ABLE, Will Reformation, The Guardianship Challenge in Texas

In this episode, Lisa Shoalmire and John Ross discuss protecting the disabled’s assets while providing a quality of life, changing wills after a person has died and the new challenge of getting a guardianship granted in the state of Texas.

Episode Transcript
Lisa
Well I guess I'll start out with something that's fairly new on the scene but it's a really great thing. And it's called an ABLE account.
John
Right, that's A-B-L-E.
Lisa
Yes and I know the "A," "B" and the "L" and the "E" stand for something [laughter] but I don't have to know that.
John
That's right.
Lisa
But ABLE accounts, they have to do with a way to preserve assets and resources for people with disabilities and we're fairly limited if people with disabilities are receiving any sort of government benefit programs and supports. There's some very strict asset limitations for a certain category of those folks. And I'm talking about people who have been disabled their whole lives, potentially.
John
Sure. People oftentimes, people who are receiving SSI, Medicaid things like that that are very limited in resource, particularly SSI. That's the most restrictive government benefit program out there.
Lisa
Right, so I know that there's been a lot of talk the last couple of years about the abuse of our disability system. But these ABLE accounts are generally not going to be something available to someone who maybe worked 20 years, 30 years. And...
John
That's not what it's for.
Lisa
That's not what it's for.
John
If you're receiving SSI, Supplemental Security Income, your maximum income under SSI is $758 a month. And you're essentially expected to live on that.
Lisa
Yes.
John
Now do you also get free health care? Yes you do. In many cases, can you get free or reduced cost housing at places like a group home or nursing facility...
Lisa
Or supported apartments.
John
Or supported apartments or things like that? Yes. Does any of those programs buy new sheets for your bed?
Lisa
Yeah. No.
John
Absolutely not. And nor do they buy movie tickets and nor do they provide any quality of life. I've had clients that were multiple amputees, quadriplegics, people who have very heavy medical needs and because of that, they are eligible for these benefits and yet they still have needs over and above that $758 that they get from SSI.
Lisa
Really?
John
Yeah, imagine.
Lisa
Yes.
John
But the other thing is is because the SSI limit also limits that same person to a mere $2000 in resources. Checking, savings, stocks, bonds. All of that added up together gotta be less than 2,000 bucks.
Lisa
Right. And so it's very apparent that for those folks on SSI that have such a limited income and such strict limits on their assets that a lot of times, other family members and all will pitch in to help that disabled family member or perhaps leave them something, life insurance or some other assets through their own, through their estate planning. In the past, we've had very, some very limited options of how we could leave those resources to a disabled person and not have them immediately sucked up and made unavailable to that disabled person. So ABLE accounts are a new thing. And it's a new way to hold some assets for the benefit of a disabled person. And, John, you wanna hit some of the high points on those?
John
There's a couple of things. We've talked on the show about Special Needs Trust which are also designed to be able to hold the assets for the benefit of a disabled person without affecting their benefits. The ABLE account is a simpler way to do it, in the sense that it's just a designated account. Now, it does have some drawbacks like, for example, any funds remaining in the account have to go to reimburse the state for any long-term care Medicaid services.
John
But many SSI recipients are not in nursing homes. They're in a group home environment or even in their own home environment, and they're not receiving nursing home Medicaid benefits. In Texas, the only payback is for nursing home benefits. So even that provision's not necessarily a big deal if your beneficiary is not in a nursing home.
Lisa
Right. And so an ABLE account's pretty easy to set up, it's one of those things that a financial advisor, a family member... I mean they are a designated type of account that can be set up to hold cash, for the benefit of that disabled person. And John, I thought one of the big pluses of the ABLE account is normally a person who's disabled, who's receiving SSI. You can't just hand them cash to spend, a little extra gift card here or there.
John
Right. Normally cash receipt by this person would reduce their SSI, dollar-for-dollar, and yet, with the ABLE account you can distribute cash without that being considered income. So oftentimes the combination of a Special Needs Trust and an ABLE account is gonna really maximize the benefits for that disabled person and give them the most flexibility. So these are pretty new, they're coming out now, you're just now starting to see some financial institutions creating these. But anybody that's got some disabled people in their family needs to be looking into this sorta stuff.
Lisa
Yeah. You need to be talking to people who know something about it.
John
That's right, we're gonna take a break, we'll be right back.
John
Not yet, you got to let me reset the clock.
Lisa
That one, that was just for the end.
John
I just said the end. [laughter]
Lisa
Okay.
