Advice for Assuming Control of Aging Parents Finances

Convincing senior parents to turn over management
of their bank accounts can be more challenging
than taking away their car keys. After all, Mom and Dad
have been role models on the importance of saving
money and investing. Their repeated advice: Pay your
bills as soon as they arrive, but check them for accuracy.
Anything left over after you pay your living expenses
goes into savings accounts or conservative investments.

Bounced Checks, Spendthrift Behavior
But now, you may see some serious red
flags in your parents’ fiscal behavior. They don’t
seem to be living up to their own sage advice.
The “every penny counts” mother mentions bounced
checks and overdraft fees. Her electricity was shut off
because she forgot to pay the bill for two months. A
review of her checkbook shows that she mistakenly
paid the same insurance bill twice.

The historically frugal father has uncharacteristically
paid $2,500 to sweepstakes entries over the last year
and written six $100 checks to a TV evangelist – the
one recently arrested for fraud. It’s scary, parents might
make a devastating financial move and lose everything.

Start With a Compromise

If your parents are reluctant to cede control,
suggest starting with the “unofficial” role of financial
monitor. The first step is to set up online account
monitoring. Gradually, the adult child can move into the
more official role of money manager as a parent gets
comfortable with sharing control.
A more formal step is to enlist the help of an estate
planning attorney to draft a Durable Financial Power
of Attorney. This legal document allows a loved one
to handle a person’s finances when he or she no
longer can. It can be written to go into effect
immediately or upon a doctor’s certification that the
parent is incapacitated.

Options for Outside Help

Another solution for some families is to hire a
licensed and bonded private fiduciary to pay the bills.
There is also a growing body of professionals who
help seniors without any family available to help, or
whose loved ones are overwhelmed by the prospect
of dealing with a senior’s financial problems.
Most large cities have a Council On Aging. They
have bonded representatives who visit the elderly at
home and are able to assist in financial matters.
There are a variety of strategies in handling a senior
parent’s finances.
As always, we hope this article has helped you. If you have
a specific case or concern, please contact Stephen Lacey to
set up an appointment.
To contact Stephen Lacey call
(321) 984-2700.
Visit our website: www.mjlandl.com

When Does Someone Need To Move From Assisted Living to Nursing Home Care?

A client’s 86-year-old mother has been in an assisted living community close to my home for the past two years. She has been declining slightly, almost imperceptibly, over the years. Most recently she fell while in her room and was unable to get up or reach out for the call cord. It wasn’t until later that day, when mom did not come to dinner, that a staff member finally found her on the floor. She had been there for hours.

Fortunately, she was only weak and did not suffer any serious injury but it was of major concern for both the loved one as well as the centers administrator.

When our client was called about the incident, he spoke in length with the administrator. She told him that it was “time” for mom to move to skilled care, that it was best for her own safety.

He was disheartened for mom. She never wanted to go into “one of those places”. She loves her apartment, her friends and was still mentally strong and even physically strong. He took the time to research nursing homes and spoke with her doctor. He said that with her age and the fact that she fell and was unable to find the strength to get up, that it was an indication that her health was declining. He argued with the doctor that she doesn’t seem forgetful and that this environment was so good for her mental and emotional state. Of course, he wanted her to be safe but how is she going to feel having to go into a nursing home? How in the world would he tell her? How could they afford 24/hour skilled care? Can this facility force her to move?

These concerns are complex and unfortunately common. In fact, these questions are exactly the same that you may have, when faced with a situation such as this.

You are asking all the right questions and several more are in order:

What kind of contractual agreement does your mother have with the retirement community? Many assisted living facilities have month to month agreements. Often, when the facility needs more care, they can ask the resident to leave.

If it is a continuing care retirement community (CCRC), it is often stipulated in the contractual agreement that a nurse’s assessment will determine the location and level of care. It is more difficult for staff to provide services all over a large community and easier if all the people needing care such as medication and continence management are in the same building or on the same floor.

One other consideration is to think about how your mother’s quality of life may be when in a different setting? This can be difficult to assess and often depends on both the individual and the setting. Consider the levels of attention she may receive in a nursing home: less privacy and perhaps more restrictions with less activity and social schedules. Also, the cognitive levels of the other residents may be less than your mother’s, therefore she may not be able to establish as many friendships.

