Saturday, May 21, 2005

*YOU CAN'T TAKE IT WITH YOUDon't even consider it

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By Julie Weiss

How else could I be spending a beautiful May Saturday but sorting through a 56-year collection of life's possessions not my own? In the midst of liquidating an uncle's household, I write to you from unusually sunny southwest Michigan. My uncle is 91 years old and running out of money. The current month's bill for assisted living and a few sundry services is $3553.50. There's enough cash for about another 10 months expenses at the current rate. His care tab so far is about $140,000.

During his working life he was a stock boy at a corner grocery, assisted in my grandfather's fruit and vegetable brokerage, joined the Army Aircorps during WWII, worked for war contractor Remington Rand, afterwards went to work as a bus driver for the local public transportation company and then became the chauffeur for executives at a very large manufacturing company. His private sector pension for all those years of toil is $336.63 per month. His 'shoshul shecurity' is $1089.

He and my aunt were very careful with their money, as was typical for all members of that generation in my family. They bought a brand new, solid brick ranch-style house in 1957 for around $18,000., made double mortgage payments whenever they could (Both worked, she for the State of Michigan as a social worker.), kept the place in excellent repair, never wasted a dime that I know of, paid their bills immediately upon receipt, never used credit cards, paid green money cash if at all possible. You all know the type.

My aunt died in April, 2000. Her mother had left her a quantity of AT&T stock, which then split into -what? seven? - baby bells, which then issued their own stock. The lollapalooza of these spin-offs was Lucent Technologies ("We make the things that make communications work." Ah, the good old days.) With a tad of coaxing on my part, she sold all of it by January, 2000 - who says market timing doesn't work? - and despite the threat she'd always use when she was irked with my uncle, "I'll just leave my money to someone else," all the money was held jointly with him when she died. Good thing she did.

Our President (I'm in a really generous mood today) would have us believe that stock market investing is the answer to all our troubles. When I sold Lucent stock in 1998 for another aunt whose affairs I handled, I believe it was around $60.00 per share. Yesterday, a mere seven years later, it closed at $2.92. So much for widows and orphans.

Perhaps a mini review of AT&T's and Lucent's sordid recent history would be helpful. Common stock of both companies benefited from the tech bubble. Selling high, as I did, is as much dumb luck - unless you're Martha Stewart - as anything. Lucent was a growth stock and therefore inappropriate, so I got rid of it. AT&T was still paying out decent dividends, but CD investing still made sense, and CD principle isn't subject to market fluctuation.

Shortly after I sold, it was revealed to the world that Lucent was schmoozing the books. Pricewaterhouse Coopers, Lucent Technologies' auditor, wouldn't certify all Lucent's fret work. This rarely happens, because the Price Waterhouses of the world didn't get to be Big Eight/Six/Four accountants by dissing their biggest clients. So, the news had to be pretty terrible.

AT&T couldn't stand the heated competition for telecommunications services where once it had been the bench mark. But the real dirt - what probably cost investors as much as the Enron crater - was Jack Grubman, an analyst, trumpeting AT&T stock, despite troubling fundamentals, in order to win AT&T investment banking business for his firm, Salomon Smith Barney. The human interest angle to the story is that Jack Grubman's twins were under review for admission to one of New York City's elite pre-schools run by the 92nd Street Y. Jack's boss at parent company Citigroup, Sandy Weill, was on the board of the 92nd St Y pre-school. AT&T bit. The kids got in. See how winning on Wall Street works? Nothing to it! (editor's note: I once belonged to that Y. It is the Ritz of YMCAs. The founder was the same guy that started the CIA...guess why I was admitted there? Heh.)

What happens if my uncle outlives his money? Well, I can sell the house, which under Michigan law he'd be allowed to keep and still qualify for Medicaid nursing care. If I sell it, all the proceeds would have to be applied to his care before he'd qualify for Medicaid under current rules.

The place he's living now, a very pleasant and well-run facility, does not accept Medicaid for its nursing care unit, and Medicaid, in any event, does not pay for assisted living, only nursing care. So, he'd have to move, take potluck as far as availability of decent quarters and suffer a lesser quality of services. And, of course, I'd have to explain to him that the reason for the move was that I'd decided to keep the house to liquidate after his death so we'd get a bigger inheritance. Do you know how nasty old people can get over the teensiest imagined slight? And THIS, the mother of all insults: Please die, so we can get our hands on your money.

In February, The Wall Street Journal published a piece entitled "Medicaid for Millionaires" in its Review and Outlook section. Pretty provocative stuff, eh? At last the beleaguered millionaires get their Lucky Ducky moment? If we believe the twaddle in the editorial, they do. But we know better.

It's pretending to be a screed about amoral millionaires and their lawyers and financial planners.

"There's a whole "elderlaw" industry out there dedicated to the children of seniors who want to make sure that other taxpayers [ big assumption there, other taxpayers. I thought the ownership society was a place where millionaires and their children are never referred to as taxpayers], not they, pay for nursing-home care via Medicaid should mom or dad ever need it."

(snip)

"Such asset shifting may be morally questionable, but in most cases it is entirely legal." [ I'm glad they got that off their chest. Confession is good for the soul. As a rule the Wall Street journal loves asset shifting, such as selling the country off to Canadian mining companies for two cents an acre and using your tax dollars to fund Dick Cheney's deferred compensation payments from Halliburton.]

(snip)

"Medicaid "planners" often counsel well-to-do clients to save enough money to pay for a year of care at a private, high-quality nursing home, which under federal law can't kick you out if you then switch over to Medicaid." (from The Wall Street Journal, 2/24/05; Page A14)

Oh, enough of this. I have way more experienced in schlepping people into and out of nursing homes than anyone at the Wall Street Journal, apparently. The "high-quality" nursing homes have lawyers, too, and require prospective residents to file a financial statement showing that the resident or guarantor has enough ready assets to pay for three years in their high-falutin' place. So much for that clever financial planning tool.

The editorial goes on to recommend, among other things that people like my uncle be required to take out a reverse mortgage - the Chinese connection is never far away these days, is it? - if they want to keep their house, or allowing a state to claim title to a senior's assets, giving him a zero interest loan against Medicaid payments and offering tiered services: those choosing less expensive services would retain more residue for their heirs. Isn't that cool? There are some pretty substantial ice floes on Lake Michigan in the winter. Wonder what the charge would be for that?

I have only my sense of humor and plucky pioneer spirit to keep me company. The bills pile up. The government gets quirkier and quirkier. And this situation is one of the fortunate ones.

At least he has something to sell!

(Editor's note: in Medieval times, the Church and King would take the same amount from everyone if they could; the best bed, the best horse etc. So the longer you lived, the more stuff you could accumulate and the more you could retain after the others were done taking stuff. Today, it is the reverse. How interesting is that?)
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