Protecting Seniors & Disabled Loved Ones Against Financial Abuse

At present, there are 3.2 million Texans (12% of the total population) who are age 65 and older. By the year 2050, that percentage is expected to rise to twenty percent (20%). Our state also has an unusually large number of disabled citizens – close to 11.7 percent of our population fits into this category.

All these individuals are at a higher risk of being financially abused than others. Furthermore, a highly regarded MetLife Study found that the annual cost of elder financial abuse equals about $2.9 billion – and that number would be far higher if we added in the losses incurred by the disabled population

For this reason, all honest adults should do whatever they can to help their older family members and friends protect themselves against being defrauded of their money and possessions.

Defining financial abuse – and noting who most often commits this type of crime

Before reviewing how the elderly and disabled can protect themselves against financial abuse and scams, it’s important to define “financial abuse” more precisely. According to the Centers for Disease Control and Prevention, this type of abuse involves the improper or unauthorized use of an older person’s resources for the wrongdoer’s personal profit, benefit or gain

Sadly, ninety percent (90%) of those who commit fraud against the elderly (and disabled) are already people known to them. A February 2018 article published by AARP entitled, “Fraud in the Family,” provides highly useful information on this topic.

Financial safety tips to share with the elderly and disabled regarding financial fraud

  • Each person should put together a small “team” of professionals who will help them manage their funds – and meet with them every few months for this purpose. This team should include two or more of the following individuals.
  1. A reputable Houston estate planning attorney
  2. A highly trusted family member – or friend
  3. A geriatric (or disability) case manager, social worker or therapist
  4. A bonded accountant or bookkeeper

           Advise your elderly or disabled friends to meet quarterly with their small group – and

           make sure their Durable Power of Attorney, Advanced Directive for Healthcare and other

           legal documents clearly indicate that no major life decisions should be made without the

           added input of the individuals named within those documents;

  • Always confer with others before making any major purchases, sales or life decisions. Never rush into to making any new financial investments or decisions about moving into a new home or senior care facility;
  • Keep important items either in a desk or safe at home. Put copies of the person’s Will and all other estate planning documents in their desk at home – making sure that at least one family member or close friend knows where they can be found in case the person becomes suddenly ill. It’s also wise to place all blank checks and major credit cards in a locked safe at home – and only take them out on days when they will be needed to make purchases. These actions can help the senior or disabled person greatly minimize chances of fraud and identity theft. All older bills and bank statements should always be shredded;
  • Never accept any phone calls from strangers. If the person accidentally takes a call from someone they don’t know and is asked to make some type of donation, tell the caller donations or only made by check – and only in response to a written request received by mail. Never, ever give out any bank or credit card information over the phone to such callers;
  • Seniors and the disabled should always ask a family member or friend to help them run a comprehensive background check on anyone them would like to hire as a caregiver in their home or current residence;
  • All routine bank and investment statements should be reviewed with a family member, a bonded bookkeeper or a trusted close friend. Any suspicious withdrawals from such accounts should be reported right away;
  • Consider having all credit reports frozen if any unauthorized credit card accounts are opened in the person’s name. Also, find out which type of fraud alert or security watch program is best suited to daily monitoring all larger financial accounts;
  • Never readily make gifts or loans to family members or friends – especially if they are currently battling drug or alcohol addictions. Ask other people to help address this problem;
  • Finally, advise the senior or disabled person to create a workable monthly budget, allowing for unexpected medical fees and limited travel and entertainment expenses.

If you or a senior friend or disabled person need additional advice and help with these issues, please contact one of our Murray Lobb attorneys. We would be happy to answer any questions you may have concerning this topic.

Legal Documents Often Needed by Caregivers

Careful planning is required once you agree to act as the legal caregiver of a family member or close friend. Always make sure the person making this request promptly provides you with copies of properly executed legal documents that will help you address their most critical needs on a timely basis.

Fortunately, your Houston estate planning attorney can help you decide which legal documents may be required by the person needing care. These documents can help you make such crucial decisions as where the person needing care may want to live — and choose the types of medical care they’re willing to receive from specific healthcare providers.

Depending on if you’re personally named in all the required documents, you may also need to handle burial needs – and make sure that all money and possessions are properly transferred to the correct beneficiaries once your loved one or ailing friend passes away.

