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socrateaser
socrateaser, Lawyer
Category: Family Law
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Experience:  Retired (mostly)
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Hello, My mother in law is 78 years old. She has been in

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Hello,

My mother in law is 78 years old. She has been in a registered domestic partnership with another woman for many years (decades I think). It was a very co-dependent relationship with lots of financial issues along the way. The partner, let's call her Mary, is a very mentally ill woman and over the years has committed financial crimes. She defrauded activists with a charity where she stole all the money...they already reported her. She took a $30k loan in my MIL's name for a grad plus loan (so MIL is co-signer) without my MIL's knowledge: we only found out in April when Mary defaulted and Sallie Mae came looking for payment from the co-signer, MIL.

It was during this time that my husband and I realized how much MIL is losing her ability to cope with finances in general. She basically lives in a fantasy world re: money, and is on Prozac for life long depression..her basic personality is to ignore all problems until it's too late. So in April, MIL and her son (my hub) went to a trust attorney, created a revocable trust, and husband became Attorney in Fact and Trustee. She has no assets other than 1/3 interest in 5 acres of vacant land near Palm Desert...something I'm sure the IRS will come after some day due to tax liens.

We filed a police report and completed a fraud affidavit with Sallie Mae. In letters, they are intimating that is in fact my MIL who is committing the fraud because she did not disclose the registered domestic partnership. MIL wanted it dissolved when they "broke up" two years ago but again, ignored, delayed, did nothing.

Total soap opera: Mary is dying of stage 4 cancer. MIL is now giving her money for caregiving (Mary ran away to NY after the fraud charges here in California were filed by the activist group). When MIL is alone with us, she says she is terrified of Mary and that she keeps getting swindled by her, but the reality is Mary is a pro grifter who has total emotional abusive control over my MIL and MIL keeps doing what's she's told by this "svengali". As Atty in Fact, her son is going to take away her checkbook and access to transferring money to Mary this week. Yesterday MIL transferred $900 in an account of Mary's.

This is so complicated. Mary will die with a lot of debt that MIL will be responsible for as a domestic partner. Are there complications with son as POA dissolving the partnership now at this late date when there is clear evidence MIL gives Mary money after filing fraud charges against her? Will the fraud charge backfire if Sallie Mae finds out money has been given to Mary before and after the fraud charge? (I don't know if the research is that thorough.) Do we have to declare MIL incompetent to make any progress in any direction?

It should also be noted that years ago, Mary talked MIL into writing off a trip to France and calling it "research" (they are both PhD students). My MIL has no wrong intent, just is obviously deluded and is easily manipulated. MIL now has $11k in IRS tax liens to pay after being audited (it was much higher but we made her use her payout on deferred comp...she only retired from her full time/career job this past March), and believes that if she gives her money to Mary, then she won't have money to make the terms of an Offer in Compromise. We tell her emphatically that she can't play games like that.

My husband is now so afraid that because he is Atty in Fact, that he can be liable for her mistakes and actions after the POA was triggered. We already know she will pass some day with nothing...there's nothing for the IRS to take. But her credit will suffer, and the collectors will of course keep coming. Do we need a lawyer to protect her? My husband as Atty in Fact? What is the best way to tell our story to someone without accidentally doing something that would get MIL in more trouble? Do you think there will be problems trying to a) settle with the IRS; b) dissolving the domestic partnership (we will file, Mary won't show or respond, and 6 or 12 mos later according to what I know, the court will enter in a judgment for dissolution); c) does my husband need to do more to control MIL's finances to stay out of trouble himself?

We want to follow letter of law, will hire an Elder Atty if needed, but we're swimming in confusion and if you can provide guidance, steps, any advice or reassurance we're not all going to be paying Mary's bills for the rest of our lives, that would be so great. We just need to know where to start and what to be aware of. Thank you so much, Liz
Submitted: 10 months ago.
Category: Family Law
Expert:  socrateaser replied 10 months ago.
Hello,

My condolences on your difficulties. Caring for a parent who has lost their mental faculties is a terrible burden. I've been there myself. You asked:

Are there complications with son as POA dissolving the partnership now at this late date when there is clear evidence MIL gives Mary money after filing fraud charges against her?