John
Alright, now we're gonna start again. Alright, five, four, three, two, one.
Lisa
Well, welcome back everyone to our next segment here on Aging Insights, and this is Lisa Shoalmire and I'm here in the studio, but not on Saturday. [chuckle]
John
No, it's middle of the week.
Lisa
Middle of the week, again.
John
Pre-recording the show.
Lisa
Yes. But here with John and what we're talking about is what we did last weekend. And John, some people talk about a fabulous getaway trip. We're here talking about a fabulous...
John
Work trip.
Lisa
Summit and continuing legal education. But it's about elder law and it's about things that affect our listeners so...
John
Well, and you can always... It's good to be able to bounce off ideas, I know I had several people... Lisa and I, both were some moderators of some of the different programs, where we got to share our knowledge. And I know I had several people come up and say that they had learned some things from us. And then, we are also then able to learn things from some of the other folks. And so it's great that they we can pick up that information and bring it back to all of y'all out here.
Lisa
Okay. So I jumped out there with some ABLE accounts. So people if they have disabled family members that are on SSI, they need to think about ABLE accounts. But John, what's something else we've learned about?
John
The ABLE accounts are actually a... That's a federal program, so it doesn't matter if you're in... Even though we were at a Texas Elder Laws Attorneys' meeting. ABLE accounts are federal. So whether you're a Arkansas listener or a Texas listener, or a Oklahoma listener, or a Louisiana listener...
Lisa
Or Utah, or Idaho.
John
Utah listener, or whoever you're listening, that applies to you. But the next thing, this is gonna be Texas-specific. Last year I believe, either last year or the year before, but in the last, very recently, Texas changed one of their rules and this was a very long-standing rule that has been changed. But Texas now has a law that says that, "You can amend a will after a person has died."
Lisa
Okay, John. Let me get my head around that here. So, someone makes a will, they sign it, two witnesses, their will says, "Whatever they... I want so and so to have this, that." And they die, and the will is probated, and property is dispersed per the will. But yet, there's a law on the books that we can amend this will.
John
That's right. We can go back and change that will. But it's limited to one particular purpose. You can go back and amend that will for the purposes of protecting a beneficiary's access to government assistance benefits.
Lisa
Okay. So that makes a little more sense there.
John
Yeah. So let me give you the example, if you're a husband and wife out there and you have a will in place, I bet it looks something like, "I leave everything to you and you leave everything to me, and when you were both dead, we leave everything to the kids in equal shares."
Lisa
That's pretty standard.
John
That's what I call the "I love you" will. Now the problem you run into is let's say that the wife has Alzheimer's disease, and the husband is her caregiver, well the stress of being a caregiver like that oftentimes kills the caregiver long before it kills the patient, that is suffering with the disease. So wife has Alzheimer's, husband dies, and here his will says "I leave everything to my wife, who now as a single person with no caregiver is gonna need something like nursing home benefits."
Lisa
Right, and she can't handle the property that's coming her way anyway, I mean she can't manage it and now it's gonna be counted as resources that she's supposed to spend away completely before she can get any assistance or care.
John
Now if if those people had had their wills done by an attorney like one of us, who actually knows what they're doing, we would've already included a provision saying that because the wife is disabled and incapacitated that her share goes into a trust for her benefit, where those monies won't count for things like Medicaid. We would've already included that. But they didn't, 'cause they just had this little, "I love you" will. And so we now, we could not do this before, but now in Texas, we can go back to the court even after the husband has died. We can go back to the court and say, "Judge, look, the will says everything goes to the wife outright, but she's incapacitated, she's probably gonna need nursing home care, we want to amend that will and instead of everything going to her outright, we want it held in trust for her benefit in a way that she'll still be able to qualify for Medicaid or other government assistance without losing all of this money."
Lisa
Right. And without losing the family legacy, of you know, that home and the family land and all those things that can be lost, and you know, John, I know some people might say, "Well, golly gee, I'll just... Let's just do one of those sweetheart simple 'I love you' wills and then if there's a problem, then with the law that you are telling me, we can fix it later."
John
Well and that is true. But I don't necessarily have to put oil in my car, because it'll drive for a while without it and when the engine freezes up, I can go have a new engine put in it.
Lisa
Yeah. It's a lot cheaper, John, to just keep the oil changed, than it is to go buy a whole new engine block.
John
And you know in our practice, in the practice of elder law, there are a lot of situations that we can fix, but it is often so much easier and in legal terms, easier means cheaper, it's a lot... As often as a lot easier to prevent those problems than it is to fix them. But this was a problem that there was no fix for up until the most recent legislative sessions in Texas and this is a great tool.
