Estate of Chicago Cubs’ Ernie Banks

In the weeks following the death of Chicago Cubs shortstop Ernie Banks, it was apparent that the Banks family faced unwanted surprises and challenges. Bleacher Report columnist Tim Daniels writes that Banks’ estate was revealed to hold only $16,000 in assets, much less than expected. Additionally, Banks, in his declining health, signed a new will three months before his death, directing his estate to his caretaker instead of his family. The mourning family and other individuals involved are trying to understand how the situation came to be and where the money went.

Recently, news broke that the costs of Ernie Banks’ funeral have gone unpaid, and the provider of the service has filed a claim, effectively adding to the legal strife. Upon hearing this news, the Chicago Cubs committed to cover the $35,000 claim, as an effort to alleviate some of the burden on the Banks family.

“Thank You!”–Mahalo v. First Citizens Bank and Trust Co.: Georgia Court of Appeals Gives Us The Good, The Bad, and The Ugly…

Forbes has just published a new article written by our colleague and nationally reknowned asset protection guru, Jay Adkisson wherein Jay analyzes the Georgia Court of Appeals new decision Mahalo Investments III, LLC v. First Citizens Bank and Trust Co. (Feb 19, 2015). Mahalo had two members: Epstein and Kelly. The two members lost a $3 million judgment to the creditor, First Citizens Bank (“FCB”). FCB then followed the well-known Georgia statute to obtain a charging order, OCGA 14-11-504(c). That’s where Mahalo takes off into a new, but not unforeseen (at least as to Jay) direction .

The Good

Mahalo reaffirms the robustness of the Georgia LLC Act in that it point-blank states that creditors do not get to take over management of a LLC merely by virtue of obtaining a charging order. Creditors are limited to the status of an assignee insofar as the members’ interests in distributions to be paid by the LLC. As for the LLC, it’s “business as usual.” For the debtor member(s), the creditor stands in their shoes for any distributions made by the LLC, and the latter is to make such distributions to the creditor, not the debtor-member. Otherwise, the LLC is faced with making two distributions, one mistakenly to the debtor-member and the other will be compelled to the creditor holding the charging order. Then, the LLC is left to recoup the wrongfully paid distribution from the debtor-member. Of course, the aggrieved creditor could go after either. But, the easiest target is the LLC who basically would be in contempt of court for failing to obey the court-issued charging order.

The Bad

Mahalo breakes the silence that previously existed in the area of  whether a creditor must file separate lawsuits to obtain charging orders on other LLCs of which the debtor is a member. You see, Epstein and Kelly held member interests in other LLCs who weren’t named parties defendant in the Cobb County State Court suit instituted by FCB; FCB sued only Epstein, Kelly, and Mahalo Investments III, LLC. The Court of Appeals upheld the State Court’s issuance of charging orders against the other LLCs despite FCB having not named them in the original suit, nor having brought “collateral” actions against the other entities. The Court of Appeals interpreted OCGA 14-11-504(c) to mean only that the creditor must bring a “proceeding” in the sense of an Application for Charging Order in the State Court. Here, FCB had brought a “proceeding” in the form of its Application for Charging Order in State Court. Ergo, the Court of Appeals held that FCB had complied with 504(c)’s requirement merely by filing its Application for a charging order. The charging order applies to the debtor-member, not the LLC. So, the creditor obtains an assignee interest in any interest held by the debtor-member in any LLC of which the debtor may hold a member interest, regardless of whether the creditor has named that LLC in the action. Once again: the creditor need NOT institute separate proceedings for the charging order to reach each company/entity interest held by the debtor-member.

The Ugly

Debtor-appellants also argued that the Georgia State Court was not “a court of competent jurisdiction” because the Georgia State Court did not have personal jurisdiction over the LLCs whose interests were charged. Citing Bank of America BAC -1.71%, N.A. v. Freed, 983 N.E.2d 509, 520–521 (Ill.App.Ct.2012), the Georgia Court of Appeals reasoned that the only jurisdiction required was that over the debtor-member. Extending its logic from the preceding argument, Mahalo holds that so long as the State Court held proper jurisdiction over the debtor-member, the charging order reaches any other LLC member-interest the debtor holds, regardless of whether that entity is a Georgia LLC or even transacts business in Georgia. Reiterating the good news that the charging order gives a creditor NO management rights in the LLC, the Court of Appeals held “that under Georgia’s limited liability company act, it is only necessary for a court to have jurisdiction over the judgment debtor to have the authority to enter charging orders against the judgment debtor’s interest.”

