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- Life Changes Should Lead to a Review of Your Estate Plan
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Filial Support (or Responsibility) laws establish a duty for adult children to take care of their indigent parents, meaning that the child may be required to pay for bills accumulated by parents for nursing homes and other form of elder care.
Although Filial Responsibility laws are on the books in 30 states, they have historically been seldom enforced and lawsuits citing filial responsibility often fail. For example, the most recent successful case in the state of Georgia involving filial responsibility occurred in 1936. Unfortunately, however, recent cases across the country are indicating a possible change to this trend. The landmark case in this turnaround is that of Health Care & Retirement Corporation of America v. Pittas. In 2011, the nursing home brought suit against John Pittas for $93k of his mother’s unpaid rehab bills. After completion of rehab and prior to her Medicaid application being approved, Mr. Pittas’ mother moved to Greece to live with her other 2 children. The Medicaid application for her bill was still pending. In the meantime, the nursing home sued Pittas, the only remaining family member in the US, for the remainder of the funds ($93k). In 2011, a trial court ruled in favor of the nursing home and an appeal to the PA Supreme Court went against Pittas earlier this year. He is currently appealing to the US Supreme Court.
Pennsylvania filial responsibility laws, which are similar to half of the US states with filial responsibility laws, state that the parent must be indigent and adult child must have sufficient financial ability to support the parent. Pittas’ pre-tax income is $85k/year.
Unlike previous successful cases in the US, the Pittas case has no record of fault. The adult child has not been the cause of financial troubles, has not defrauded the parent, and there are no criminal elements. We would expect the adult child to be responsible for the parent’s bills if there was reasonable cause, as in the situations previously mentioned. One such case is that of Presbyterian Medical Center v. Budd (PA) in which Elizabeth Budd used power of attorney to take control of her mother’s finances while her mother was in the nursing home. With this power, Budd transferred $100,000 of her mother’s assets to her own name and did not pay the medical center or file a Medicaid application for her mother. Elizabeth Budd was responsible for the unpaid nursing home bill after making fraudulent claims to the nursing home and misrepresenting her mother’s finances.
Nursing homes also appear to be ignoring the situation of adult children in the chase for quick payments on bills. You all probably understand joint and several liability in which multiple parties can be held responsible for the entirety of a debt, and it is up to the parties to determine how the full debt will be paid. This can be used by nursing homes as well in order to hold multiple children liable for a debt.
Elnora Thomas and her unemployed sister both received notices in 2007 that they were being sued by their mother’s nursing home for $50k and were threatened that liens would be placed on both of their Florida homes if the bill was not paid (two liens could be placed due to joint and several liability). This occurred after their mother’s husband, the women’s stepfather, refused to disclose his financial situation on a Medicaid application, causing the application to be denied. The actions of a man who was related to the Florida women only through their mother’s marriage, was able to put them on the line for $50k.
As lawsuits targeting the adult child of seniors who owe money become more prevalent, it is important that steps are taken in order to protect yourself and your adult children from becoming a target. While many assume that there will be a gradual decline of health prior to entering a nursing home which will allow time to save up for future bills, it is important to note that the $93k bill from the Pittas case was the result of a car accident that no one could predict. There are 10,000 baby boomers that become eligible for nursing care every day. There are possibilities of situations in which the parent receiving nursing care may declare bankruptcy and yet the adult child can still be held liable for the bills. In some states, there are criminal penalties of up to 1 year in jail for an adult child failing to pay their parent’s bills should they be targeted for payment. And remember, these laws can cross state lines, which is why I have included every state with these laws in your handout.
How can we protect ourselves? One way is to appear unable to provide help to pay these bills by having your assets in a trust. The most important steps you must take are to be aware of these occurrences and to have long term care insurance or some other method to make sure our children will not have to foot the bill should something unpredictable occur.