Lisa
Yeah. No, I'm thrilled and I'm glad to know that we do have a tool that we can go back and fix these situations, it's just I hope I don't have to get it out too often, John, because like you say, money, time, uncertainty.
John
Yeah, hopefully people are listening to the show and they're making sure that, that stuff is included in their planning on the front end, so you don't have to go and fix it after the person is already deceased. Well we've gotta take a bottom of the hour break, for the news, so stick around 'til after that and we'll come back.
John
And three, two, one.
John
Welcome back to Aging Insight, everybody, this is your host, John Ross here in the studio with Lisa Shoalmire, now in the little intro, it said call in with your questions, but we are not live today, we are pre-recorded.
Lisa
Once again.
John
Once again. Should be back live next weekend.
Lisa
Yeah, I think so, yes.
John
But not this weekend. If you're listening to this show, it is pre-recorded, so don't call in, but if you have questions, you can always reach out to us on social media, for example, you can go to our Facebook page for Aging Insight, you can go to our website aginginsight.com. You can even call me and Lisa during the week at Ross & Shoalmire, at our law firm and ask. Say, "Hey I've got a question I'd like for you to answer it on the radio."
Lisa
Yes, you know what your teacher used to always tell you in school, if you have a question, someone else probably has the same one.
John
Somebody else has the same questions so just get out there and ask your questions.
Lisa
Or as a listener, you could be writing 'em down in the notebook and saving 'em up until we're live on the air. You could just pepper us with it.
John
That's right, you could just save it until next weekend, we will be back in the studio live. But we're not now. Right now we're pre-recording and we're talking about our previous week where Lisa and I went down and shared information with other Texas elder law attorneys and they share their information with us and we picked up a few things that we thought we would share with you all. We started out by talking about ABLE accounts that's A-B-L-E accounts which are a newer way... A new way to... For a disabled person to be able to preserve, either some of their own resources or resources that somebody would like to give them like a family member and there's some pros and cons to 'em. But some of the pros are pretty good, and so if you have disabled people you need to learn about that. The next thing we talked about was the new law that allows you to amend a will, change a will, after the person that made that will has died.
Lisa
I like the official term, 'a will reformation.'
John
Yes, a will reformation. And it's used only for one purpose and that one purpose is to protect a disabled beneficiary who might be receiving government benefits, but that is a tool that we have needed. There have been many situations where somebody, inadvertently, left assets to that disabled person, messed up their assistance programs, and it was very difficult for us to fix that. This creates a much simpler fix. Still involves some court process and things like that, so it's still not as good as preventing it on the front end. But it does give a us a pretty neat tool to protect.
Lisa
And I just remembered, John, I've actually used that. Before we went to Dallas and learned so more details, I actually used that provision in a case over... I believe it was Hopkins County. That exact thing happened, a husband passed away, wife had dementia and we had to educate the judge on this will reformation provision. And John, that is another thing. Just like we educate our listeners, our judges that we practice in front of, they're handling all sorts of things. Meth labs, and breach of contracts and...
John
Divorces.
Lisa
Divorces, child custody, and so these judges they may be smart but they don't know everything and so we have to spend quite a bit of our time educating our judges about elder law issues as well. So we go to these conferences and we educate you, the listener, and we even bring it back to the courthouses to help our judges do a better job with a...
John
Yeah, and not just them. A lot of times we're talking to doctors and social workers and making sure they know about changes in the law and how they relate to their own practices and financial advisors and all kinds of stuff. But we gotta have that good information out there for the people.
Lisa
Right, well, and so John, I wanted to jump into another area that there's been a lot. Speaking of changes. I don't know any area in elder law that has changed in the last two years as much as the area of guardianships. And you know, John, guardianships, this is the legal process by which someone petitions the court to say, "Hey, there's this other adult out there and this adult doesn't have capacity to care for themselves or to manage their finances, and this adult needs someone to be appointed to do those things for them." This is the only process where you can substitute judgement for a person who's 18 or older. Once you're 18, you're on your own.
John
You're an adult. Yep, you're an adult.
Lisa
But if you're over 18, but you are losing capacity or lack capacity, then this is the only legal process by which someone can substitute their judgement for yours in order to care for you and all of that. John, most of us, once we're 18 and over, we never think about the possibility really of needing that level of care, of that level of guidance. We just don't like to think about that, but it happens.
