Monday, August 25, 2014
Power of attorney has always been an inexpensive way to give someone the right to act on another person’s behalf. Yet, the power is not absolute and when it fails, the consequences can be disastrous.
For Christine, a 62-year-old woman in Connecticut, experienced the powerlessness power of attorney embodies. After sorting out their parents’ estate, Christine’s older brother promised he would set his own affairs in order so they would not face the same messy process. He drafted a will, titled accounts to transfer to them on death, and drew up a power of attorney should he become incapacitated. Years later, when Christine’s brother began suffering from severe dementia, he needed indefinite care. Christine knew there would be no problem paying for this since he had done well financially. However, when she looked at the power of attorney, she noticed he used her legal first name, Carol, which she had abandoned. It was not until she went to bank after bank explaining the situation, was she denied access to his accounts to pay for his care. “They said ‘Go get your marriage certificate’ . . . . I had my birth certificate, passports, a driver’s license. But they did not have the name my brother had on that form.”
Estate planners say that Christine’s experience is not uncommon. Banks routinely try to deny the appointed person any right to have access to accounts. One valid reason for banks’ hesitancy is because a power of attorney can be used to commit elder fraud. Banks have been sued for giving access to accounts without properly checking the person named in the power of attorney.
A better option all around might be a revocable trust. It allows people to put their property in a trust while they are still alive, using it as they normally would. “Banks are more comfortable with this because you’re funding it now while you’re competent.” Provisions can also be written into revocable trust documents that allow future trustees to put in assets that were forgotten when the trust was created.
See Paul Sullivan, Power of Attorney Is Not Always a Solution, The New York Times, Aug. 22, 2014.
Special thanks to Matthew Bogin (Law Offices of Matthew B. Bogin) for bringing this article to my attention.
August 25, 2014 in Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)
For many individuals, power of attorney is an inexpensive estate planning tool that allows for a trusted loved one to be able to take a decision making role if the person becomes unable to do so for themselves. However, the fear of elder abuse being committed through a power of attorney has caused many banks to create detailed rules for honoring the designation of power of attorney. Problems can occur when individuals go to a bank to enforce a power of attorney and find out for the first time that the bank requires the document to be on specific paper or the drafter used a variation of their name that does not match their official forms of identification. One possible solution is a revocable trust, which banks are more comfortable with.
See Paul Sullivan, Power of Attorney is Not Always a Solution, The New York Times, Aug. 22, 2014.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) and Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
The Federal Deposit Insurance Corporation (FDIC) and Consumer Financial Protection Bureau (CFPB) have made available a resource guide entitled Money Smart for Older Adults. The guide provides information for financial planning and, avoiding and addressing elder financial exploitation. Provided below is the introduction to the guide:
With over 50 million Americans aged 62 and older1, Older Adults are prime targets for financial exploitation both by persons they know and trust and by strangers. Financial exploitation has been called “the crime of the 21st century” with one study suggesting that older Americans lost at least $2.9 billion to financial exploitation by a broad spectrum of perpetrators in 2010.2
A key factor in some cases of elder financial exploitation is mild cognitive impairment which can diminish an older adult’s ability to make sound financial decisions.
This epidemic is under the radar. The cases tend to be very complex and can be difficult to investigate and prosecute. Elders who lose their life savings usually have little or no opportunity to regain what they have lost. Elder financial abuse can result in the loss of the ability to live independently; decline in health; broken trust, and fractured families.
Awareness and prevention is the first step. Planning ahead for financial wellbeing and the possibility of diminished financial capacity is critical. Reporting and early intervention that results in loss prevention is imperative.
Money Smart for Older Adults is designed to provide you with information and tips to help prevent common frauds, scams and other types of elder financial exploitation in your community. Please share this information as appropriate.
Friday, August 22, 2014
The Consumer Financial Protection Bureau has released a series of informative guides entitled, Managing Someone Else’s Money. Here is a description of the series from the CFPB website:
Millions of Americans are managing money or property for a loved one who is unable to pay bills or make financial decisions. This can be very overwhelming. But, it’s also a great opportunity to help someone you care about, and protect them from scams and fraud.
We are releasing four easy-to-understand booklets to help financial caregivers. The Managing Someone Else’s Money guides are for agents under powers of attorney, court-appointed guardians, trustees, and government fiduciaries (Social Security representative payees and VA fiduciaries.)
