Elder Law Section Meeting: November 2003 Minutes
Meeting of Elder Law Section of the CBA
November 20, 2003
1. The meeting was called to order by Chuck Connell at 9:10 a.m.
Introduction of members followed. Those present and attending in person or by telephone were:
Rebecca Burton Aldrich
W. Dirk Costin
M. Carl Glatstein
Stephen J. Orzynski
J. Elaine Procter
Mary L. Rogacki
Frank P. Slaninger
There was a brief review of the multiple handouts for today's meeting.
- October 16, 2003 Minutes (these also appear on the CBA web page).
- September 25, 2003 Minutes.
- Val Corzine's one page Amendment of September 25, 2003 Minutes.
- Colorado Cross-Disability Coalition-A word about November 10, 2003,
- Coloradan - November 12, 2003, State Finds Nursing Home Deficiency -
Patient Raped, Remained Unchecked for Fourteen Hours.
- Coloradan - October 5, 2003, Helpless Victims - Cases Bring Nursing Home Assaults to Light.
- Employment Opportunity for an Attorney - The Legal Center for People
with Disabilities and Older People - closing date is November 24, 2003.
- Proposed amendment and new law C.R.S., 15-15-401, et seq., regarding "Beneficiary Deed," together with committee comments.
- 2004 Medicare Premium Amounts.
- Val Corzine can't comment on Medicare Bill - it was later signed into law November 24, 2003.
- Medicare Supplement Insurance now available.
- Monthly Medicare Supplement Prices Under Age 65.
- New Pharmacy Cards
- Copy of Booklet - Free and Low-Cost Prescription Drugs
- CLE accreditation affidavit for today.
- Agenda for today's meeting.
- I.R.S. Form 3975 - to order 2-volume package X.
- Val Corzine noticed that an updated listing of discount pharmacy
programs for persons with Medicare is available.
- Federal Exclusions from Federal Estate Taxes from 2003-2010.
- November 6, CBA Sole Small Firm Committee - LexisNexis File & Serve
E-Filing Proceedings (four pages).
- Reverse loan lets senior draw on equity in homes
- Uniform Principal Income Act, CRS 15-1-401 to 434, can make principal as well as income available. See also Prudent Investor Act, 15-1.1-101 to 115.
- Make plans for changes in Living Trusts when law changes 01/01/03.
- Review all estate plans.
- IRS compromises - can save money, a new $100.00 application fee begins in November 2003.
- Early retirees suffer later in terms of Social Security.
- How to Get Rid of Old Computers.
- Federal Court Fees to Increase.
- What to do with a windfall.
- Get medical tests - Medicare helps to pay for them.
- New help number 211 - for basic human needs, physical and mental health resources, employment services, helping elderly and disabled persons, support for children, youth and families.
- Buzzing insoles in shoes may help elderly with balance problems.
- Long Term Care Insurance.
2. The October 2003 minutes were approved. The September 2003 minutes were also approved, incorporating a one page supplement prepared and submitted by Val Corzine.
3. Old Business -
a. Elder Law Handbooks status - Wayne Stewart - there will be a meeting at the bar Friday afternoon regarding new articles.
b. New topics for CLE's and speakers - contact Billie Castle and Wayne Stewart.
4. New Business -
a. Statutory Revisions Update - Gordon Williams - he discussed the "Beneficiary Deed" - see attached materials. This provides that at death, this real estate goes to a designated person. It would be a non-probate transfer would be revocable, would be effective on the death of an owner or joint tenant, and the property would have a step up in basis. It may be non-probate, but still part of the estate. There are Medicaid issues, there are protections and it would impact a living trust. Sterling Ambler will speak on it in December, 2003.
Spencer Crona is working on a large disaster bill to identify persons lost in a 9/11 situation.
b. Standardized contracts for assisted living facilities - Paul Mitchell - this will be discussed later this afternoon.
c. Aspen Village or "Promise that Medicaid resident anything" - Val Corzine "Aspen Village" use to be known as "Legacy at Lowry." Thirty Medicaid residents were told not to worry, you can stay, don't be concerned about new construction. Then, on October 31, 2003, they got a discharge notice that they had to be out by December 2003. The question is being handled by AARP and the media, and questions of promissory estoppel arise. Management claims it didn't understand the impact of the prior statements, but the attorney did. There are arguments to extend this until April, 2004, with added payments being made.
d. Porter Place and motorized wheelchairs or "One thing leads to another" - Val Corzine - indicated that Porter Place forbids the use of motorized wheelchairs, discussed blanket rules due to the American With Disabilities Act, etc.
e. People with Disabilities and Voting - Val Corzine - indicates there is help to provide by mail to seniors, this is in the planning stage, they are working with accommodations, training issues, and one person can only pick up five ballots. Jean Thompson and Frank Slaninger and others volunteered to contact and speak at assisted living centers regarding voting, the contact person is Faith Gross, (303) 722-0300.
f. Rights of people with disabilities to receive fertility services - Val Corzine - passed.
g. Assault occurred in nursing home. From a policy perspective B what more should be done to protect residents? - Val Corzine - on handout. This will be discussed later.
h. Liz Giordano with CLE needs topics for Elder Law CLE's - Carl Glatstein also solicits our ideas.