If you think I’m being repetitive now, it’s for good reason. As Jay has been preaching for years now, the asset protection industry has marketed the concept of LLCs formed in other jurisdictions with more favorable debtor statutes concerning creditor remedies as having an advantage over other states. Mahalo now clearly establishes precedent that creditors will be deterred only by the extent of the court’s personal jurisdiction over defendant debtor-members and the domiciliary jurisdiction’s charging order statutes, and NOT those of the entity’s domicile jurisdiction. Stated another way, those Wyoming, Nevada, Alaska, Arizona, Delaware and other jurisdictions lawyers have marketed as having better charging orders than Georgia are of no value so long as the creditor may sue the debtor-member here in Georgia. Undoubtedly, creditors will use this precedent across the nation to circumvent those other states’ statutes previously thought to be more advantageous to debtors.

Jay Adkisson has written a well-thought out analysis in these areas. It’s worth a read and you can find it here. The full case may be read at:  Mahalo Investments III, LLC v. First Citizens Bank andTrust Co., Inc., 2015 WL 687922, ___ S.E.2d _____ (Ga.App., Feb. 19, 2015). Full opinion at  http://goo.gl/sFbjRf

Moving Forward

Just to leave you with a positive feeling: Georgia’s freedom of contract principle remains alive and well in its LLC Act. The well-drafted LLC Operating Agreement will save more skin and provide better bang for the buck in the long run than an attempt at and “end-around” play using another jurisdiction’s LLC statutes to try to avoid creditors. Probably at least as many problems arise between members than between creditors and LLC members. The well-crafted LLC Operating Agreement may provide a better playbook to avoid bad business decisions being made in the first place and thus avoid the creditor problem before it leads to the company and its members being sued in state court. If drafted and executed properly, it may well prevent the members from remaining in the lawsuit and losing a judgment to the creditor in the first place.

Need to have your Operating Agreement reviewed or updated? Thinking of forming a new LLC? The formation documents with the Secretary of State’s Office is only the beginning. Remember: the pain of low quality is remembered long after the pleasure of low price has been forgotten. Give us a call at 404-602-0040, you’ll love doing business with WR Nichols Law!

Medicaid Ranks Highly Among Americans in Poll

A New York Times article from October 9, 2014 reports high satisfaction level from low-income people in three Southern states who use Medicaid.  Respondents preferred Medicaid over private insurance.  The study of residents of Arkansas, Kentucky, and Texas, found those surveyed preferred Medicaid compared with private coverage as the former offered better “quality of health care” and made them better able to “afford the health care” they needed.  This is the same result reached by repeated surveys showing the program, much maligned as a political target as being substandard, is quite popular among the people who use it.    A 2011 survey from the Kaiser Family Foundation found that 86 percent of people who had received Medicaid benefits described the experience as somewhat or very positive. A slightly more recent Kaiser survey showed that 69 percent of Americans earning less than $40,000 a year rated the program important to them or their families. Medicaid’s political opponents would have you believe that its restricted list of doctors and additional red tape make it worse than being uninsured.  But, other pollsters and surveys find Medicaid ranks higher on consumer satisfaction levels than private insurance.

Kaiser’s top pollster says the Medicaid is “surprisingly popular” and has seen the program get high marks from the public for more than 10 years.  The public at large rates Medicaid highly as well, saying that Medicaid is important to them and their families.  Now covering some 67 million Americans, Medicaid is not the country’s largest health insurance program.  Moreover, a Majority of Americans support Medicaid expansion as part of the Affordable Care Act.  In fact, it’s only when compared to Medicare that Medicaid looks unimpressive, stated Robert Blendon, a public health professor at Harvard University who studies public opinion on health care issues and was a co-author on the subject recent study.

The Harvard researchers said those surveyed gave private coverage the edge when it came to seeing “doctors you want, without having to wait too long” and “to have doctors treat you with care and respect.”  But Medicaid surpassed private insurance on whether the available programs enabled respondents to “be able to afford the health care you need,” and on the overall question of “quality of health care.”

Estate Planning: The Problems of Disinheritance and Alternative Solutions (There’s always a better way)

Parents and children each have duties imposed on the other by society, custom and tradition.  After the teen years, the family mobile dynamic often becomes broken, breaking the parent/child bond, and leading to estrangement.  When carried to the extreme, vengeful or unhappy parents may seek retribution by exercising the only remaining power they have left—disinheritance.

Disinheritance may be a parental attempt to save a wayward child from alcohol or substance abuse issues.  Other issues include parental concerns over a child’s spouse, concerns that a child never properly applied him/herself, abuse issues that cut both ways, or which ultimately lead to the denial of access to grandchildren.

