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By Mitchell Sorkin, CPA

Your client phones and informs you that his mother, who lives in a Florida condo on Social Security, and has $200,000 in assets, just had an operation, but will not be able to care for herself. What should he do?

As our population gets older, this question will pop up time and time again. How do we, as accountants, who are the advisors most familiar with client's affairs, properly advise them?

The problem is that when clients move to retirement areas, it becomes difficult to administer their affairs. Proper planning should be done before the retirement move. However, few people really do this.

In the above scenario, what should have been done leisurely, must now be done rapidly.

Introducing the Geriatric Care Manager

A new profession is popping up which is called the Geriatric Care Manager (GAM). These people are usually board certified social workers. They have experience with the elderly in providing for their needs. They usually have nursing home experience as social workers, directors, or administrators.

A GAM can be contacted and employed to do all the legwork without the necessity of hopping on a plane. They can evaluate the needs of the patient, determine progress, and prescribe a course of action. They can be instrumental in obtaining health­care proxies and living wills. These legal documents direct what and how medical treatment should be administered and who will make these decisions.

GAMs can also help in determining the type of facility that's best under the circumstances and in choosing one. They can explain what Medicare covers, and how to qualify for Medicaid. For terminal illnesses they can help find a hospice if that approach is desired.

The Role of the Elder Care Attorney

The elder care attorney becomes an extremely important person. He is aware of all current laws and the rights of the patients. He can review legal documents, identify missing documents, and determine the special needs in the domiciled state. He can assure that a proper power of attorney is in place.

The elder care attorney can inform you of the patient's rights when in a nursing home and help in the reallocation of assets to qualify for Medicaid.

Is the Doctor in?

The doctor is, of course, very important to properly diagnose a patient's condition and promote longevity. She is the person who will suggest treatment, prescribe drugs, and authorize discharge from the hospital. She also is the person who must request a hospice and, together with relatives, determine whether or not to resuscitate or use artificial life sustaining equipment. It is important to note that the attending doctor in the hospital will probably not be the same doctor in the nursing home. This may present a major problem in communicating and in treatment.

The Role of the Caretaker

The caretaker (usually the patient's relative) is the one that must implement the course of action and follow it through. There will be many opinions, options, falsehoods, and truths, and the caretaker must make the appropriate decisions. The checklist in the Exhibit on page 69 will help you make those decisions. *


By David Langer, FCA, ASA, EA, consulting actuary, president­David Langer Co., Inc.

There are currently about 7.5 million persons receiving $62 billion in survivor insurance benefits under Social Security. CPAs therefore need to be aware of the magnitude of these benefits when assisting clients and their families with personal financial planning. The following is a brief explanation of survivors insurance covering certain key aspects.

Example of Survivors Insurance Benefits

Consider an employee age 45 with a wife age 42 and two children, 15 (Child 1) and 14 (Child 2). If the employee died on January 1, 1996 and had always earned more than the taxable wage base, the survivors insurance benefits would be equal to those in the Exhibit, assuming 3% cost-of-living increases:

The actuarial lump sum value as of January 1, 1996 for these benefits is approximately $211,000 (6% interest, 3% cost-of-living, GA-83 Mortality Table). All birthdays are assumed to be on January 1.

Examples of Beneficiaries­Benefit Rates

* Widow(er), age 60 or over; 50 to 59 if disabled. 100% of primary insurance amount (PIA), subject to reduction for early commencement.
* Widow(er) any age with eligible child below age 16. 75% of PIA.
* Child below age 18; in elementary school: college; any age if disabled before 22.
* Dependent parent age 62 or over. 82.5% of PIA; two parents, 150%.
* Lump sum. $255 is payable to surviving spouse if lived with deceased worker.


* There are fully and currently insured worker requirements for benefits.
* The maximum family benefit ranges from 150% to 188% of the PIA.
* The earning test applies to each beneficiary, but only the benefit of the beneficiary exceeding the earnings limit is affected.

An updated summary of Social Security benefits is available annually from CCH Incorporated, among others. The CCH booklet contains the key provisions of Old-Age, Survivors, and Disability Insurance (and Medicare). Benefit tables enable a financial planner to estimate future benefits, assuming no future changes in Social Security or current wages. The booklets cost $5 each for up to four copies scaling down to about $1.50 for 1,000 copies. *


Milton Miller, CPA

Contributing Editors:
Andrew B. Blackman, CFP, CPA\PFS
Shapiro & Lobel LLP

David Kahn, CPA
Goldstein, Golub, Kessler & Co, PC


The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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