writing the Will) need money that would be gained through sale of the items?
  2. Can the testator fit certain (or all) the items in the new downsize residence?  Does she even want to take them all?  Can she afford the cost of moving the items?
  3. Will the persons to whom the items were intended be a able to take them now, and/or be upset if the items were not available in the future?  This might happen, for example, when grandkids are the intended recipient and they do not have a place of their own or are still living at school.

Give the gift now!

Usually, the gift given during the testator’s life is more appreciated than after death.  And, the testator can enjoy seeing the recipient have the gift and use it.  Wonderful memories are shared when grandmother’s pearl necklace is given to a great-granddaughter along with the story of how she got it in the first place!  Or, of hearing the piano played by a grandchild who could not afford one for many more years!
And, if you do decide to give the gifts now, do these two things as well:
  • Gift them as instructed in the will  – it fulfills her wishes ahead of time, and it will prevent hurt feelings when the will is later revealed and everyone sees that the “wrong person” ended up with the necklace, piano, painting (or whatever).
  • Then, mark a copy of the will with gifts given out and identify which she still has with her.  That will make the executor’s job a lot easier in the future!

The choice to downsize can be a difficult time for lots of reasons.  Derive immediate joy by gifting the important personal possession now.

Filling in your NC Health Care Power of Attorney

Sometimes I am asked about the Health Care Power of Attorney .. .that is the document that names an “agent” who will be able to make medical decisions for you when you cannot.  It is an important role.  But, what do you put in the various spots?

Here is the blank form used in NC for standard choices for the health care agent under a power of attorney.
For section 1, you would simply fill in the name of the advocate you choose, and if you would like a second or third, add those.  Please be sure to enter the contact information because if you need help, your doctors need to know how to reach the agent you are naming.
I advise NOT entering a physician in section 2.  The language allows your attending to start the process of deciding when to call on the agent … you don’t want to wait until your primary care doctor returns from his annual 2-week trip to Yellowstone…
If your family knows your wishes in section 5, no additional entries are needed.  But, you might have some religious or other limitations.  For example, if you wish to refuse blood transfusions, you can enter it in part B.  Also, you can (and should) tell doctors to turn off your pacemaker.
If you would like to specify organ donation chose one of the blocks to initial in item 6 (or leave them blank, it is not required).
Then have it witnessed and notarized.  The notary has to see all the people sign it, so don’t sign it and then take it to a notary.
Witnesses CANNOT be related to you, or be caregivers, or heirs.
You can often have the document notarized at a bank, the hospital, or of course, you can come to our office.
Once completed, you keep a copy for each of the agent advocate, and then send /give the original to the doctor’s office or any doctors you use as specialists.  Usually just your primary care doctor is sufficient.
Let us know if you’d like to come in to have it witnessed and notarized.  Call at 919-883-2800.
Or if you have more questions, schedule a complimentary strategy session on aging and long-term planning.

What is PASRR?

I’ve been asked a couple of times this week about admission to adult care facilities and this thing called “PASRR”… what is it?  Well, let’s check it out at the NC Health and Human Services website​.

​As always, if you have questions about VA benefits, Medicaid, or Estate planning, please give us a call!  919-883-2800

North Carolina Pre-Admission Screening and Resident Review (PASRR)
Who is subject to PASRR Screening?
The PASRR is a required screening of any individual who is being considered for admission into a Medicaid Certified Nursing Facility or Adult Care Home regardless of the source of payment. Please see the specific informaition below for each program.


Federal law (42 CFR 483.128) mandates that states provide a Level I screen for all applicants to Medicaid-certified nursing facilities to identify residents with serious mental illness (SMI), mental retardation (MR), or a related condition (RC). For residents with no evidence or diagnosis of SMI, MR, or RC, the initial Level I screen remains valid unless there is a significant change in status.
Referred to as the Level I or identification screen, specific diagnostic and functional questions about an individual are raised to identify those persons with mental illness, mental retardation, and conditions related to mental retardation. The Level I and, when required, the Level II screens must be performed prior to nursing facility admission (excluding those situations discussed in Section II.D.ii of this manual).
The Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (DMH/DD/SAS) PASRR Unit is the agency which will make final determinations regarding appropriateness of placement and need for specialized services and, in cases where specialized services are determined as necessary, the DMH/DD/SAS will arrange for provision of those services.