There are some other options, should the assisted living facility and her doctor agree:

• The option of physical therapy and exercise. Can her strength be regained with the appropriate guidance and strength training?
• Outside assistance. Can you afford and will the facility allow an in-home care agency to provide assistance in her room? Are you or other family/friends able to intervene more and see her on a more frequent basis?

Give all of the above serious consideration. Unfortunately, because we live in a litigious society, the facility may have liability concerns. If you are confident that it is best for your mother to stay where she is, you may want to inquire if the facility has a negotiated risk agreement or a “hold harmless” contract, where your family would basically promise not to sue if there is an adverse event. This is an important decision and one that as the loved one needs to make carefully. Seeking the advice of an elder law attorney can help you review the emotional, financial and long term plans for your mother, while protecting both her, you and the future.

To learn more about emotional, financial and long term planning to protect your loved one, you and the future, please contact me today to schedule an appointment. You can also visit our website at www.mjlandl.com/

Creating An Estate Plan or Updating One

If you have a Will detailing your assets, make certain that you create it or update it to include not only the list of financial accounts but your user names and passwords, too!

Without log-in information, survivors usually need to go to court for legal authority to gain account access. The process varies from state to state; it doesn’t always require a lawyer but it always takes time. In addition, the process can involve the heir approaching the individual on line companies to heed her authority - a task that can be very frustrating. Many married couples today already face this issue when trying to get a simple balance on a credit card that is only in one spouse name. Companies today are reluctant to release any information at all, to avoid potential litigation for personal information violations.

Try contacting customer service and telling them, you’ve been appointed as your late brother’s administrator. Then ask them for his user ID and password. Eventually, of course, this type of problem is solved when you can reach a real human being who doesn’t act like this is the first out within every institution.

The process can be even more complicated if someone is incapacitated rather than dies. If there’s no Power of Attorney, then you MUST have a guardian or conservator appointed to have access to these records. Furthermore, some companies won’t release any information without a specific court order.

The time to gather all of this information can be lengthy and the costs associated with it, can be more than most families expect. It is definitely an area that can be avoided if you plan for it in your estate plan or be sure to update your existing plan with all of your user names and passwords.

For more information regarding estate planning and wills, please visit our website at www.mjlandl.com

No Estate Tax in 2010, But Much Uncertainty

Although we have known since 2001 that the federal estate tax was scheduled for a one-year repeal beginning on January 1, 2010, it’s hard to believe that the repeal has actually taken effect. Many experts were confident that Congress would have acted to prevent this from happening, perhaps by permanently extending the 2009 federal estate tax level and rates. Although the House had approved such a bill on December 3, 2009, the Senate failed to take similar action.

A brief review of the law will explain why this is so significant. The 2001 tax act signed into law by President George W. Bush was designed to provide significant tax relief. It gradually reduced the maximum federal estate tax (and generation-skipping transfer tax on transfers to grandchildren) from 55% to 45%. It also gradually increased the amount of property that could be passed free of federal estate tax (the “applicable exclusion amount”) from $675,000 per person in 2001 to $3.5 million per person in 2009. That means that a married couple who planned correctly could have passed up to $7 million free of federal estate tax had they both died in 2009.

Although there is no estate tax this year, in 2011, under the existing law, the estate tax rates are scheduled to revert to a top rate of 55% and the applicable exclusion amount will revert to $1 million. New York will continue to impose an estate tax on estates exceeding $1 million. It’s unclear whether Congress will take action this year and it’s uncertain what the laws will provide or whether they will be enacted retroactively. At least Senator Max Bauchus, Chairman of the Senate Finance Committee, recognizes that swift action is necessary to prevent “massive confusion.”

To compensate for the loss of estate tax revenue, the 2001 tax act increased the income tax by substantially changing the law with respect to capital gains on property included in a decedent’s estate. Before this year, a decedent’s assets received a step-up in basis to their fair market value at the date of death. Upon a subsequent sale of assets (such as real property or securities), the surviving spouse or heirs would not have to pay income tax on any of the growth that occurred during the decedent’s life. This resulted in an enormous tax savings for many heirs. However, in 2010, there is a limitation on the amount of property that can be “stepped up” in value at the time of death. Property that does not receive the step-up will be subject to tax on all increases in value from the date the decedent first acquired the property.

