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The October issue of The Elder Law Update, a monthly e-newsletter full of the latest legal developments and other trends of vital interest to seniors and their advocates. Read on to learn why the SEC wants to remind seniors that a "free lunch" may come at a cost, how and why guardians are appointed, staff requirements for nursing homes and more.
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| SEC Finds Fraud at Investment Seminars for Seniors
 A new study by the Securities and Exchange Commission (SEC) finds that "free lunch" seminars may in fact mislead seniors into making unwise investments. The findings come in the wake of an SEC complaint against several individuals and companies in an alleged scheme to defraud thousands of seniors of their retirement funds.
As part of an effort to protect senior investors, the SEC investigated seminars in which financial services firms offer seniors a free lunch in exchange for listening to investment advice. According to the SEC, 23 percent of the seminars involved possibly unsuitable advice and 13 percent appeared to be fraudulent. While the seminars are advertised as providing financial planning advice, the report found that 100 percent of the seminars were actually sales pitches, half of which featured exaggerated or misleading advertising claims.
The report was released as part of the SEC's second annual Seniors Summit to combat investment fraud and abusive sales practices against older U.S. investors. Free-lunch sales seminars are routinely targeted at senior citizens and are commonly held at hotels, restaurants, retirement communities, and golf courses. The report found that many seniors were encouraged to attend the seminars with misleading claims like "Immediately add $100,000 to your net worth." According to the report, inappropriate sales pitches included recommending risky investments to conservative individuals and suggesting illiquid investments to investors who needed cash.
The report recommends that financial firms supervise sales seminars more closely. It also recommends that ongoing senior investment education efforts include education about "free lunch" sales seminars.
Last week, the SEC filed charges against 26 individuals and companies in connection with a $428 million securities fraud scheme that targeted seniors. According to the SEC's complaint, Michael Kelly and those working with him sold investors timeshares in a hotel in Cancun, claiming the investors would get a guaranteed return. In fact, according to the SEC, payments to investors came from money raised by new investors. The complaint alleges that more than $136 million of the funds invested came from IRA accounts. The complaint also alleges the salespeople who sold the investments collected undisclosed commissions totaling more than $72 million.
To read the SEC report, click here.
For more information on the SEC's complaint, click here. |
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How a Guardian Is Appointed
 No one wants to see a loved one become unable to make decisions for him or herself. If this happens, however, the court may appoint a substitute decision maker, often called a "guardian," but in some states called a "conservator" or other term. A guardian is only appointed as a last resort if other, less restrictive, alternatives, such as a power of attorney, are not in place or are not working.
In most states, anyone interested in the proposed ward's well-being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward's county of residence. Protections for the proposed ward vary greatly from state to state, with some simply requiring that notice of the proceeding be provided and others requiring the proposed ward's presence at the hearing. The proposed ward is usually entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford a lawyer.
At the hearing, the court attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be a responsible guardian.
A guardian can be any competent adult -- the ward's spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.
The guardian need not be a person at all -- it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward's life -- people who are both aware of and sensitive to the ward's needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.
For more information on guardianships, click here.
For more information on Elder Law Associates PA's guardianship legal practice, click here. |
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Book Review: Estate Planning for the Healthy Wealthy Family
 Stanley D. Neeleman, J.D., Carla B. Garrity, PhD., Mitchell A. Barris, PhD., Estate Planning for the Healthy Wealthy Family (Allworth Press, New York, NY, 2003. 240 pages).
$16.95 from Amazon. Click on book to order.
This book offers a unique perspective on estate planning. Instead of focusing solely on wills and trusts and other estate planning methods, Estate Planning for the Healthy Wealthy Family discusses how to create a values-based estate plan.
Written by a law professor and two psychologists, the book asserts that the key to effective estate planning is to pursue objectives that conform to your values and circumstances. For example, if your goal is financial independence, you'll want to explore alternatives to giving away your money in order to qualify for Medicaid. The authors provide a list of questions to help readers prioritize values.
In addition to discussing more typical estate planning topics like using trusts to protect assets, saving on taxes, and advance directives, the book also discusses how to teach children about money, including how to subvert greed. Other topics include divorce, sibling rivalry, and gaining and losing wealth. The book highlights various resources for maintaining a standard of living, how to optimize savings, and how to leave a philanthropic legacy.
Peppered with quotes from philosophers like Aristotle and Hobbes, Estate Planning for the Healthy Wealthy Family places estate planning in a broader context and focuses on family harmony. While not for everyone, the book offers a distinctive take on planning for the future.
Click on book image to read more and order. |
Long-Term Care Insurance Giant Raises Premiums on Existing Customers for First Time
 It's no secret that long-term care insurance companies can and often do raise premiums on policyholders. Still, a few companies have been able to truthfully say "we've never had a rate increase."
