Real Life Situations, stories about unexpected pain, bad advice, and a lousy advisor

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Real Life Situations

People need and want impartial and accurate information and advice. H.E.L.P. works to meet that need.

The following are samples of situations families bring to private consultations with H.E.L.P. Names and certain other circumstances have been changed to protect the privacy of the families.

	*Unexpected Pain*
	*Bad Advice Hurts*
	*The Lousy Advisor*
	*Life Will Be Better!*

H.E.L.P.'s free "Aging Better (Legally)" classes provide information designed to help people plan ahead, and to avoid the avoidable anguish that arose in the following situations.

Unexpected Pain (Tom and Sue)

Tom is 56, Sue is 55. Shortly before our meeting, Tom had placed Sue in a skilled nursing home, expecting her to remain there for the rest of her life. He referred to himself as a "widower." Sue's condition had been deteriorating for two years, and she had been diagnosed with early-onset Alzheimer's-type dementia. Since early on, she had been frustrated by aphasia, a condition that made her unable to recognize or state many words. Their ability to communicate had been almost totally lost.

Tom and Sue have good health insurance, through his job, but it does not cover long-term care. Tom came to H.E.L.P. for a private consultation on how to handle long-term care costs. Our consult helped Tom deal with the future:

Tom learned about the spousal protection rules, under which Medi-Cal will pay most of Sue's care costs.

Tom now understands the use of powers of attorney and other planning documents, and their use to help protect Sue if something were to happen to Tom.

Tom will also be working with a speech pathologist to find ways to communicate with Sue other than through speaking.

Bad Advice Hurts (George and Norma)

George is 84, Norma is 79. They have no living children, but have several close friends. Both are retired. George is mentally sharp, but his multiple physical problems have caused him to live in a nursing home for the last five years. Norma has been living at home, is also sharp, but osteoporosis and other ailments have required her to have a live-in caregiver for the last two years.

George and Norma own their home, but never were wealthy people. George's five years of care costs have been paid from his pension and their savings. Care costs for George, and now Norma, have reduced their savings to the point that Norma now has only enough money to remain in her home for six months -- if they continue with the current approach.

Norma wants to stay at home. Norma came to H.E.L.P. for a private consultation, to deal with what she now saw as the likely loss of the family home and the need to move to an assisted living setting (if she could afford it).

Our consult made a big difference in Norma's outlook for the future:

Norma will apply immediately for Medi-Cal for George. George will have the same care. With Medi-Cal covering much of George's care cost, there will be enough money for Norma to stay at home for an additional six months.

Norma will investigate a reverse mortgage, to use the equity in the home to pay for needed care. As an alternative, she will look into an arrangement with her paid caregiver under which the caregiver would be paid from the equity in the home (a kind of private reverse mortgage). Combined with the Medi-Cal help for George, the reverse mortgage or alternative arrangement could allow Norma remain at home indefinitely.

Norma and George will update their powers of attorney, naming trustworthy friends to help if Norma becomes more severely incapacitated.

Especially unfortunate in this case was the fact that five years earlier George and Norma had "asked around" to find out if Medi-Cal would help pay for George's care. They were told that it would not -- painfully bad advice. Under the Medi-Cal spousal protections, the major portion of George's nursing home bill would have been covered from the beginning -- preserving enough savings to cover four added years of home care for Norma.

The Lousy Advisor (Anne and Mary)

Mary is 79. Anne, her daughter, became Mary's caregiver two years earlier, when Mary suffered a series of mini-strokes. Mary has fallen from time to time and hurt herself. Due to safety concerns, ten months ago Mary moved from her home to a nearby board and care.

Shortly after Mary's first mini-stroke, Mary and Anne attended an "estate planning" seminar at a local library. The seminar presenter made a strong case for Mary to do some planning, by preparing a living trust and powers of attorney. A planning advisor came to Mary's home to help with the documents. The planning documents that were prepared were generally useful, although they create several impediments to Anne's ability to assist Mary. Because Mary is mentally sharp, these practical problems can be removed by amending the documents.

Along the way, the planning advisor convinced Mary and Anne that Mary should sell two-thirds of her savings (treasury bonds) and buy annuities. Despite Mary's age at the time (77) and her physical condition, the annuities included significant surrender penalties if Mary were to withdraw other than small amounts in the first 13 years. The annuities were totally unsuitable for Mary, and undoubtedly earned the advisor substantial commissions.

The annuities create a larger problem for Mary. She needs money to pay for her stay at the board and care. Right now, with Mary's social security and other remaining savings, there is enough money to pay for care. But down the road, when the savings are gone or if Mary needs a higher level of care, the annuities will become a significant financial burden.

Our consult helped Mary and Anne start recovering from the damage done by the advisor. We:

Helped them understand the existing documents, and the work that needs to be done to fix them.

Helped them understand the annuities, what amounts could be withdrawn without penalty and how the surrender penalties worked.

Explained the Medi-Cal nursing home program, and how the annuities and Mary's home would be treated under that program.

Recommended that they report the seminar presenter and advisor to the California Attorney General's office, and consider further steps to "unwind" the annuities.

Life Will Be Better (Kathleen, Bill and Carol)

Kathleen is 88, clear-headed and energetic. She suffers from several medical problems, recently had congestive heart failure, and has periodically needed hospitalization. Kathleen was married once, and divorced. She has one child, Carol, who also lives in the South Bay and is a supportive friend to Kathleen (but cannot help Kathleen financially).

Kathleen's principal source of income for many years has been SSI (a program for people with minimal assets and low incomes, who are also elderly or blind or disabled). She has also been eligible for Medicare and Medi-Cal. For three years, Kathleen lived in the home of a friend (Bill). She provided care for Bill that helped him to remain in his home and they shared expenses. When Bill's health declined, he moved to a nursing home and Kathleen moved to a board and care facility.

Before our meeting, Bill had died. He left his house (now in disrepair) and bank account to Kathleen. For the first time in a very long time, Kathleen has assets (valued at about $150,000). Kathleen and Carol visited the local Social Security office (which administers the SSI program), to discuss Kathleen's inheritance. The Social Security representative advised Kathleen that Kathleen's inheritance would cause her to lose her SSI, but that if Kathleen gave away her inherited assets Kathleen could go back on SSI. [Note: under rules in effect today, giving away assets would likely make Kathleen ineligible for SSI for a period of time.]

Kathleen came to H.E.L.P. for a private consultation, to discuss giving away her inherited assets. Carol also attended. During our consult, among other things:

We asked Kathleen about her living arrangements, whether she could live in the inherited house, and how she wanted to live her remaining years. Kathleen admitted that she strongly disliked her current board and care facility, and would like to live in a more cheerful, caring setting.

We discussed the Social Security, SSI, Medicare and Medi-Cal rules, and the impacts that giving away her inherited assets would have under those programs.

We recommended that Kathleen create a durable power of attorney for health care, and state her feelings about medical treatment, so that a trusted person could manage her medical treatment and follow her wishes if Kathleen became incapacitated.

We recommended that Kathleen create a durable power of attorney for financial matters, giving a trusted person the ability to manage her assets if Kathleen became incapacitated.

Probably most importantly, we created a cash flow projection chart for Kathleen. The chart showed that if she kept the inherited assets (selling the house), she would have enough money to pay for care in a more expensive (but much more agreeable) facility for at least seven years.

Kathleen lit up, saying "You mean I don't have live in that place anymore?"

The result? Kathleen won't be giving away her inheritance. She'll still have her Medicare to help with her health problems. She'll have a more acceptable place to live. Life will be better!