I posit that the choice of disinheriting a child is akin to the death penalty—one reserved for only the gravest of circumstances and wrong-doing and then only implemented after a series of appeals.  Otherwise, if there are siblings, they will have to deal with the repercussions the disinherited child will inevitably raise.  These actions will be taken towards and involve the survivors who did inherit.  Those children’s relationships with the disinherited will forever be strained until some compromise is reached or one of them dies.  Moreover, the hurt inflicted by the disinheritance becomes “permanent” in the psychological sense, and there are always more than one side to any story.  And, is that really the legacy any parent wishes to leave—that of being such an old, unforgiving, crotchety cuss that the parting shot with one foot in the grave was the ultimate “gotcha?”

The result of the ultimate “Gotcha!” or disinheritance, is that the surviving children who were received an inheritance is that they may have to buy peace by carving out an appropriate, equitable share to the disinherited child.  In that case, the parent has effectively projected his/her own problems onto another child or grandchild, instead of having the courage and character to appropriately and properly address those issues with the estranged child themselves, during their lifetime.

And, of course, the disinherited child may bring a will or trust court action to invalidate the parent’s estate plan, with the hope of receiving an intestate share equal to the other children’s shares.  Not only will the lawsuit be stressful and upsetting to the other family members, it will be particularly hard on any child who is in charge of administering the estate.  Any court action will also diminish how much is left to distribute.

Reconciliation is possible, but difficult and not a frequent outcome.   A better alternative is for the parent to finish life being as good a parent as he/she can be, and at least try to be better than the child, adult child or not, and leave some incentive there to stop the cycle from passing on to the next generation.  Several alternatives should be considered:

·        Consider reducing the inheritance until such time as when (if ever) the parent and child are reconciled;

·        Put incentives in place in a trust that would reward the desired behavior and work towards normalizing the full inheritance;

·        Leaving some or all of the child’s inheritance to that child’s own children (who may themselves be the objects of neglect or abuse).

Leaving a reduced inheritance demonstrates that the child was once a part of the parent’s life.  It also provides an incentive to the child not to contest the will or trust. The use of incentives in a trust protects the principal, yet simultaneously incentivizes the person to turn away from destructive behaviors.  The last alternative recognizes that the grandchildren are not to blame for their parent’s choices and behavior.  It prevents inadvertent punishment of the grandchildren by allowing them to be recognized in the estate while bypassing the individual who was intended to be punished.  While it is an alternative to outright disinheritance, I view it as the last gasp of an otherwise dysfunctional parent who themselves would rather take bitterness to the grave than to appropriately address their own role in the dysfunctional relationship and make appropriate provision to heal the dysfunction, such as funding psychological assistance or a rehabilitation program.

We will be happy to explore each option with you in confidence in our offices.  Just reach out and contact us to arrange a mutually convenient time to meet.

Medicare/Medicaid and the Rising Cost of Sexual Activity for Seniors

As Bill Mahr humorously, but perhaps, ineloquently stated as a “New Rule” last Friday night on his HBO show “Real Time,” the feds have been investigating the rising costs for durable medical equipment to see if certain types of equipment should be added to the competitive bidding list.  Enter the swelling controversy surrounding the penis pump, more formally known as the “vacuum erection system.”  Over the five-six year period between 2006-2011, Medicare paid an average of $451 per pump.  That left a $90 co-pay per patient with Medicare picking up the remaining 80%.  Comparatively, the VA paid only $186 for each device.  And, is anyone surprised that any average shopper could find less expensive pumps online?  Medicare purchased 473,000 pumps over the period investigated.  Predictably, there is controversy underlying adding these devices to the competitive bidding program, as many conservative groups argue that these expenditures are wasteful and detract from true “health” related expenditures.

But, perhaps we shouldn’t jump past the “health” aspects of sex so cavalierly.  Sure, in 2006 Congress barred medications like Viagra from being covered under Medicare Part D, the bill’s sponsor stating he didn’t want to have taxpayers subsidizing “grandpa’s recreational sex.”  But, there is a larger bias here that is arguably being overlooked:  the health aspects of sex in any adult human’s life.  The clear bias exists that seniors are, or should be, asexual.  Yet, how is that any different from the argument against younger, college age women who many on the left have argued should be insured for birth control pills.  It seems at some base level, Americans are just prudish at worst or giggling adolescents in general when it comes to a healthy discussion about human sexuality.  Is sex really just to procreate?  Recent studies say no and that more than half of men and 40% of women over age 65 are sexually active.

So, at least one author urges that we just insist that Medicare not get ripped off by price-gouging device suppliers and continue to cover the devices, perhaps as well Viagra and then the discussion will shift to condoms and safe sex and STD control for seniors as well as the general population.  This all in the name of health and to avoid “ageism.”  At some point, we all must address the limits the system can bear and the “Pentagon-Contractor” nature of the abuse and over-charging that is a huge source of the problems.  One thing is for sure, as millions of Baby-Boomers age into retirement, “No-Sex for Grandpa” rules probably are not going to work.