A: The difficulty is that only the actual domestic partner can use the California Secretary of State "notice" form to terminate a registered domestic partnership. Your husband would have to petition the Superior Court for a termination order, and then ask the court to appoint him as guardian ad litem for the action -- and he would have to hire a lawyer to represent his mother as part of the process. So, the difficulty is that it would be a costly exercise.

The money issue, in my opinion is irrelevant. What matters is whether or not your MIL is proved to be mentally incapacitated, such that all of these actions she takes are subject to being set aside as the product of undue influence or incapacity. However, the termination of the partnership will not stop SallieMae from pursuing your MIL to collect the debt. Though, if she has no assets, then that really doesn't matter -- because there's nothing to collect on anyway.

Will the fraud charge backfire if Sallie Mae finds out money has been given to Mary before and after the fraud charge? (I don't know if the research is that thorough.) Do we have to declare MIL incompetent to make any progress in any direction?

A: Probably yes. Frankly, your better course of action may be to contact county Adult Protective Services (APS) and see if they will take over your MIL's care and appoint a public guardian. This wouldn't prevent you from visiting your MIL -- it would just create conditions where the government would bear the cost of MIL's legal expenses, and she would be declared legally incapacitated (assuming that she actually is mentally unsound).

It should also be noted that years ago, Mary talked MIL into writing off a trip to France and calling it "research" (they are both PhD students). My MIL has no wrong intent, just is obviously deluded and is easily manipulated. MIL now has $11k in IRS tax liens to pay after being audited (it was much higher but we made her use her payout on deferred comp...she only retired from her full time/career job this past March), and believes that if she gives her money to Mary, then she won't have money to make the terms of an Offer in Compromise. We tell her emphatically that she can't play games like that.

A: From what you describe, your MIL can play games like that -- because the IRS is not going to through an elderly woman in federal prison. Uncle Sam will simply put her on the uncollectible list and that will be the end of the matter.

My husband is now so afraid that because he is Atty in Fact, that he can be liable for her mistakes and actions after the POA was triggered.

A: Your husband is only liable if he signs on behalf of his mother. Once again, APS is probably a better route for all of this.

We already know she will pass some day with nothing...there's nothing for the IRS to take. But her credit will suffer, and the collectors will of course keep coming. Do we need a lawyer to protect her? My husband as Atty in Fact? What is the best way to tell our story to someone without accidentally doing something that would get MIL in more trouble?

A: In your question you stated that MIL has no assets. Yet, she apparently has an occasional $900 to burn. If this is simply Social Security income, then it's not enough to get the IRS excited -- or SallieMae. They may administratively garnish her income -- regardless, if the county comes in and takes over, that won't matter, because the county will be paying for your MIL's care, and using her Social Security Income to pay for that care.

Do you think there will be problems trying to a) settle with the IRS; b) dissolving the domestic partnership (we will file, Mary won't show or respond, and 6 or 12 mos later according to what I know, the court will enter in a judgment for dissolution); c) does my husband need to do more to control MIL's finances to stay out of trouble himself?

A: The power of attorney that your husband has will not satisfy the IRS. It requires a separate power of attorney signed by your MIL. Assuming she signs, then he can represent his mother and try to settle the debt. That won't make him liable for the debt. Dissolving the registered domestic partnership won't improve MIL's bargaining position with the IRS. All it would do is prevent a third party creditor of the domestic parter from coming back, looking for money from MIL.

Based upon everything you've described, I still think that APS is the best option, if MIL is incapable of caring for herself. But, your husband can try to negotiate some of these issues away. Just expect it to cost money and take time -- because it will.

Please let me know if I can be of further assistance.

Hope this helps.
socrateaser, Lawyer
Category: Family Law
Satisfied Customers: 33377
Experience: Retired (mostly)
socrateaser and 7 other Family Law Specialists are ready to help you
Customer: replied 10 months ago.


Hi, I rated you but also requested a follow up in a previous reply. Just wanted to make sure you received it and can still answer. I can add a bonus in if not...really want to finish this conversation :)


 


thanks, ee

Expert:  socrateaser replied 10 months ago.
Hello again,

I never received any follow-up questions from you -- evidently they were lost in the system. Feel free to ask and I'll answer...though, I'll be off line until later this evening, so please be patient -- I will get back to you.

Thanks in advance for your continued confidence.
Customer: replied 10 months ago.

Thank you.