As you can imagine, this can affect many more people than even the change in the estate tax rates.

The repeal of the estate tax this year may significantly impact some married couples whose will or trust includes a formula to divide the decedent’s property into a credit shelter trust (also referred to as a “bypass” or “family” trust) and a marital trust, so as to maximize the amount that will pass free of estate tax. The trustee may be forced to fund more assets into the credit shelter trust than necessary, leaving the marital trust relatively empty. However, it is unclear how such formula clauses would be interpreted and how the credit shelter trust would be funded.

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Interesting Article

PROTECTION FOR DIGITAL ASSETS

Do heirs need to know your online passwords?

Monday, November 16, 2009 5:23 AM

BY TIM GRANT

PITTSBURGH POST-GAZETTE

After an American soldier died in Iraq five years ago, his father wanted to save copies of his son's e-mails sent through a Yahoo account. But the Internet company's privacy policy allowed access by only the soldier, triggering a legal fight.

The case highlights a growing discussion concerning what happens when the owner of a password-protected online account dies. To whom does the account belong? Can digital assets be passed on to heirs?

"If you use a computer, you need to have an estate plan that deals with digital assets and paperless transactions," said Lawrence H. Heller, an estate lawyer in Santa Monica, Calif. "People need to think about how to give their heirs access to information that may be stored online, but without the risk of unauthorized access."

Many important documents and personal treasures once kept in file cabinets and safe-deposit boxes are now stored electronically. Photographs, videos, music, letters and book manuscripts that might have monetary value -- or be priceless to loved ones -- often are saved exclusively on computer drives.

Legal disputes involving digital assets are relatively rare, but as the computer-literate population ages, after-death lawsuits are likely to become more common. "What we are trying to do is anticipate and avoid the problem," Heller said.

Until now, estate planning has primarily focused on tangible assets such as real estate, autos and jewelry and intangible assets such as stocks and bonds.

In exceptional cases, artists and musicians face issues involving copyright, trademark or patent law. But now, anyone who owns a computer could end up dealing with those issues, too.

"If I have created something in the digital universe, it's not free game. I may have a hard time protecting it, but I own it," said Steve Seel, an estate and trust lawyer in Pittsburgh.

Sometimes, heirs don't even know these things exist. As more companies move away from paper, online bank accounts, investment accounts, insurance polices, time shares and frequent-flier miles might become trickier to locate and access if someone dies without telling heirs of their existence.

According to a recent study by HSBC Direct, 49 percent of the online population conducts most of its banking via the Internet.

Meanwhile Internet blogs, as well as MySpace, e-mail and Facebook accounts, could be owned by an even greater percentage of the population.

In a growing number of cases, checking a deceased person's computer or other digital devices is becoming a crucial step in executing an estate.

Executors of estates often get special privileges giving them access to most assets. But privacy laws might prevent Internet companies from releasing username and password information to executors.

If a digital asset is stored on someone else's server, ownership becomes especially complicated. Yahoo mail, for example, has a provision in its user agreement that gives the account owner no right to transfer the ownership. All rights are terminated with the owner's death, and all content can be deleted.

The rules were tested in the high-profile case involving the father of Lance Cpl. Justin Ellsworth, a combat engineer with the Marine Corps who died in Iraq in November 2004. The two men were in constant e-mail contact during the deployment, and when the son died, the father wanted the e-mails from his son's account for sentimental reasons.

But the son had changed his password a few weeks before his death and had not shared it with his dad, who lives in Detroit. It took a five-month legal case to work out an arrangement to release copies of the e-mails.

Asset Protection Seminar

Presented by

Stephen J. Lacey, Esq.

McClelland, Jones, Lyons, Lacey & Williams, LLC

1901 S. Harbor City Blvd, Ste. 500 Melbourne, FL 32901

Workshop presented in the law office conference room

Wednesday, December 9th (10:30 am to noon)

There is no charge. But since space is limited, reservations are required. (So R.S.V.P. A.S.A.P.!)

Please call (321) 984-2700 for reservations or email slacey@mjlandl.com.

Visit us on the web at www.mjlandl.com for more information.

December Issue of SpaceCoast Business Magazine