Elder Law

Fourteen Most Common Reasons to Do Estate Planning

1. Designate who will manage your affairs is you become disabled and when you pass away.
2. Plan for Medicaid and its impact on your estate if you must go into a nursing home.
3. Avoid probate during your lifetime and when you pass away.
4. Protect children from a prior marriage if you pass away first.
5. Protect assets inherited by your heirs from lawsuits, divorces and other claims.
6. Impose discipline upon children (and/or grandchildren) who may not be capable or experienced in managing money.
7. Provide for special needs children and grandchildren.
8. Insure that a specific portion of your estate actually gets to grandchildren, charities, etc.
9. Protect a portion of your estate if you pass away first and your surviving spouse remarries.
10. Address different needs of different children.
11. Prevent or discourage challenges to your estate plan.
12. Reward/ encourage heirs who make smart life decisions, and prevent the depletion of your estate from those who do not make smart choices.
13. Assure an education for grandchildren/children, despite what they (or their parents) dream of doing with the inheritance.
14. "Brady-Bunch" family estate planning: assure the step-parent doesn't spend your children's inheritance and/or provide for a spouse without sacrificing the intended legacy for children of a prior marriage.

Asset Protection is the old legal maxim; you can't get blood out of a turnip or water out of stone. If you don't have anything they can't take anything.

Secondly, in this country we have neither debtor's prison nor imprisonment for debt. Therefore, creditors, banks and nursing homes cannot force you to pay any debts and you can walk away from any monies the greedy hospitals claims against you. This maxim of law of course cannot protect you from spiteful ex-wives.

Except for the West Coast State, state legal codes have a married woman's property rights act whereby creditors cannot sue the wives for the husband's debts. However the common law rule that the husband can be sued for the wife's debts is still in effect. (If women want equal rights they need to give up a bunch!)

Therefore in most states you can deed your house to your wife to protect it from the greedy nursing homes. In all states, you can set up a trust which, if properly constituted can protect your assets from greedy lawyers, litigious creditors and tax thieves.

The best explanation of property laws pertaining to taxes is found in the Tax Collector's Manual-The Actual IRS Legal Reference Guide for Revenue Officers, also available from the Patriot Bookstore (click Here).

[Disclaimer: This material is FYI only, and was not written by Dr. Clarkson]

From Wikipedia: The Hill-Burton Act

The Hospital Survey and Construction Act, also known as the Hill-Burton Act, is a United States federal law passed in 1946. This act responded to the first of Truman's proposals and was designed to provide federal grants and guaranteed loans to improve the physical plant of the nation's hospital system. Money was designated to the states to achieve 4.5 beds per 1,000 people. The states allocated the available money to their various municipalities, but the law provided for a rotation mechanism, so that an area that received funding moved to the bottom of the list for further funding.

As is always the case, these federal dollars came with strings attached. Facilities that received Hill-Burton funding had to adhere to several requirements. They were not allowed to discriminate based on race, color, national origin, or creed - except for the proviso that allowed for discrimination so long as separate, equal facilities were located in the same area. The U.S. Supreme Court struck down this segregation in 1963.

Facilities that received funding were also required to provide a 'reasonable volume' of free care each year for those residents in the facility's area who needed care but could not afford to pay. Hospitals were initially required to provide uncompensated care for 20 years after receiving funding.

The federal money was also only provided in cases where the state and local municipality were willing and able to match the federal grant or loan, so that the federal portion only accounted for one third of the total construction or renovation cost.

The states and localities were also required to prove the economic viability of the facility in question. This excluded the poorest municipalities from the Hill-Burton program; the majority of funding went to middle class areas. It also served to prop up hospitals that were economically unviable, retarding the development wrought by market forces. Once Medicare and Medicaid were enacted, participation in those programs was added to the list of requirements for access to Hill-Burton funding.

The reality, however, did not nearly meet the written requirement of the law. For the first 20 years of the act's existence, there was no regulation in place to define what constituted a "reasonable volume" or to ensure that hospitals were providing any free care at all. This did not improve until the early 1970s, when lawyers representing poor people began suing hospitals for not abiding by the law.

Hill-Burton was set to expire in June 1973, but it was extended for one year in the last hour. In 1975, the Act was amended. The most significant changes at this point were the addition of some regulatory mechanisms (defining what constitutes the inability to pay) and the move from a 20-year commitment to a requirement to provide free care in perpetuity. Still, it was not until 1979 that compliance levels were defined.

