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Sponsored By: SSBA and ISBA JOHN C. VOORN 10759 WEST 159th STREET, SUITE 201 ORLAND PARK, ILLINOIS 60467 (708) 403-5050; Fax (708) 403-9667 SENIOR CITIZEN LEGAL ISSUES AND RIGHTS September 30, 2004 YOU HAVE THE RIGHT TO PLAN FOR THE POSSIBILITY OF YOUR INCAPACITY AND THE CERTAINTY OF YOUR DEATH. FAILURE TO DO SO CAN BE COSTLY AND LEAD TO UNINTENDED CONSEQUENCES. 1. WILL 1. 1. 2. 3. 4. 5. 2. Definition Format Advantages to making a will Changing a will Periodic review of will If no Will - Intestacy 1. State intestacy law - determines distribution of property View will as a Afunnel@ 1. The title on the asset determines how it passes at death 2. Problem of frustrating the provisions of the Will What about Anon-probate@ assets: 3. 4. 1. Joint tenancy property and tenancy by the entirety (husband and wife and only as to their marital residence) 2. Life insurance proceeds payable to specific beneficiary 3. Pension or profit sharing plan - payable to named beneficiaries, make sure you name a contingent beneficiary 4. Joint and mutual will (one will for husband and wife) - a contract by both that surviving spouse will not change or revoke will? 5. Land Trust Agreement only applies to real estate 6. Trustee accounts, TOD and POD 5. Perils of Joint Tenancy - Beware of creating joint tenancies with non-spouses a/k/a loss of control. 1. A typical situation: Dad died recently leaving Mom and four (4) children. Mom has been told by friends that she should add one (1) of her daughters= names to all of her accounts and her house. This will avoid probate and allow someone to get at her money anytime the need arises. She selects Sally who lives nearby. 1. What if Sally gets divorced? 2. What if Sally gets into an auto accident and is sued and a judgment is rendered against her in excess of her liability insurance limits? 3. Will Mom be prevented from qualifying for Medicaid if she has to go into a nursing home? 4. What if Sally has problems paying her creditors or she has to file bankruptcy? 5. If Mom dies, can Sally keep all the money and the assets and not share the assets with her siblings? 6. Do gift tax returns have to be filed when Mom adds Sally as a joint tenant to the assets, i.e., taxable gifts? 7. If real estate is involved, is there a loss of: (1) Senior citizen homeowner tax exemptions on real estate tax bills? (2) 8. Violation of Adue on sale@ clause in mortgage? Risk of unequal inheritances. 9. Loss of AStepped-up-Basis@ for capital gains taxes at time of death, i.e., date of death valuation. 10. Possible other concerns and problems, e.g., one of the joint owners becomes subject to a guardianship or Mom wants to sell the house and move into a retirement home and Sally (the other joint owner) says :No Way@! 6. Estate and Gift Taxes 1. Unlimited marital deduction upon death of first spouse 2. $11,000 per year per person gift tax exemption (indexed to inflation) 3. Currently $1,500,000 lifetime exemption per person 2. LIVING TRUST (INTER VIVOS TRUST) WITH A POUR OVER WILL 1. 2. 3. 4. How created Revocable or irrevocable? Advantages Disadvantages 3. PROPERTY POWER OF ATTORNEY (PPOA) - See Exhibit AA@ Definition - a written document which states that if I cannot make property decisions on my own, I want my agent, X, to make these decisions for me. 4. HEALTH CARE POWER OF ATTORNEY (HCPOA) - See Exhibit AB@ Definition - A written document which states that if I cannot make health care decisions on my own, I want my agent, X, to make these decisions for me. 5. END OF LIFE DECISION MAKING Cruzan v. Missouri Dept. of Health, (U.S. Supreme Ct. (110 S.Ct. 2841) [6/25/90]) Held: State may permit termination of life support systems, including nutrition and hydration, if the incapacitated individual's intentions are shown by clear and convincing evidence. Cruzan Points 1. Under the U. S. Constitution, a person has the right to refuse medical treatment, this is a protected liberty interest. 2 2. Incompetent patients also retain a right to refuse treatment with that right to be exercised by a surrogate decision maker. Some experts have argued that without an advance directive, it is impossible to correctly judge an incompetent's wishes, but the Court made no such requirement. 3. Although the court upheld Missouri=s right to require "clear and convincing evidence" it did not say that the guidelines adopted by other states that permit a "guardian's best interests" decision were not permissible. While Missouri can maintain its rigorous requirements, other states can legally enforce more flexible guidelines. Points Also Inferred by the Cruzan Decision 4. The right to refuse medical treatment is not limited to patients who are terminally ill. 5. The right to refuse medical treatment includes the right to refuse artificially supplied nutrition and hydration. 