John
Just before we came over here, I visited with a husband and a wife, and the wife said about 800 times, "Well, I'm never gonna need that stuff. I can make my own decisions."
Lisa
And I hope she's right.
John
And I do to. I hope she's right from now until she takes her last breath. I hope she's able to make her own decisions. Unfortunately.
Lisa
Unfortunately, that's just not the case. And those of you out there with life experience you know that. And under the law, this was a big change in Texas. About two years ago, Texas changed the law to really make guardianships, where we appoint someone else to care for another adult. That Texas has made guardianships a very disfavored procedure.
John
That's right.
Lisa
And so that means, by disfavored I mean, basically, the state legislature has said, "A guardianship should not be granted, unless all possible alternatives have been reviewed to see if they can work short of a guardianship."
John
Right. You can look at this in several ways but you should be able to understand at least the concept behind it. Taking away all of somebody's rights and putting all of that decision making in the hands of somebody else, that is a very drastic remedy.
Lisa
Sure.
John
And so you don't want somebody to willy-nilly be able to get into a court and have your rights removed and somebody else now taking over your whole world. There should be lots of protections for that to prevent that from being misused.
Lisa
Right, I completely agree, and Texas has lots of safeguards. There's attorney ad litems that have to be appointed to independently and objectively review the facts and to represent the proposed ward and there's notice provisions to everybody who is close in the family that a guardianship action is going on. So we have a lot of those type protections. But John, I just wonder, the new law about disfavoring guardianships. The big cities, what we're hearing from our colleagues in the big cities, is that the courts in the big cities are almost never granting guardianships.
John
Yeah. And so, I've got some theories as to how all of this came about.
Lisa
Yeah. Well...
John
So I think maybe we'll take one more break here. And then we can. 'Cause there's a lot of this guardianship stuff for us to talk about.
Lisa
Yeah, there really is. We could talk about that into our last segment. But if you like theories, I think definitely stick with us. [chuckle]
John
Yeah. We got some theories on this. So, stick around and we'll be right back.
John
And three, two, one.
Lisa
Well, welcome back everyone to our final segment today on Aging Insight. This is Lisa Shoalmire. And I'm here with John Ross. And this is another pre-recorded episode. And for all of our loyal listeners, we appreciate you listening and wanted to pre-record a show for you to give you some new information. John and I just got back from a conference on elder law, so we wanted to share with you some of that information. And right now we've kind of in the middle of a talk about guardianships. This is particular to Texas. But John, the old saying, "As Texas goes, so goes the country."
John
That's right.
Lisa
Isn't that what they should say?
John
I think, yeah. I think that's what they should... I don't know that that's actually a saying.
Lisa
Yes, well. So a couple of years ago, the Texas legislature passed some laws that required that you look at every alternative to a guardianship before a guardianship is granted. And which I think it's a pretty valid. Let's look. But, talking to our colleagues in places like Houston and Dallas and Fort Worth what's happening is when elder law attorneys or any attorneys really are bringing guardianships and they're presenting facts, such as mom's got dementia, she's not paying her bills, she gets lost when she's driving, she can't take her medication properly. And they're presenting this type of evidence to the court stating that mom needs a guardian to pay her bills, to manage her medication, to make sure she gets proper medical care, to make sure she's safe in her living environment. The courts were saying, "No. We're just not gonna grant a guardianship."
John
Right. And here is essentially what I believe has happened. If you go back, and you don't have to go back all that far, but go back 10 years, go back 15 years, go back 20 years. Getting guardianship over somebody was entirely too easy.
Lisa
Yes, I agree.
John
It's still is in Arkansas.
Lisa
It is. Yes it is.
John
The laws are just... It's not the courts, it's the laws. The laws just do not provide enough protections for a potential ward in a State of Arkansas like they do in Texas. But here's the problem, so you go back in Texas, you go back 10, 15, 20 years it's way too easy to remove somebody's rights. And because of that there is abuse. There's financial abuse through the court system where people are able to take advantage of the weak, the elderly, the incompetent, and they're doing it all with court approval essentially because the rules are not there to protect them.
Lisa
Well that, John and of course, the other issue we have in Texas. We've got 254 counties and these courts and all these different counties, many of them are handling all sorts of different matters. And so guardianships has been a fairly small percentage of their work. And we just... The courts historically have not very closely supervised guardians.
John
Well that's where I was going is that you start out with there not being any good laws. Because there's not any good laws, you get abuse of the system. When you get abuse of the system, you get the legislators down in Austin making up new, more restrictive laws.