The Level II screening is triggered by evidence of a serious mental illness (MI), mental retardation (MR) or condition related to mental retardation (RC) as defined by state and federal guidelines. The purpose of the Level II screening is to determine if the individual has any special needs due to his/her identified condition that need to be addressed in a nursing facility or if those special needs are so significant that they cannot be met in a nursing facility and can only be met in a psychiatric hospital or a specialized facility dedicated to the care of the developmentally disabled. For those suspected of meeting state and federal PASRR criteria for MI or MR/RC, Level II screens must be performed both prior to admission (PAS) to assess for both NF placement appropriateness and specialized service needs.​

When to update your will?

Here are some thoughts from St. Jude’s Children’s Hospital:

Does your will need updating?

Creating a will and estate plan is a good first step in protecting the people closest to you and the assets you’ve worked so hard to accumulate. But even the best will can become obsolete over time.
Consider the many life events that can impact a will and other arrangements:

  • moving to another state
  • changes in the value of your assets
  • a change in marital status
  • birth of a grandchild
  • a change in the real estate you own
  • new tax laws
  • changes in your charitable goals

If you need to update your will, there is no substitute for using a qualified attorney with estate planning experience in your state. A knowledgeable attorney can make sure that your revisions are properly recorded, which can reduce expenses and help heirs receive their inheritances sooner.

Proposed regulations offer guidelines for new state – sponsored ABLE accounts for people with disabilities

Proposed Regulations Offer Guidelines for New State-Sponsored ABLE Accounts for People with Disabilities
IR-2015-91, June 19, 2015


— The Internal Revenue Service today released proposed regulations implementing a new federal law authorizing states to offer specially-designed tax-favored ABLE accounts to people with disabilities who became disabled before age 26.
The Achieving a Better Life Experience (ABLE) account provision was signed into law in December 2014. Recognizing the special financial burdens faced by families raising children with disabilities, ABLE accounts are designed to enable people with disabilities and their families to save for and pay for disability-related expenses.
The new law authorizes any state to offer its residents the option of setting up an ABLE account. Alternatively, a state may contract with another state that offers such accounts. The account owner and designated beneficiary of the account is the disabled individual. In general, a designated beneficiary can have only one ABLE account at a time, and must have been disabled before his or her 26th birthday. The law provides what it means to be disabled for this purpose.
Contributions in a total amount up to the annual gift tax exclusion amount, currently $14,000, can be made to an ABLE account on an annual basis, and distributions are tax-free if used to pay qualified disability expenses.  These are expenses that relate to the designated beneficiary’s blindness or disability and help that person maintain or improve health, independence and quality of life. For example, they can include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services and other expenses.
In general, an ABLE account is not to be counted in determining the designated beneficiary’s eligibility for many federal means-tested programs, or in determining the amount of any benefit or assistance provided under those programs, although special rules and limits apply for Supplemental Security Income (SSI) purposes.
The proposed regulations, available today for public inspection at, provide guidance to state programs, designated beneficiaries and other interested parties on a number of issues. For example, the proposed regulations explain the flexibility the programs have in ensuring an individual’s eligibility for an ABLE account. They also indicate that the IRS will develop two new forms that ABLE account programs will use to report relevant account information annually to designated beneficiaries and the IRS — Form 1099-QA for distributions and Form 5498-QA for contributions.

Until the issuance of final regulations, taxpayers and qualified ABLE programs may rely on these proposed regulations.

The IRS welcomes comments. Comments must be received by Sept. 21, 2015, and may be submitted electronically, by mail, or hand delivered to the IRS. A public hearing is scheduled for Oct. 14, 2015, at the IRS Auditorium, 1111 Constitution Ave. NW, in Washington. See the proposed regulations for details on submitting comments or participating in the public hearing. More information can be found at Tax Benefit for Disability: IRC Section 529A.

Asset Protection Trusts

An article recently published by WealthCounsel addresses the use of Asset Protection Trusts.  Technically, they discuss self-settled trusts, in which your assets are used to fund the trust and you retain a beneficial interest.  We can’t do that in North Carolina exactly that way, so we use a version that irrevocably transfers those assets out of your name and interest and the trust makes your family and children the beneficiaries.