 


I'll just cut to the chase, I had in the reply explained her income:


 


1. $790/mo social security


2. $1914 net mo pension


3. MIL does adjunct teaching: never a guarantee of an offer for classes the next semester, but she was hired this semester, and over the course of 2013 will earned about $22k ($18k or so net)


 


She only retired from her full time job in March (thus the new pension, her wages in prior years were obviously higher), but I always thought that she would not qualify for reduced payments with Sallie Mae with $4200/mo income (although her loans kick out of deferment this month while she is testing [and failing her comps] to get into the dissertation phase. Her monthly payment will be $1500...she never thought it through about how she would ever pay this amount. She's incurred $200k in student loans through ARGOSY and while I'm furious they would encourage her to keep incurring debt at her age, I guess they can't discriminate either. She thinks taking comps means the loans go back into deferment despite us telling her 100x only if she passes and is accepted into dissertation phase. Honestly, she is not going to pass. The upshot to the $1500 pay means less to the IRS. This is just to color in my take away from your initial response:


 


But if I'm reading you right...ethical problems aside...she could in theory not communicate anymore with the IRS or Sallie Mae once she defaults, and no one will come after her if she has nothing to take? Her credit will be destroyed, the dissolution of domestic partnership will not matter if she's saddled with Mary's debt upon Mary's death (BUT ONLY IF WE HAVE HER DECLARED INCOMPETENT, is that right?), but she can just go on living life, and so long as my husband did not sign the fraud affidavit, and Sallie Mae determines by whatever standard that MIL defrauded them instead of Mary because of the cash given to Mary after the fact, then my husband is not liable for her errors, omissions, anything after the POA was triggered, is that right?


 


Can/will Sallie Mae, assuming she defaults, garnish her pension? If she dies before the pension benefit is exhausted, my husband is the beneficiary: is he legally obligated to settle her debts with it? The benefit is not listed in her trust...in fact, she has not vested any assets to it yet...another thing she promised to do and never did.


 


Can the IRS garnish her pension? Think they would over $11k?


 


MIL will go suicidal if we try to declare her incompetent. She would definitely lose the ability to teach. We want her to stop working completely, but feel like we can't force it without strong arming her. She lives on her own, has $2200 in monthly living expenses between rent, meds, food, car payment....she always spends more...she had $900 to throw around, but she's depleted what little savings she had over visiting Mary in NY for a month. We are requiring that she to take a driving test this month....maybe we would end up selling her car but not before the semester is over.


 


But our thought was that when the "other shoe" finally dropped and she couldn't live alone, she'd move in with us...we really don't want to put her through the nursing home system. She can't afford assisted living, and doesn't really need it right now...she can live on her own, she just can't handle money anymore. We're in the "grey" area. She's also a compulsive liar, so I'm afraid a competence hearing would be gut wrenching. Do you still suggest going to adult services knowing her current ability to live alone?


 


I will still talk to Adult Services to affirm our position and options at your suggestion, but I kind of got the sense from your initial reply that other than her not agreeing to live with us when we feel she's ready, she really can ignore everything else, including the debt, let her credit be ruined, and live what little life she has left. Am I reading you right?


 


The only thing left over would be to see what Sallie Mae does about the fraud affidavit. Do you think they would do more than just reaffirm the debt that she won't pay on regardless? Will they try to prosecute? BotXXX XXne: do we need to see her this week and said you should have never given Mary that $900...now Sallie Mae is going to call you the fraudster, and the only way to get you out of trouble is to declare you incompetent?


 


Yes, this last question is the biggie, and second, who, if anyone, can garnish her pension?


 


Thanks so much, ee


 


 

Expert:  socrateaser replied 10 months ago.
Okay, I'm back. You asked:

She only retired from her full time job in March (thus the new pension, her wages in prior years were obviously higher), but I always thought that she would not qualify for reduced payments with Sallie Mae with $4200/mo income (although her loans kick out of deferment this month while she is testing [and failing her comps] to get into the dissertation phase. Her monthly payment will be $1500...she never thought it through about how she would ever pay this amount. She's incurred $200k in student loans through ARGOSY and while I'm furious they would encourage her to keep incurring debt at her age, I guess they can't discriminate either. She thinks taking comps means the loans go back into deferment despite us telling her 100x only if she passes and is accepted into dissertation phase. Honestly, she is not going to pass. The upshot to the $1500 pay means less to the IRS. This is just to color in my take away from your initial response:


But if I'm reading you right...ethical problems aside...she could in theory not communicate anymore with the IRS or Sallie Mae once she defaults, and no one will come after her if she has nothing to take? Her credit will be destroyed, the dissolution of domestic partnership will not matter if she's saddled with Mary's debt upon Mary's death (BUT ONLY IF WE HAVE HER DECLARED INCOMPETENT, is that right?), but she can just go on living life, and so long as my husband did not sign the fraud affidavit, and Sallie Mae determines by whatever standard that MIL defrauded them instead of Mary because of the cash given to Mary after the fact, then my husband is not liable for her errors, omissions, anything after the POA was triggered, is that right?