6. The right to refuse medical treatment may be exercised through a Living Will, Health Care Power of Attorney or other advance directives. Physician Assisted Suicide On June 26, 1997 the U.S. Supreme Court ruled in Washington v. Glucksberg, 117 S. Ct. 2258, 138 L.Ed. 2d 772 (U.S. 1997) and Vacco v. Quill, 117 S. Ct. 2293, 138 L.Ed. 2834 (U.S. 1997) that there is no constitutional right to physician assistance in committing suicide. The Court upheld two states= statutes which had the effect of making physician assisted suicide a crime. But the court left it open for the states to pass laws permitting it. So the debate will continue in the future. Oregon has passed a law permitting physician assisted suicide. Litigation Nightmare As an example of what can happen when there is a court battle over ending life support, refer to www.terrisfight.org. and www.internationaltaskforce.org. In Re Guardianship of Teresa Marie Schiavo has been bouncing back and forth through the Florida Court system for over four (4) years. On September 23, 2004 the Florida Supreme Court ruled Terri=s Law (in which the Florida Legislature authorized the Governor to reinsert into Terri the Afeeding tube@ which had been removed by Court order) was unconstitutional since it violated the separation of power clause in the Florida Constitution and allowed the State Legislature to authorize the Governor to overturn a lower court decision that would have ended Terri=s life. IV. LIVING WILL - THE ISSUE OF DELAYING DEATH BY ARTIFICIAL MEANS See Exhibit AC@. 7. Definition - A written declaration which states that if I should have an incurable and irreversible injury, disease or illness judged to be a terminal condition by my attending physician and that death is imminent except for death delaying procedures, I should be permitted to die naturally. I do not want the moment of death to be artificially postponed. The Living Will Declaration is made voluntarily by a person of sound mind, instructing his or her doctor, that in the event of a terminal illness, the doctor should not use death delaying procedures that would serve only to postpone the moment of death. 8. Distinguished from HCPOA. 1. Does not authorize withdrawal of nutrition and hydration if death would result from starvation or dehydration. 3 2. No agency relationship created. 3. HCPOA stays operation of a living will if agent under HCPOA is available and willing to act. V. SOCIAL SECURITY MYTHS - IS SOCIAL SECURITY A PONZI SCHEME? 9. SOCIAL SECURITY IS INSURANCE No, it is not. It does not have the attributes of true insurance such as having a contract. A Social Security recipients rights are statutory and Congress has reserved the right to amend and modify and even terminate them. Insurance revolves around concepts such as risk pooling and risk transfer - Not Social Security - it is an income redistribution program - like any welfare program - one person=s taxes are immediately paid to another person. BENEFITS ARE AN EARNED RIGHT, GUARANTEED BY LAW Social Security Benefits were promoted as being AAs a Matter of Right@, AAn Earned Right@ and AGuaranteed by Law@. This is not the case at all - Social Security Act, Section 1104 reserved to Congress the right to alter, amend or repeal any provision of the Social Security Act. Congress has made numerous changes to the law since its inception - some of which have had the effect of reducing benefits. In the United States Supreme Court case, Flemming v. Nestor, (1960), the Court ruling confirmed that there is no vested right to Social Security benefits. 11. SOCIAL SECURITY IS FINANCED WITH A TRUST FUND A trust fund suggests that there is a fund out there that is accumulating assets to pay future Social Security benefits. This is not true. There is a Treasury account referred to as a ATrust Fund@. The amounts taken out of our taxes for Social Security go to the Trust Fund and are borrowed by the United States Treasury and used for government spending. The Treasury gives Social Security an IOU, i.e., ASpecial Issue Government Securities@ - claims by the Government against itself. They are non-marketable promissory notes - have no price and no value. When Social Security needs money to pay benefits, it tenders these AIOUs@ to the Treasury Department which then has to come up with the money - by taxing the economy or borrowing from the public. This relies on the Government=s power to tax and public willingness to be taxed. The United States Treasury Trust Fund Account is unfunded. 12. SOCIAL SECURITY=S TROUBLE IS THAT CONGRESS IS ROBBING THE TRUST FUND Not true, there is no true Trust Fund so Congress cannot rob it. The Social Security Act mandates that revenues paid into Social Security in a year over and above what is necessary to pay Social Security benefits are to be used to buy these special unmarketable IOU=s the U.S. Treasury issues with the funds going to pay for other government expenses. So Congress is complying with the law. SOCIAL SECURITY IS A DEFINED BENEFIT PENSION PLAN Such a plan specifies the size of the pension benefits which will be received at retirement. Social Security does have a formula to determine what our expected benefits should be. Pension plans have to forward fund as their obligation to pay benefits by investing them to build up reserves that have a market value. Social Security law does not permit forward funding or investing payroll taxes in marketable securities. Social Security is a Apay-as-you-go@ system - it amounts to a transfer of wealth from current workers to current retirees. SOCIAL SECURITY IS A SAVINGS SYSTEM No, it is not. Social Security does have an account for each taxpayer, but it contains no funds. It is a record of tax payments. The payroll taxes paid by the Aaccount holder@ are spent right away by transfer to Social Security recipients or on other federal programs. Source of above - WHAT YOU NEED TO KNOW ABOUT SOCIAL SECURITY by John Attarian, published by American Institute for Economic Research (AIER), Great Barrington, Massachusetts 01230, 2003, eight-six (86) pages, $10.00 N:\VOORN\elder law issues september 30, 2004 10. 13. 14. 4
"Senior Citizen Legal Issues and Rights-Elder Law - Illinois Legal "