I. Medicaid has released 2004 figures:
Max CSRA $92,760
Min CSRA 18,552
MMMNA max 2,319
MMMNA min 1,515 (subject to change with new poverty threshold figures in '04)
Medicare Part B premium: 66.60/month
Does anyone have the following:
Medicaid Institutional Income Cap: ----
Medicare Part A hospital deductible: ----
Hospital co-insurance (days 61-90): ----
Hospital co-insur (days 91-150): ----
SNF co-insurance (days 21-100): ----
Medicare Part B annual deductible: ----
5. Committee Reports (Chairperson of the committee may report any current matters)
a. Treasurer's Report - Melissa Sugar - Passed
b. Civic & Community Affairs - Senior Law Handbook - Melissa Sugar -
c. Public Policy Committee - Val Corzine - Passed
d. Trust and Estate Council Liaison - Melissa Sugar -Passed
e. AARP Liaison - Elizabeth Tulloch - Passed
f. Department of Health Care Policy & Financing liaison - Val Corzine -
g. Guardianship Standards - Marco Chayet - Passed
I. Legislative Policy Committee of the CBA - Michele Lawonn - Passed
6. Speaker - Michael Lloyd - IRS - Abusive Trusts - 1 CLE credit - see below.
7. December speaker - Sterling Ambler - Beneficiary deeds
8. Continuing Legal Education Programs
a. Elder Law - Nov. 20.
b. Trust & Estate Ethics Dec 4th - 9:00 CBA CLE - 4 ethics credits.
9. Hot Topics
a. Suggestion - everyone bring an item on paper "the best practice tip I have."
b. Adult Protective Services - may provide our speaker for January 2004.
c. Paul Mitchell - an issue of "imputed income" from a trust specialist - a curative gift post application time.
10. Important - medical supplemental insurance information of people under 65 - a one time enrollment for 58,000 eligible Colorado citizens to buy medicare supplemental policies will end February 29, 2004. A short summary of requirements is included in materials, together with a table of some rates.
That ended the business meeting. Our speaker was Michael Lloyd from the IRS, and his topic was "Abusive Trusts." He included an interesting fourteen page handout.
He used to be a Senior Attorney in the U.S. Attorney's Office. His mother was also targeted by one of these schemes.
The IRS is going after the promoter going after the individuals. ATAT stands for "Abusive Tax Avoidance Tactics." The IRS usually proceeds in the civil fashion, because an injunction is quicker. Criminal remedies are also available, the person can go to jail, there is a higher burden of proof, so this takes a long time. Many of these things have a "Star Wars Theme" to them. Some schemes claim that at age 61 you don't have to pay taxes, that you are entitled to slavery reparations, all home expenses are deductible if you operate a home business, that there is a disabled tax credit, use of sale and bonus kits for deductions, etc. Many of the abusive trusts involve businesses that file tax form Schedule C for the self-employed and Schedule F for the family farm.
Offshore trusts involved sending money overseas, assigning income overseas, and then bringing it back in the form of a debit or credit card, a "loan," and so forth. Some of the promoters are part of an anti-tax movement and may become violent.
Many participants reform over time. They pay the promotion fee up front, then they owe back taxes, penalties, and interest, so they are bitter against everyone as well as adamant that their position is correct. But, when faced with going into tax court, they become silent or leave. Many of these schemes involve fictitious credit or refunds.
Some use FICA as a way to seek to avoid the Social Security tax and self-employment tax. A couple in one office said that it didn't work, and therefore they needed to do more withholdings. One filer under-reported taxes, but showed up later in bankruptcy court. There are a lot of designer corporate tax shelters. Many of these schemes work until they are discovered, and then the participants face a triple whammy - pay the tax, pay the penalties and interest, and realize you lost the promoters fees you paid up front.
Another example is drilling a well, then supposedly transferring it to a personal trust or a business. Many of these are "Ponzi" schemes. The IRS targets different specific areas. They may see a change of name, but the people don't often change their address. For example, you may see 500 returns at one address under several different names.
Information on abusive trusts can be found in Public Notice 97-24 on trusts at the IRS public web site which is www.irs.gov, and information on criminal investigations by the IRS is available at www.ustreas.gov/irs/ci. A K-1 form is hard to transcribe, and new K-1 for partnerships are scheduled for the April 2004 filing system. This is not set up yet, but the program is currently being refined. Another scheme is to try to renounce U.S. Citizenship, then demand all Social Security payments be repaid. Many compliance projects exist. The IRS is going after several offshore companies. The IRS has won all cases seeking debit or credit card lists, and many Hollywood people are on those lists. One guy filed an amendment and said that he "forgot" to report a $126,000,000.00 in income. There are research programs, some people think of these as games, and the rules of trust have historically been set by statutes. The abusive "pure trust" is another scheme. You cannot assign away income, it's the "fruit of the tree" doctrine, if you grew it, you pay tax on it. One pure trust scheme involved a Gregory Carl 1996 letter to the IRS seeking an EIN number for a pure trust, the IRS refused, and he later claimed that it was a pure trust, and that the IRS refusal to issue it an EIN number meant he did not have to claim tax. The trust may not, but taxation is still required, even if not at the trust level.
The IRS can seek to undo a trust. Its agents can go against the individual at the audit, and if there is no resolution at that stage, the matter proceeds to tax court. A notice of deficiency is sent, you're liable, and the tax court will usually disallow expenses claimed by the trust.
The IRS is now targeting abusive trusts and is searching for "pure trusts." Black reparation claims, and general anti-tax arguments - claiming that taxes are unconstitutional, that the state involved wasn't a state when the tax laws were passed, certain statutory arguments (for example, put a "zero" as every entry in a valid return and proclaim that is valid, claim that Section 861 means there is no tax on domestic income, etc.) How can we help elderly clients? Learn to recognize these abusive trusts, file amended returns, contact the IRS, read publication 2193 about trust that seem too good to be true, search google for lawyers speculating and going over promoters, look in the materials for a list of the top dozen scams, etc.
Our speaker's identity was stolen twice! The people in jail have nothing else to do and often engage in identity theft by using the computer. Many illegal immigrants make up Social Security numbers, find an elderly person in Minnesota, give the number to an illegal immigrant in Texas, and so forth.
Our meeting ended at 11:04 a.m.