References:

1. Health and Human Services website
2. Section 42 of the Code of Federal Regulations at the National Archives website
3. Public Health Service Act at the F.D.A. website
   Health Resources and Services Administration website
4. CBO Testimony Statement of Robert D. Reischauer Deputy Director Congressional Budget Office Before the Subcommittee on Housing and Community Development Committee on Banking, Finance and Urban affairs U.S. House of Representatives May 17, 1979 at CBO website
   

[Disclaimer: This article is FYI only, and was not written by Dr. Clarkson]

Many people of low income slave away to pay hospital bills from which they can never recover.  Sure, Medicaid and Medicare cover all or most of the expenses for low-income people who have applied for those programs.  But what of the hapless, feckless, impoverished people who haven't the wit or knowledge to ask for the government's assistance on hospital bills of tens or hundreds of thousands of dollars?  What of those who, even with health insurance that covers 80% of a bill find themselves burdened by the other 20% in the area of $10,000 to $50,000?

And what of those other unfortunates who changed jobs and insurance companies, and now get sledge-hammered with a bill for treating a "pre-existing" condition the new insurance company refuses to cover?
For all of you in that position, here comes the 1946 Hill-Burton Act,
finally a permanent part of United States law.  You can read about the law and its impact at the below links, and I do encourage you to read it.  

Government Web Site
Wikipedia (see below text)
USC 124 - Public Health

Oh, WHY should you read it? Because if you have an impossible-to-pay
hospital bill, you might simply write "Hill-Burton Act, 42 USC 124" across it, and return it without a payment of any kind.  You have a good chance that the hospital or collection agent will stop bothering you.
Why will they stop bothering you? Because the Act requires the government mercifully to pay the bill for a certain number of people who cannot pay it themselves.

I do not guarantee you that the hospital or government will pay your bill, but the Hill-Burton Act makes it profoundly difficult for the collection agent to win in their efforts to make you pay, particularly if you don't have the means.

Bottom line, don't ever let lack of money dissuade you from hospital.

1. Real estate law is very particular and deed filing must be exact. The property law system does not have room for errors in the drafting and filing of Titles to Real Estate. The date that you file your deed or any other instrument is important. File your deed at the proper time and place or face the consequences.
2. Use a General Warranty Deed. Quick Claim Deeds have a limited effect in some states.
3. Follow these instructions exactly:
   1. The grantor (the seller) must sign the deed. The grantee (purchaser) does not need to sign in most states.
   2. Grantor's signature must have a probate which includes a jurat (i.e. notarization by a Notary Public).
   3. Grantor must sign in front of two witnesses who must also sign. One witness must sign in front of a notary stating under oath that he saw the grantor and the witnesses (including himself) sign the deed.
4. Deeds in South Carolina—Using Dr. Clarkson's Deed form
   1. Witness #1 must sign two places (both marked 1) on the deed form. The name of the #1 witness must be listed in the "probate" where a line with 1 appears.
   2. Witness #2 signs at the line with the "2."
   3. If witness #2 is also a Notary, he signs the line marked 2 and also 3.
   4. If witness 2 is not a Notary, then a notary notarizes the document at the line marked (3).
5. If neither witness is a notary, go find one. Banks and most insurance/real estate offices have someone available to notarize documents. Most notaries know the proper format for the signing of a deed in their state.

Married Womens' Property Rights Act.
note: There is a similar law in every state except community property states.

NORTH CAROLINA CONSTITUTION: Article X - EXEMPTIONS

Sec. 4. Property of married women secured to them.

The real and personal property of any female in this State acquired before marriage, and all property, real and personal, to which she may, after marriage, become in any manner entitled, shall be and remain the sole and separate estate and property of such female, and shall not be liable for any debts, obligations, or engagements of her husband, and may be devised and bequeathed and conveyed by her, subject to such regulations and limitations as the General Assembly may prescribe. Every married woman may exercise powers of attorney conferred upon her by her husband, including the power to execute and acknowledge deeds to property owned by herself and her husband or by her husband.

We are forwarding to you word of a credit union with a written policy of ignoring the mere 'notices of levy' by which the IRS successfully fools many other companies into violations of both morality and the law.  This upstanding organization has declared that unless it is presented with a lawful court order to do otherwise, it will properly honor its agreements with its clients.  We would hope that is also the policy of Pinnacle Credit Union as that is what the law requires. (see attachments)

UMFCU's Web Site http://www.umfcu.org/index.html

       STATE of Georgia

               V.
                                                              }
        HIGGINS.
                                                                                           No. 11782.

Supreme Court of Georgia.

March 5, 1985.


Defendant demurred to accusations of failure to paying state income taxes and failure to timely file a state income tax return. The Fulton State Court, Charles Carnes, J., sustained demurrers, and the State appealed. The Supreme Court, Marshall, PJ., held that:

     (1)  statute making failure to pay any tax a misdemeanor offense violates constitutional provision prohibiting imprisonment for debts, and
     (2) trial court did not err in sustaining demurrer to charge of failure to make timely return.