Aging Parents Can Forget to Pay Premiums Leading to Policy Lapses With Disastrous Consequences

If your older relative has a long-term care policy, photocopy the page listing the company, policy number and claims contact information. Keep the insurance company updated on new addresses, yours (if you are the third-party designee) and your relative’s. It wouldn’t hurt, if the policyholder is becoming forgetful, to check bank statements or call the company to make sure premiums are current.  One story reported by the NY Times shows the calamity that befell a Virginia family because paying the premiums slipped dad’s mind.  State legislatures seem hesitant to correct the problem by mandating insurance companies give more formal notice to policy holders or their third-party designees.

Children of Abusive Parents More Likely to Suffer Depression in Caring for Them as Elders

A Boston College study conducted from 2003-2005 shows that the impact of abuse never fades.  The study surveyed over 1,000 participants and ranked them into the following three categories:  1) those with no history of childhood abuse or neglect; 2) those who had been abused and were caring for their non-abusive parent; and 3) those who had been abused and were, to borrow the study’s memorable title, “caring for my abuser.”  Researchers also compared caregivers neglected as children with those who were not neglected.

Unsurprisingly, adults who were abused by their parents as children were more likely to show signs of depression, like lack of appetite, insomnia, trouble concentrating, sadness and lethargy, when caring for those elderly parents as adults.  But a stronger link arose for those category 3, caring for the abusive parent.  Those abused children caring for their abusive parent were still affected by that abuse and suffered from more depression than those in the other categories.

So, a person falling into one of these categories, especially category 3, has to really ask themselves whether they wish to subject themselves to this kind of risk to their own health as adults.  Worse, this finding raises the ugly specter of whether the abused child will succumb to the increased risk that they will abuse their charges, perpetuating a sorrowful cycle, if the care-giving becomes overwhelming.  Clearly, the natural feelings of revenge could easily surmount any obligatory honor or other societal barriers that otherwise keep in check these more primitive urges.

Whether it is those that are forced to care for their elderly parents who were abusive to them when they were children because there is no alternative or if there are other factors which place the adult children in such a precarious position, those who must engage or who choose to engage in the caregiver role must steel themselves for the impact on their own health.  They should be aware of the signs and symptoms of depression and methods of dealing with it such as therapy or support groups.  What is clear is that more resources need to be made available to care for the aging other than reliance on unpaid family caregivers.  For, as this article concludes, “Not only nice people get old.”

NY Times Article:  A Risk in Caring for Abusive Parents

People All Over the Nation Are Now Using the Affordable Care Act–the White House Wants Their Stories

Expecting a continued battle over health care, the White House moved Wednesday to recruit volunteers for its campaign to defend and promote the law, which is likely to be a defining issue in many congressional races this year. A White House website invites supporters and beneficiaries of the law to provide their names, email addresses and personal experiences.

“Whether you have new coverage today or know someone who does, we want to hear your story,” David Simas, an aide to President Obama, said in an email to people who had expressed interest in the issue.

Jessica Santillo, a White House spokeswoman, said the invitation was part of a systematic new effort by the administration to “highlight stories of everyday Americans benefiting from the law.”

The administration hopes to encourage enrollment and reverse public opinion polls that show approval of the health care law lagging behind disapproval.

Read more:  New York Times Article

Related Article:

Emergency Visits Seen Increasing With Health Law

Use These 5 Strategies to Avoid Stress in Older Family Members or Those Cognitively Impaired

Following are five suggestions that may help elderly family members better enjoy the holiday festivities when all the younger family members are stirring up a ruckus celebration:

1. Prevent your elderly family members suffering from dementia from too much excitement or things like camera flashes, multiple blinking lights, over-exhuberant youngsters asking too many questions and generally just too many simultaneous visitors.  Their own inability to process information at the same pace can lead to frustration and disruptive behavior on their part in response.

2. Try to help the elderly stay in a good frame of mind by playing softer music and familiar songs to soothe their mood(s).  Perhaps predictably, those suffering from various forms of cognitive impairment, such as Alzheimer’s or other dementia, have shown positive reactions to hearing their favorite kind of music.

3. Protect your aging parent with dementia from loud noises, even loud talking and laughter that seem part of a normal day of celebration. A person with dementia can become upset by loud noises, even if they are happy sounds.

4.  Like most of us, but especially those elderly suffering from cognitive impairment, need quiet time, for rest, reflection and repose.  Too much conversation and holiday excitement among family members can agitate the elder.  Subtle signs of fatigue or frustration are indicators that a break from the action is appropriate for them.

5. Stay on their current schedule. Keep the elderly family member(s) eating at that same times that they always do.  Otherwise, disrupting their routine could create unnecessary stress or confusion.

Our thanks to Dr. Mikol Davis at http://agingparents.com for this information.