Here’s a brief overview of the types of legal documents you’ll need the person you’ll be taking care of to obtain from a lawyer.

Key documents to consult while taking care of an ailing friend or family member

  • Power of Attorney. While many older or ailing adults can still often make sound decisions for themselves – they may want you to stand ready to step in and handle key business transactions for them with various companies should they become too ill to manage these matters on a temporary basis;
  • Durable Power of Attorney for Healthcare. This may also be called an Advance Directive for Healthcare and other similar terms. Its purpose is to clearly indicate the types of medical care the named party is open to receiving – and when certain types of life-extending treatments should be discontinued when the party named in the documents is suffering from a terminal or irreversible condition. The document also clearly provides authority for the person named as the Medical Power of Attorney to have full access to all medical records required while making decisions in coordination with doctors and other healthcare providers;
  • A Living Will. This document is different than an Advance Directive because it states how the person needing medical treatment wants their medical care to be handled – as opposed to the Advance Directive which states how another person (the agent) should handle the ill person’s medical treatment needs when that person is unable to do so. This type of Will also often addresses whether life support procedures should be provided under specific circumstances;
  • A Basic Will. This sets forth the name of the executor who’s been chosen to manage the ill person’s estate once they pass away — so the chosen beneficiaries will receive all the designated wealth and possessions. Hopefully, the person you’re helping will remember to ask their lawyer if they need to create one or more trust accounts so that all or part of the estate can be easily transferred without going through the probate process.

Be sure the person you’ll be taking care of informs their lawyer about any unusual or special circumstances that may need to be addressed in all the documents named above.

You may also want to obtain a document sometimes referred to as an Appointment of Agent to Control Disposition of Remains. This will allow the older or disabled person needing your care to state who will handle their remains once a funeral home has prepared them for burial (or placement in an urn). Many people today who’ve chosen to be cremated obtain this form, so they can state the location of a specific cemetery or columbarium where their remains will be interred.

Please feel free to have the person who’s asked you to act as caregiver to contact one of our Murray Lobb attorneys so we can help prepare all of these important legal documents. We are always available to respond to any questions you may have regarding any of these documents and the entire estate planning and probate process.

Pursuing Federal Government “Set-Aside” Contracts

If you’re looking for new ways to “grow” your small business, you may want to learn more about qualifying to bid on federal government “set-aside” contracts. The Small Business Administration (SBA) says there are two basic types of these set-aside contracts. Both can result in highly lucrative contracts that might otherwise have been awarded to far larger companies

The difference between “sole-source” and general competitive bidding set-aside contracts

This “sole-source” type of set-aside contract is often awarded through a non-competitive bidding process when the government believes that only one single business can meet the contract’s requirements. Companies seeking to bid on these types of contracts must first register with SAM (the System for Award Management). Occasionally, these types of sole-source contracts may be managed so that competitive bids will be accepted.

However, most small businesses try to submit bids after qualifying for one of four main federal government set-aside contract programs that always consider competitive bids. Here’s a closer look at each of them.

The four main types of federal government set-aside contracting programs

  1. Women-owned companies. Each year, the federal government tries to award at least five percent of all federal contracting dollars to Women-Owned Small Businesses (WOSBs).

The goal is to try and help women gain access to more business contracts now since male-run companies were often favored during past decades.

  1. Companies owned chiefly by a disabled military veteran. At present, the SBA states that the federal government seeks to award about three percent of all federal government set-aside contracts to disabled-veteran owned businesses;
  2. 8 (a) business development program entities. These businesses are usually run by socially or economically disadvantaged owners. In some cases, they’re helped by forming joint ventures with more established companies. An SBA specialist may be assigned to help the owners gain a better understanding of how the federal government contracting process is designed to work. Each year, at least five percent of all federal contracting dollars are awarded to owners of these types of businesses;
  3. HubZone certified small businesses. For your company to qualify to bid on this type of set-aside federal government contract, it must be at least 51% owned and controlled by a U.S. citizen, an agricultural cooperative, a Community Development Program, an Indian tribe or a Native Hawaiian organization. The principal place of business for a HubZone company must be located in a qualified HubZone area. In general, these businesses are viewed as “distressed” and are often found in underrepresented rural or urban populations.