Affirmed.

Weltner, J., filed a concurring opinion.


1. Constitutional Law 83(3)
Taxation 952
Income tax is a “debt”; therefore, statute making failure to pay any tax a misdemeanor offense violates constitutional provision prohibiting imprisonment for debts to the extent that statute authorizes imprisonment for mere nonpayment of income taxes. O.C.G.A. ß~ 48-7-2, 48-7-2(a(l). See publication Words and Phrases For other judicial constructions and definitions.

2. Constitutional Law 82(6)
Taxation 952, 1103
There is no constitutional inhibition against criminalizing failure to make income return and trial court should not have sustained demurrer to that accusation on constitutional grounds; however, accusation charged defendant with failure to make “timely return,” and since statute made it unlawful merely to fail to make return, trial court did not err in sustaining demurrer on the basis of that variance. O.C.G.A. ß 48-722.

Donald C. English. Asst. Sol. Gen., Atlanta. for State of Ga.

Michael J. Bowers, Atty. Gen., Jeffrey L.
Listeen, amicus cunae.
Denmark Groover, Macon, for Robert F.
tgginS.

MARSHALL, Presiding Justice.

Two criminal accusations were returned against the appellee. One was for failure to pay state income taxes, and the other was for failure to timely file a state income tax return. The offenses were alleged in the accusations to have occurred in separate years from 1978 through 1983. Under OCGA ß 48-7-2, the failure to pay any tax and the failure to make any return are made misdemeanor offenses. The appellee demurred to the accusations on various grounds, one of which being that the foregoing statute violates the provision of our state Constitution prohibiting imprisonment for debt. Art. I. Sec. I, Par. XXIII of the Georgia Constitution of 1983. The state court sustained the demurrers. The state appeals.

     1. The Georgia Constitution’s prohibition against imprisonment for debt has undergone gradual modification throughout our state’s history.

This constitutional provision first appeared in the Georgia Constitution of 1798 as Art IV, Sec. VII. It provided as follows: “The person of a debtor, where there is not a strong presumption of fraud, shall not be detained in prison after delivering up, bona fide, all his estate, real and personal, for the use of his creditors, in such
manner as shall be hereinafter regulated by law.” See McElreath, Constitution of Georgia, ß 408, p. 265. This provision was modified in the Georgia Constitution of 1861, Art. I, Sec. XXVI, to provide the following: “The person of a debtor shall not be detained in prison after delivering bona fide all his estate for the use of his
creditors.” McElreath, supra, at ß 465, p. 283.

Four years later in the Georgia Constitution of 1865, Art. I, Sec. XIX, this constitutional provision was again changed to provide: “The person of a debtor shall not be detained in prison, after delivery, for the benefit of his creditors, of all his estate not expressly exempted by law from levy and sale.” Id. at 567, p. 300. Three years after that, in the Georgia Constitution of 1868, Art. I, Sec. XVIII, this provision was once again changed to succinctly provide: “There shall be no imprisonment for debt.” This language from the Georgia Constitution of 1868 has been carried forward in identical form in the Georgia Constitutions of 1877, 1945, 1976, and 1983.

As stated in Messenger v. State, 209 Ga. 340, 341, 72 S.E.2d 460 (1952), “The inhibition of the Constitution applies to any and all imprisonment for debt, irrespective of the period of its duration or the means whereby it is accomplished.”

     2. Most state constitutions contain provisions which, in one form or another, prohibit imprisonment for debt. 48 A.L.R.3d1324, Anno., Constitutional Provision Against Imprisonment for Debt as Applicable to Nonpayment of Tax. The parties dispute the interpretation of the cases contained in this ALR Annotation. The interpretation of these cases is summarized in 2 of the Annotation at pp. 1326-4327; and this summary, which we cite immediately below, sustains the interpretation advocated by the appellee:

“Upon the theory that constitutional guaranties against imprisonment for debt have as their purpose the prevention of the useless and often cruel imprisonment of persons who, having honestly become indebted to another. are unable to pay as they undertook and promised, the courts in some cases have apparently taken the general view that unpaid taxes are not ordinarily debts’ within the contemplation of the constitutional provision. A broader rationale has been relied upon in some cases in which it was said that debt under the provision refers only to contractual obligations. and where the prohibition expressly omits debts to those founded upon. or arising out of contract,  it has been held that taxes clearly are not included. And upon the view that the penalty of imprisonment for nonpayment of taxes or license fees upon occupations, privileges, and similar activities is imposed, not for refusal or inability to pay the tax but for violation of a duty imposed upon the taxpayer by the law, the courts in many cases have held that statutes, ordinances, and other regulations imposing such taxes or license fees may lawfully authorize the imprisonment of those who fail to pay. A distinction, however, has been drawn between those cases involving taxes on occupation or excise taxes and those dealing with income taxes, and it has been held that ‘debt’ as used in the constitutional prohibition includes income taxes and other taxes not imposed for the pursuit of an occupation or the exercise of a privilege.