Lisa
Right. To try to really counterbalance the potential for abuse.
John
That's right. Then you get courts who don't know about those rules and therefore, keep doing it the way it was being done. And then you continue to get more abuse.
Lisa
And I know, John, we've certainly talked about some of those type abusive cases that we ourselves have been involved in to try to help wards that have been improperly put under guardianships.
John
Yeah, where their auto mechanic goes in and gets a guardianship over them or something crazy like that. So you continue to get these abuses out there. The legislator continues to respond by making it, by adding more rules and more rules which continue to not be followed.
Lisa
Right. Right.
John
I mean, the rule of having a certified attorney to handle these cases is been around for five or six years and you'll still see courts in our area appointing non-certified attorneys.
Lisa
Like last month maybe? [chuckle]
John
Yes, like last month maybe. And so, what happens is you get this snowball effect of more abuse, more rules. More rules that don't get followed equals more abuse, which creates more rules. And so what has happened now is that the legislators have finally made it, they've made so many rules. They've made it so difficult. They've put so many hurdles there to try to prevent these abuses that they've basically made it impossible to go forward.
Lisa
Well, and John, just like we were, as we were talking to our colleagues, they were telling us that the judges in their courts in the bigger cities, as these judges go get their... Go to judge school as we call it. Judges go to judge school. And there're continuing education seminars for judges, and because of these abuses and all of these snowball of rules, the Texas Supreme Court and the state bar is trying to educate these judges on what these rules are. And so, it becomes such a maze for the judges that they feel like it's a safer bet to just not grant a guardianship than it is to grant one and have someone complain that they didn't comply with all the rules that have just been, that have just promulgated and popped up like mushrooms in the last few years. And so...
John
And unlike other areas of law, if you're in a divorce court and the judge makes a bad ruling, not saying that they ever do. But if one of them were to make a bad ruling in a divorce matter, the judge cannot be held at fault.
Lisa
Right.
John
Same thing in a car wreck or even a criminal case. If a judge were to find somebody not guilty of a crime they did commit or guilty of a crime they didn't commit.
Lisa
Yeah. There's no personal liability.
John
The judge is not personally responsible for any damages caused. You can't turn around and sue the judge except in guardianship.
Lisa
Right and in guardianships, you can. And so, and it's one of those cases, again it's one of those rules to really get a judge's attention to make sure they are paying attention to these guardianship cases, and that they are weighing very heavily the need of a guardianship versus taking away the rights of this individual. And John, I so appreciate all those things.
John
Right. Again, the theory behind all of this is sound.
Lisa
Yes.
John
We need to protect the incapacitated people.
Lisa
But the issue becomes when I'm sitting across the table from the adult daughter who is telling me how frightened she is because of the things that her mother, who is descending into the grips of dementia is doing. And how, John we had one case where a lady was walking down the street, in the rain, 45 degree temperature, 80-something year old lady. A kind hearted person pulls over 'cause they didn't think this looked right. The woman got into this stranger's car and could not remember where she lived, could not remember a phone number to call.
John
Right.
Lisa
Finally remembered her son-in-law's first name and that he worked at a bank, is I recall. And the driver of the car actually knew who that was and called.
John
Right. Got lucky.
Lisa
And got lucky. But you know, is that a serious situation that is likely going to need a guardianship? And the problem is, as I'm speaking to that adult daughter who is trying to protect her mother and to do right by her mother, the rules that are in place make it so, so difficult for that well meaning adult child who has all the best of intentions to step in, to now care for a parent that so many of my clients tell me, "You know, they cared for me."
John
That's right.
Lisa
"Now I wanna return the favor."
John
That's right. So all of that to say, it's harder to get a guardianship, easier to probate a will, and there's some new ABLE accounts out there to help with some disabled folks. We are coming up on the end of our show, so we'd like to thank Edgewood Manor, The Barnett Agency, Dierksen Memorial Hospice, Riverview Behavioral Heath, Cowhorn Creek Estates, Curt Green & Company, St. Michael's Hospital, The Retreat At Kenwood, Red River Federal Credit Union, Twin City Rehab, and Inspirations. And of course thanks to all of ya'll. You know, again, get out there and check us out on aginginsight.com. Listen to some of our old radio shows, you can even watch our TV show on there in the event you're not a Cable One subscriber.
Lisa
Right, so and always, you see an Aging Insight magazine out there and pick it up, and we look forward to hearing from you. So we'll be back next week.
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