A: I regret that I must revise my original answer. I had an image from your first question that MIL was a mentally frail elder woman living off of Social Security and being taken advantage of by her domestic partner.

 

Your information now suggests that your MIL not having serious mental health or financial challenges, but is, instead, someone who simply operates on impulse when it comes to money issues, and consequently, MIL is in "deep doodoo."

Can/will Sallie Mae, assuming she defaults, garnish her pension? If she dies before the pension benefit is exhausted, my husband is the beneficiary: is he legally obligated to settle her debts with it? The benefit is not listed in her trust...in fact, she has not vested any assets to it yet...another thing she promised to do and never did.


A:Sallie Mae can levy wages (15% after tax), seize tax refunds, and administratively offset Social Security payments (15%). SLM would have to obtain a court order to seize private pension benefits, but it could do so.

 

Can the IRS garnish her pension? Think they would over $11k?

A: The IRS has nearly unlimited levy authority. IRA generally won't take more than 15%, of a person's income.

MIL will go suicidal if we try to declare her incompetent. She would definitely lose the ability to teach. We want her to stop working completely, but feel like we can't force it without strong arming her. She lives on her own, has $2200 in monthly living expenses between rent, meds, food, car payment....she always spends more...she had $900 to throw around, but she's depleted what little savings she had over visiting Mary in NY for a month. We are requiring that she to take a driving test this month....maybe we would end up selling her car but not before the semester is over.


But our thought was that when the "other shoe" finally dropped and she couldn't live alone, she'd move in with us...we really don't want to put her through the nursing home system. She can't afford assisted living, and doesn't really need it right now...she can live on her own, she just can't handle money anymore. We're in the "grey" area. She's also a compulsive liar, so I'm afraid a competence hearing would be gut wrenching. Do you still suggest going to adult services knowing her current ability to live alone?


A: No. What you are describing is a woman who is just "living large," and who does not know how to manage money.


I will still talk to Adult Services to affirm our position and options at your suggestion, but I kind of got the sense from your initial reply that other than her not agreeing to live with us when we feel she's ready, she really can ignore everything else, including the debt, let her credit be ruined, and live what little life she has left. Am I reading you right?


A: My message has radically changed, because my impression is entirely different now. Your MIL needs a wakeup call. Someone needs to explain that 2 + 2 = 4, not 200,000. Since she has income, the IRS will want installment payments. IRS general rule is based on how much it believes it can collect over the next 60 months after you make an offer in compromise. The IRS website has an OIC calculator. Try it and see if IRS will accept an OIC. It probably won't, but you can run the numbers and see. Otherwise, your MIL will have to do an installment plan.

 

The only thing left over would be to see what Sallie Mae does about the fraud affidavit. Do you think they would do more than just reaffirm the debt that she won't pay on regardless? Will they try to prosecute? BotXXX XXne: do we need to see her this week and said you should have never given Mary that $900...now Sallie Mae is going to call you the fraudster, and the only way to get you out of trouble is to declare you incompetent?

A: MIL may want to talk to a bankruptcy attorney with experience obtaining discharges for student loans. It's not likely that she will ever be able to repay $200,000 in loans at age 78, so maybe she can get an undue hardship discharge. That would really solve her problems -- but, it's a very difficult type of discharge to obtain, so you need a lawyer who has experience obtaining a student loan discharge.

Yes, this last question is the biggie, and second, who, if anyone, can garnish her pension?

 

A: IRS. Sallie Mae, also, if it wants to go through the litigation hoops. I doubt that it does, because it's expensive.

 

Hope this helps.

 

Customer: replied 10 months ago.


Thank you so much. We concur on all points. Thank you for validating our opinions of what needs to be done. So much great info, thanks again!

Expert:  socrateaser replied 10 months ago.
You're welcome and good luck.

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