You Get What You Pay For- A Free Service?


Written on June 29, 2015 – 6:12 am | by Audrey Miller

I have written about innovative organizations and programs that will better the lives of seniors and serve them well. At the other end of the spectrum I feel I have the same responsibility to share concerns regarding ‘free’ elder care services and the fine print which the reader likely doesn’t see.

There is an American franchise chain that has come to Canada advertising themselves as a free service to “find & compare senior housing options, see senior housing communities in our area all in one place; compare costs, amenities and services; get free, customized search results from our proprietary directory. ”

The New York Times wrote an article title A Helping Hand, Paid on Commission  which summarizes some of the pitfalls of why it is not a free service but one that is paid solely by the places that families are referred to. The Times article continues:  “clients…..will be referred only to facilities that have signed contracts and agreed to pay a proportion of the first month’s rent when a resident moves in”. A few years ago the Seattle Times reported that in Washington, this company was paid approximately $3,500 by the residence for a placement. Some states have been so concerned about ‘proliferating referral companies’ that a coalition introduced legislation to require better disclosure of fees and commissions and have placement companies brought under the state’s consumer protection act.

Helping a family make the decision to ‘stay or go’ is not to be taken lightly. It is a life changing event and leaving the family home after 50 plus is not an easy decision. The choice setting needs to be one that addresses the senior’s needs both at the current time and in the future, so that the setting is appropriate for the immediate and longer time; ideally where they can ‘age in place’. Seeking professional guidance on such an important decision makes sense; the key word here is professional. Check credentials; geriatric care managers and registered social workers follow a code of ethics and referral fees are against the code.

You get what you pay for. If you pay nothing, don’t be surprized if you get nothing in return. We may need some protection in Canada as well.

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    Caught by Unintended Consequences


    Written on June 26, 2015 – 8:50 am | by Jasmine Sweatman

    Last week we spoke about domestic contracts and will drafting. This week we shift to situations of incapacity – where the spouse with the support obligations becomes incapable.  As we know, once an individual becomes incapable of managing their own property, his or her attorney or guardian of property will step in.  Section 37 of the Substitute Decisions Act is a useful but not often used tool for the capable spouse to seek support payments from the incapable spouse’s property.

    Under section 37 the attorney/guardian of property is to make those expenditures which are “reasonably necessary” for the person’s support, education and care for both the incapable person and his or her dependants.  Factors taken into consideration are the value of the assets and the accustomed standard of living of both the person and his/her dependants.

    The leading decision is Cherry v. Cherry, ONSC 4574, in which Maria sought support (including interim) pursuant to section 37 from her incapable husband, Alan’s guardian for property, Clayton.  Maria sought $10,000 a month in support which Clayton opposed as being excessive.

    Although Alan had been successful with extensive property holdings, it was early:  Clayton was still in the process of ascertaining the extent of Alan’s holdings and still quantifying Alan’s expected care costs.  Alan’s capital assets were in the process of being realized to pay for his own ongoing expenses and at this early time his expenses exceeded his income. In response, Clayton (with Alan’s approval) suggested monthly payments of $4,880.71 which would cover Maria’s condominium expenses, insurance, phone, cable, storage and car expenses.

    Justice Brown examined the uncertainties surrounding Alan’s assets. He looked at whether the assets were and would remain sufficient to provide for Alan’s expenses.  He confirmed the primary consideration was the “reasonably necessary for Alan’s own support, education and care”.  In looking at section 37 and its broad range Alan’s support, education and care came “first” – especially in this case given the unknown long term level of expenditures needed for Alan’s care, the unascertained extent of his assets and liabilities, and the question of the availability of Alan’s assets to provide for his own needs in light of Maria’s pending motion for an interim preservation order and support claims in the family law litigation.  Putting it all together in this case Justice Brown accepted the suggested monthly payment of $4,880.71.

    The case resonates with us. It makes public policy sense. It ensures the vulnerable in our society are protected.  But what does this mean for Maria?  Something she had nothing to do with or control over – the incapacity and health of her husband – led to her “unintended separation” from him and put her in a whole separate regime where section 37 played the center role.

    Until next time,

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      Ethical Investing in Trusts (part I)


      Written on June 25, 2015 – 7:56 am | by Paul Fensom

      It seems like every month, a Charity or a pension plan is making an announcement about how they have changed their investment mandate to incorporate ‘Socially Responsible Investing’ (“SRI”) standards. There is no question we are witnessing a real growth in these types of investment mandates. In fact, a 2015 report prepared by the Responsible Investment Association (RIA) and Royal Bank of Canada indicated that Canadian assets under management using responsible investing strategies has increased from $600 billion in 2011 to over $1 trillion.

      I would like to take the opportunity to use my next couple of blogs to explore SRI investing in the context of estate and trust administration.

      The principal SRI strategies that I will refer to include;

       
      • Negative screening: In addition to the usual investment goals, a negative screen will eliminate certain types of investments. For example an investor can choose to eliminate investments in tobacco companies, gambling, alcohol or companies with a negative impact on the environment

      • Positive screening: A positive screen generally makes use of a scoring system to rank the best of class within any industry. The scoring system focuses on matters such as Board Governance, the companies’ environmental footprint and its social or human relations policies.

      • Direct or Impact Investing: active investment of capital in business and funds that generate positive social and/or environmental impacts, as well as financial returns.

      A Testator or Settlor can expressly permit or mandate investment choices. However, in my experience this is rarely done and, when it is, the Testator or Settlor will mandate a form of negative screen. The interesting aspect of a negative screen is that it limits the choice of investments and could potentially adversely impact the financial return. I believe this is the principal reason why we don’t see many trusts with negative screens. If the main reason for the trust being established is to generate a financial benefit then why potentially direct a mandate that possibly limits those returns.

      In my next Blog I will discuss the growing use of positive screens as an SRI investment strategy and the growing body of evidence that suggests this strategy does not limit financial returns. I will also draw attention to the legal cases that govern how trustees should behave when there is no express language and the Trustees are faced with the question about incorporating an SRI strategy.

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