Both strategies are important estate planning tools.  In our experience, the irrevocable asset protection trust​ is an essential part of estate planning even if you are not worried about VA benefits or Medicaid… there is still a place for planning wealth transfer to your heirs in a controlled, predictable, and protected manner.

If you’d like more information, check out this article.  And, give us a call to discuss your estate planning needs.  You will find us to be caring compassionate attorneys, passionate about Estate Planning and Elder Law, and focused​ on VA benefits and Special Needs Trusts.

Proposed changes to VA rules

The VA Pension benefit is available to veterans who have served during a period of war as defined by Congress, who meet certain income and asset limits, and who meet certain disability or medical thresholds.  On January 23, 2015, the Veterans Administration (VA) published a comprehensive rule that would amend 38 CFR Part 3.  Part 3, which involves changes to several sections, covers net worth, asset transfers, and income exclusions for needs-based benefits.  The stated objective is to respond to the GAO and to maintain the integrity of the system.

It seems clear from the proposed changes that maintaining the integrity of the system really means closing “loop-holes” and reducing veterans’ short-term access to benefits.  The amount a veteran could ultimately receive is not changing, but the path to get there is harder and longer.

So, how will the VA approach this change?  In this set of proposed rules (if they become law as written), it will be met through changes to net worth and income thresholds, reductions in use of asset transfer approaches, and changes to the way medical expenses can reduce the net income.

Limitations on Net Worth

Proposed rule 38 CFR § 3.274 would impose a limit on net worth which is a hybrid of the processes used by the VA and by Medicaid.  This new net worth limit is equal to the maximum community spouse resource allowance for Medicaid purposes on the effective date.   To this is added annual income, so every dollar of annual income is now added to the asset levels, even though veterans and their spouses clearly have to actually *spend* the income they receive to survive.  Recognizing this, the proposed rules then deduct certain expenses from the asset amount, similar to the method used today to compute the “income for VA purposes.”  This procedure is explained and demonstrated in 38 CFR §3.274(f)(5).  The numbers seem to all be based on year-end information.   The primary residence is still excluded, even if the claimant is not residing there, but personal mortgages on the property are not considered.

Changes to Asset Transfers

Proposed rule 38 CFR § 3.276 addresses the transfer rules and penalty periods that would be imposed for transfers made prior to applying for VA pension.  Significantly, the VA will impose penalties on all transfers to qualify.  Today, some veterans are able to irrevocably give assets to family members, transfer assets to a trust, or purchase income-producing annuities with assets in order to reduce asset levels to qualify.  Under the new rules, NONE of these methods will be suitable for planning.  Further, the look-back period for such transfers is 36 months.  Returning the assets transferred will remove the penalty if returned within one month of application.  The penalty is not based on the cost of care (as used by Medicaid) but on the expected pension rate, and can last for as long as ten years.  Even more onerous, the penalties are added and then applied as of the most recent transfer date.

One exception to the asset transfer rules are for a transfer by a veteran or spouse to an irrevocable trust established on behalf of a child (e.g., a “special needs trust”).  This will only work under specific conditions.

Medical Expenses

Under proposed rule 38 CFR § 3.278(c), medical expenses for VA purposes are those that are “medically necessary or that improve a disabled individual’s functioning.”  These are similar to allowed expenses under the current rules.  Caregiver costs may be deducted only for licensed providers and only for support for ADLs (basic self-care activities … bathing or showering, dressing, eating, toileting, and transferring), but if rated “Housebound” or “Aid & Attendance” then a more liberal set of caregivers and services may be provided (independent living activities, such as shopping, food preparation, housekeeping, laundering, managing finances, handling medications, using the telephone, and transportation for non-medical purposes).  Certain eligible family members can provide care (and be compensated) if care is prescribed by a physician.  Rates for care givers must be under the rates published in the MetLife Mature Market Institute Market Survey of Long-Term Care costs.

This seems to expand the services available that can be used to reduce income as compared to the current rules.  Independent living facility costs are still not covered.