“While the constitutional prohibition may sometimes be regarded as including taxes within the term ‘debt,’ some provisions allowing imprisonment in case of fraud have been interpreted to exempt from their general prohibition willful refusal to pay occupation and other taxes.

“In summary, it must be emphasized that under all the various particular constitutional provisions applicable in certain circumstances stated, it has been held in the overwhelming majority of cases that imprisonment for nonpayment of taxes, or at least for the exercise of the occupation or privilege conditioned upon their payment, or for the nonpayment of penalties associated with the initial failure to pay, does not come within the prohibition of the constitutional provision against imprisonment for debt. The outstanding exception has been imprisonment for mere nonpayment of income taxes.” (Emphasis supplied: footnotes omitted.)

     3. OCGA ß 48-7-2 provides, in full: ‘(a) It shall be unlawful for any person who is required under this chapter to pay any tax, make any return, keep any records, supply any information, or exhibit any books or records for the purpose of computation, assessment, or collection of any tax imposed by this chapter to fail to:

     (1) Pay the tax; (2) Make the return; (3) Keep the records; or (4) When requested to do so by the commissioner: (A) Supply the information; or (B) Exhibit the books or records. (b) In addition to other penalties provided by law, any person who violates subsection (a) of this Code section shall be guilty of a misdemeanor.” (Code 1933, ß 92-3217, enacted by Ga.L.1937. p. 109, ß 17; Code 1933, ß 91A-9930, enacted by Ga.L.1978, p. 309, ß 2.)

[1] 4. We hold that an income tax is a debt-albeit a public debt, as opposed to a private, contractual debt. It is, however, a debt nonetheless. Therefore, we agree that ß 48-7-2(a){1) is unconstitutional on state law grounds to the extent that it authorizes imprisonment for mere nonpayment of income taxes. The state court did
not err in sustaining the demurrer to the accusation for nonpayment of state income taxes on this ground.

[2] 5. However, we perceive no constitutional inhibition against criminalizing the failure to make an income tax return. Consequently, the trial court should not have sustained the demurrer to that accusation on constitutional grounds. But, that accusation charges the appellee with failure to make a “timely return,” whereas the statute makes it unlawful merely to fail to make a return. We cannot say that the trial court erred in sustaining the demurrer because of that variance.

Judgment affirmed

All the Justices concur.

WELTNER, Justice, concurring.

I write only to suggest that, in my opinion, this case (and particularly Division 4) should not be considered as a proscription of all possible criminal sanctions for failure to pay taxes.

The provisions of OCGA ß 48-7-2(a)(1) make criminal the failure to pay income taxes-for any reason. Thus, included within its gambit is the citizen trapped within the toils of honest poverty, who, even through the exertion of the greatest of effort and good faith is unable to pay the tax.

A criminal provision drawn in terms or a “willful failure’’ to pay tax would be an entirely different matter. as it would catch the intentional tax evader without at the same time ensnaring the hapless pauper.

Ownership of real or personal property means among other things that you have the right to transfer, sell or make it as donation or gift. When you transfer personal property including cash, the ownership and transfer and is very hard to retract by you or others.

When you deed real estate to someone else, the deed is classified by the courts as inviolate unless incorrect or illegal. However, titles to real property can be revoked under a number of circumstances. If you apply for bankruptcy or unearned government benefits, you can be forced to retract the deed.

Transfers to avoid creditors

If you owe money at the time you sign the title to real estate, your creditors can cancel the deed unless it is to a third party who paid fair market value and was not aware of the real purpose of the change of title. The creditors can file suit to upset the deed within the six year statute of limitations. This is a common law real estate principal, often called the Statute of Elizabeth.

The IRS has a code section called “fraudulent conveyance” which like so many of their terms is misleading. The conveyance itself is not fraudulent but the intent may be improper. This is not a provision in criminal law but simply a section of the Internal Revenue Code.

These provisions exist in law and any insinuation by RBC or by anyone else that this does not exist would be wrong. If a creditor or the IRS is hounding you, you need to be aware of this common law principle, even if RBC does not spell it out in great detail. Also many people selling various products may give misleading information about the IRS code section.