If you’d like to find out if your company can be certified to bid on federal government contracts under one of these four competitive set-aside programs, plan on meeting with your Houston business law attorney. You can then discuss the various challenges you may encounter while trying to become a small business contractor with the federal government. You can also ask how you might submit bids to any state government contracting programs.

After speaking with your lawyer, you may also want to pursue a special SBA training program. Even if your business cannot currently qualify for certification under one of the set-aside programs described above, you can still try to obtain specialized training that can help you better manage your employees while expanding your customer base without doing business with any government programs.

Please feel free to contact one of our Murray Lobb attorneys about your current interest in bidding on specific types of government or private enterprise business contracts. In addition to providing you with our best legal advice, we can also help you create the formal paperwork that you may need.

Basic Facts: Special Needs and Pooled Trusts

If you want to give money to a disabled family member receiving government benefits like SSI (Supplemental Security Income) and Medicaid, consider setting up a special needs trust and naming that person in your Will. Careful planning is required since disabled people can lose their eligibility to receive certain benefits if their net worth and assets increase.

Once you’ve created the proper type of trust account, your disabled family member will be in a better position to: (1) start receiving an added monthly stipend or inheritance from a family member; (2) accept a large sum of money after surviving a serious vehicle accident caused by another person’s negligence; or (3) receive funds from another unusual source.

Here’s additional information about creating SNTs – special needs trusts. You may want to set up a third-party or first-party SNT – and possibly even a pooled trust.

Here are some of the unique features offered by third-party SNTs (special needs trusts)

The American Bar Association says that this type of SNT, also referred to as a supplemental needs trust, can be used to help a disabled beneficiary receive a gift or inheritance from a third party such as a relative. However, it should never to be used for any assets or money that already belong to the beneficiary.

Based on the general terms you set forth in the trust, your trustee will then determine the exact way all funds will be used to help your beneficiary (or loved one). While many of these types of trusts are considered testamentary (part of someone’s estate), they can also be used for inter vivos transfers of gifts (those made while the person making the gift is still alive).

Like the third-party SNT described below, this first-party type should be set up so that the recipient’s government benefits remain their primary source of income — and these types of added funds are simply a supplemental source.

What are some of the unique attributes of a first-party SNT (special needs trust)?

While sometimes referred to as self-settled special needs trusts, these are mainly created to receive assets that are the beneficiary’s legal possessions. As is true of most SNTs, you’ll need the help of a highly experienced Houston business law attorney to help you create one since the multiple state and federal laws governing them can periodically change.

What’s most unique about this type of trust is that it must include a provision stating that when the beneficiary dies – depending on the exact amount of assets still contained in the SNT — Medicaid must be repaid for all funds that were ever spent on the beneficiary.

Those who most often benefit most from these types of first-party, special needs trusts usually fall into one of the two following categories.

  • They are under age 65 and want to receive funds worth more than $2000 (or more than the net worth amount currently allowed by law) – while remaining eligible for government benefits — or
  • They have received (or will receive) an unexpected financial windfall – possibly as the result of a personal injury lawsuit following a car accident.

Keep in mind that first-party SNTs can only be established by a parent, grandparent, legal guardian or court for a special needs person.

If you can’t afford a trust administered by a paid trustee – ask about “pooled” trusts

When funds are limited, you can ask your attorney to create what’s often referred to as a “pooled trust.” This type of account containing a disabled person’s money can be added to funds that have been deposited for other special needs individuals.

All of these accounts are then monitored and administered together by a non-profit board or agency. Among other tasks, your attorney may need to create a joinder agreement (or review one offered to you) as you start applying to various types of appropriate pooled trust groups.

Many disabled adults prefer this approach since they can personally help establish their own “pooled trust” with an organization set up to administer such accounts – without the help of other family members.

Whatever else you do, try to avoid simply giving extra funds to a family member so that person can later provide for all the disabled person’s needs. Given human nature, that money may never wind up being spent to benefit the person with special needs.

Please contact one of our Murray Lobb attorneys so we can use our lengthy experience creating special needs and other trusts to protect your disabled loved one’s financial interests — both now and in the future.