Now, one of the biggest players in the industry, Genworth Financial, can no longer claim that. For the first time, Genworth has said it will raise premiums for existing policyholders. The company has filed in all 50 states for premium increases of 8 percent to 12 percent on most of the policies it introduced before 1997, when Genworth was a unit of General Electric Co. (GE). Some of those policies were sold until the early 2000s. The increases affect 45 percent of policyholders.
According to the Dow Jones Newswires, Genworth's move has raised fears that the long-term care insurance industry may return to the dark days when many insurers raised premiums rapidly, and some sold off policies and exited the business altogether.
Pressure on insurers to keep premiums low and level has made the products unrealistically cheap, Cynthia Zalewsky, founder of Saratoga Investment Solutions, told Dow Jones.
"Clients might not think they're cheap," Zalewsky said, "but they're cheap."
The principal reason for Genworth's rate rise is that its actuaries overestimated the percentage of policyholders who would let their policies lapse -- that is, stop paying for coverage, forfeiting all premiums paid to that point.
Genworth's actuaries were counting on 5.5 percent of consumers at some point voluntarily ceasing coverage. In fact, only 1.5 percent have dropped their coverage before claiming benefits.
According to Dow Jones, "financial advisors who know the products well are almost unanimous in predicting that more [insurer rate] increases lie ahead."
"I don't think we've seen the end of the repricing trend," said Michael Hennessy, director of insurance products for global wealth management at Citigroup Inc.'s Smith Barney. |
What Nursing Home Staff Levels Are Required?
 Nursing homes are notoriously understaffed. Studies have shown that more staff leads to better care, but employees are often overworked and turnover can be high. When choosing a nursing home, one of the most important details is the staff to patient ratio, but what staffing levels are required by law?
Federal law requires Medicare and Medicaid certified nursing homes to have an registered nurse (RN) director of nursing (DON); an RN on duty at least 8 hours a day, 7 days a week; and a licensed nurse (RN or LPN) on duty the rest of the time. However, there are no minimum staffing levels for nurse's aides, who provide most of the day-to-day care. Instead, nursing homes are required "to provide sufficient staff and services to attain or maintain the highest possible level of physical, mental, and psychosocial well-being of each resident." In addition, nursing homes must provide a minimum of 75 hours of training for the aides.
The important factor in improving quality of care is the amount of nurse time each patient receives. If a nursing home met only the federal nurse staffing requirements described above, a resident would receive 20 minutes of nurse time per day. In 2000, the Centers for Medicare and Medicaid Services (CMS) reported that the preferred minimum staffing level was when nursing home residents received three hours of total staff time per day -- two hours of nursing assistant time and one hour of licensed nurse time. The optimum staffing level, according to the CMS, is one hour of licensed nurse time and three hours of nursing assistant time.
Most states have standards that are higher than the federal requirements, but still fall short of the levels recommended by the CMS. According to a recent study, the key to improving nursing home staffing levels is increasing state standards. The study by Charlene Harrington, a UCSF School of Nursing professor, found that states with the highest standards for nursing staff levels are the only states where nursing homes have enough staff to prevent serious safety violations. According to the study, the act of raising the state minimum staffing ratio has a direct impact on the quality of care nursing home residents receive.
For more information on the study, click here.
For more information on nursing homes, click here.
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Elder Law Associates PA is a boutique elder law firm that practices exclusively in Medicaid and long term care planning, including Medicaid applications, home and community-based waiver services, diversion program benefits, nursing home benefits, spousal refusal applications, and Medicaid fair hearings and appeals; nursing home and assisted living facility residents' rights litigation; asset preservation planning with a special focus on planning in light of the Deficit Reduction Act of 2005, including personal service agreements, income producing real estate for Medicaid eligibility, irrevocable trusts, and spenddown planning; disability planning, including special needs trusts and guardianship; estate planning, including wills and trusts; advance directives; and probate, encompassing estate and trust administration and specialized litigation.
We assist clients in planning for the possibility of disability, incapacity, home health care, assisted living and/or nursing home placement. Our firm enables clients to avoid impoverishment caused by the escalating cost of long term care, to maintain their right to make health care decisions and to avoid unnecessary medical treatment.
We hope you have enjoyed The Elder Law Update. If you have questions about something you read, elder law matters or issues concerning persons with disabilities, we would be delighted to hear from you. We serve as an elder law resource to many professionals and organizations and want to become your elder law resource as well. You can reach us at Info@ElderLawAssociates.com.
Warm regards,
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Ellen S. Morris, Esq. & Howard S. Krooks, Esq., CELA
Elder Law Associates PA
phone: (561) 750-3850 / (800) 353-3752
fax: (561) 750-4069
This publication is intended for general information purposes only. It is not intended to constitute individual legal advice to any specific client. |
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