The Effect on Planning for Pension

The new rules are harsh, in particular around the penalty periods.  The presumption that all transfers are made with the intent to qualify for Pension might mean t​​hat ALL gifts for family birthdays, Christmas, travel, and so on will be countable and penalized.  Consequently, proper planning and record-keeping is critical.  If these rules become law, many veterans who could have received benefits immediately will be unable to apply for several years.

If you have questions, please refer to these resources, or stop in to ask us directly:

The proposed rules​

Current Rules – Computation of Income​
Current Rules – Computation of Net Worth​
Current Rules – ​Exclusion from Income​

Pet Trusts and Estate Planning

Some of our clients ask us if we can do pet trusts for their beloved pets.  The quick answer is yes, we can.  Of course, we have to understand the nature of the pet and the client’s plans, but, generally, this is possible.  Establishing an actual separate pet trust will usually be a little more expensive.

We write wills with pet provisions included, if desired by our clients.  Using this approach, your will gives the specific pets to named persons, and includes a sum of money to go along with that pet.  To protect your pets, we add language that includes all pets you own. This will usually work, but if you adopt new pets after you draw up the will, they might not be covered.  And, a will may take considerable time to probate, which means that funds might not be readily available to your caretaker.  Most importantly, a will does not provide for incapacity planning … which is another way to ask who will care for your pet if you are unable to do so?  A pet trust can be a better solution, and it can be created while you are alive and can work with your trustee.

Legally, pets are property.  They can’t inherit anything.  To allow the use of a trust for pets, North Carolina has taken the step to add guidelines about pet trusts to our body of laws.  Specifically, NCGS 36C-4-408​ addresses the use of pet trusts.  The law provides that a trust for the care of designated pet animals alive at the time of creation of the trust is valid.    This law includes “pet animals” so it reasonably includes more than just dogs and cats.  As long as the pet is legal (endangered species probably won’t be covered), a trust can be established.  But, your trust cannot cover animals you do not have when you die, nor animals that have died before you.  They have to be specifically identified in the trust document.

The law also states that no portion of the principal or income may be converted to the use of the trustee or to any use other than for the benefit of the designated animal or animals.  That means that the money has to be used for the pet, and that a trustee can’t just decide to vacation with your pet’s funds.  On the other hand, you do have the right to name a trustee, who should be a person you trust to care for your animals.

Although most pet trusts are created when a person (the “settlor”) dies, in their will, it is possible to create a trust for a pet while you are still living.  Then, you can add pets and funds to care for them at any time up to your death.

The trust terminates upon the death of the animal named or the last surviving animal named in the trust.  And, the law defines how funds remaining are to be distributed.  This means that if you leave more money than necessary to care for your pet before it dies, there is a way for the remaining funds to be distributed without a court fight.

When you come to see us about estate planning, we always ask about pets and your wishes for them.  When appropriate, a pet trust can be just the right solution for you and your beloved pets.

Why do we ask so many hard questions?

Preparing a will or a trust is central to an overall estate plan.  Of course, there are lots of other documents too, but for the moment, what goes into the Will and Trust?  Answers to our questions … based on planning​ and thinking about the future; planning for both while you  are alive and after you die.

We ask a lot of questions.  Some are about you, and others are about your family.  How do you want to be treated?  How do you want to have your family protected?  What would you like to leave them?  Do you have people​ in your life who need special gifts?  O​r, special provisions?

These are hard questions … some have no immediate or easy answer.  We are patient!  It might take a revision or two to get it all the way you want it.  Don’t worry about all the details we ask about and subsequently put into the wills … everything is important.  If you don’t define it now … someone will argue about it later!

A recent example of this is the Robin Williams estate.  You can find a write up about it here and there on the Internet.  The second article is a great argument for the use of trusts in estate planning.  One question that is asked is if a renovation is considered upkeep on the house.  The question is, what doyou want it to mean?  We help define everything so that your family doesn’t have to argue about it after you are not there to help answer the questions.

Whomever you work with should be as detailed as possible.  So, we have to ask a lot of hard questions!​​  You won’t find our questions in an on-line will package.  And, if trusts are right for you even if you do not have an estate like Robin Williams, we are sure to include that planning in your overall estate plan.

Come see us!  Call us today!

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