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The New York State Bar Association's (NYSBA) House of Delegates, at its November 1, 1997, meeting, called for the commencement of litigation aimed at nullifying that portion of section 4734 of the Balanced Budget Act of 1997, which criminalizes advising the elderly about lawful transfers of assets in order to qualify for Medicaid. In addition, the House of Delegates called upon Congress to repeal this prohibition. According to State Bar President Joshua M. Pruzansky, "This draconian piece of legislation, which denies the right of counsel to citizens wishing to undertake a lawful act, strikes at the heart of free speech as well as at the attorney-client relationship. Medicaid planning, incidentally, is not a tool of the rich." Pruzansky continued, "The wealthy purchase long-term care insurance. The working middle-class utilizes these perfectly lawful transfers (already carrying long and severe civil penalty periods between the time of transfer and the time of application for Medicaid) to salvage what is usually a pitifully small sum representing a lifetime of hard productive work."

The present legislation, dubbed the "Granny's Advisor Goes to Jail Act," applies not only to lawyers, but to accountants, financial planners, doctors, social workers, and anyone who, for a fee, dispenses advice concerning the lawful divestiture of assets for Medicaid eligibility purposes. The previous so-called "Granny Goes to Jail Act" exposed the elderly to criminal penalties for Medicaid transfers and was part of the Health Insurance Portability and Accountability Act of 1996.

The NYSBA lent its voice to the uproar that followed the enactment of that legislation and led to its repeal. Congress then enacted the present law that shifted the threat of criminal liability to attorneys and others who counsel clients, thus denying the middle class elderly of advice relative to these entirely legal transfers.

"This Catch-22 legislation says to the 80 year old facing the onset of Alzheimer's Disease, 'sure you may make the lawful transfers, but no one can advise or help you.'" "Why shouldn't hard working, tax paying senior citizens be able to receive professional advice?" Pruzansky queried. A Congressional Research Service Report requested by some members of Congress prior to the enactment of this legislation warned that the then pending bill had significant constitutional defects. It was nonetheless enacted and hidden within the massive reforms contained in the Balanced Budget Act of 1997.

"There are serious First Amendment issues involved here," Pruzansky noted. "Our association is the voice of the practicing bar. We are ethically committed to providing quality advice when questioned by our clients. Accordingly, this legislation cannot stand. It is a dangerous precedent for other potential restrictions on the freedom of speech, the right to counsel, and the attorney-client relationship. It simply flies in the face of traditional American notions of basic justice and fair play."

The 60,000-member New York State Bar Association is the official statewide organization of lawyers in New York and the largest voluntary state bar association in the nation. *

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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