The guides help you to be a financial caregiver in three ways:
- They walk you through your duties.
- They tell you how to watch out for scams and financial exploitation, and what to do if your loved one is a victim.
- They tell you where you can go for help.
August 22, 2014 in Books, Disability Planning - Property Management, Estate Planning - Generally, Guardianship, Non-Probate Assets, Professional Responsibility, Resource Links, Trusts | Permalink | Comments (0) | TrackBack (0)
Thursday, August 21, 2014
A comprehensive on-line estate planning toolkit service called Final Roadmap can assist with various estate planning needs, including storing and sharing estate planning documents. Membership to the site is available with a one-time purchase. Here is a description of the toolkit from the website:
Misunderstanding and confusion result from neglecting to plan ahead, leaving a painful and costly legacy to those you care about most. Final Roadmap was created to make end of life planning manageable and affordable. The Toolkit allows you to create, compile and safely store documents and directives – with the option to share the documents you select, with the individuals you choose, in the equivalent of an electronic vault.
August 21, 2014 in Death Event Planning, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Resource Links | Permalink | Comments (0) | TrackBack (0)
Wednesday, August 20, 2014
Lara Zeigler (Fiduciary Counsel) recently published an article entitled,The Donald Sterling Case and Mental Capacity, Of Minds and Money, Summer 2014. Provided below is the introduction to the article:
Rochelle (“Shelly”) Sterling, wife of Los Angeles real estate mogul and billionare Donald Sterling, made headlines in May when she argued to a probate court that her husband was mentally incapacitated—a charge he vehemently denied. The court’s decision had great implications for the Los Angeles Clippers, a 44-year-old professional basketball franchise held in a revocable trust for which both the Sterlings were co-trustees.
The ensuing legal battle brought to light an important question all wealthy individuals should address: What happens when you lose capacity to make sound decisions regarding your wealth? In this estate planning update, we explore the legal nuances of mental capacity through the lens of the Sterling case and offer practical tips on how to establish a clear plan in the event one’s cognitive abilities decline.
August 20, 2014 in Articles, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)
Tuesday, August 19, 2014
Advanced health care directives and financial power of attorney are helpful planning tools to ensure that in the later years of life, one’s health care and financial needs are provided for. However, they can also be helpful during other stages of life. For a new student that is leaving home and starting the adventure of college life, these tools can ensure that parents can assist with health care decisions, access important health information, and address financial circumstances if the need arises.
See Michael J. Maransky, Back to School: Health Care Directives and Powers of Attorney for College Students, Mondaq, Aug. 14, 2014.
Thursday, August 7, 2014
Before moving into an independent living senior community, there are obvious questions to ponder. At first, many people can struggle with the decision to move into a senior community. Yet once they make the choice, they build relationships, settle in, and are extremely reluctant to move. It is important to look at the larger picture and not only pick a place that works for you today, but try to imagine what it will be like as you age. Consider these issues as you look for a new home:
- Rent or “buy”? Rentals have advantages. You may not need to sell your home to come up with a down payment, it is easy to leave if you are unhappy, and you do not need to worry about maintenance. Keep in mind that rent prices are subject to increases. In continuing care communities, financial structures vary, but you will usually pay a costly entry fee in addition to a monthly fee. You can also purchased a downsized home or condo, either in a senior community or in a multi-generational building or neighborhood.
- Cost. Try to compare amenities as well as apartment size. Expect your costs to rise over the years.
- Neighbors. In many facilities, you spend a lot of time with your neighbors. You will share meals and attend events with small groups of people. Before moving in, learn about the culture of your new community and think what is most important to you.
- Location. Do you want your home close to family and friends, in the suburbs, close to neighbors? These are all things to consider before moving to a new home.
- Meals. Many independent living facilities offer on-site dining rooms. Good food matters—is it healthy, tasty, and is there a variety?
See Howard Gleckman, Six Questions to Ask Before you Move into a Senior Living Community, Forbes, Aug. 6, 2014.
Tuesday, August 5, 2014
There are specific estate and disability planning considerations that arise for couples called DINKs, which stands for dual-income-no-kids. The risk of financial abuse is more likely because the couple has probably maxed out retirement contributions and accrued a large amount of savings. This is because both individuals have likely had uninterrupted careers and have not faced the typical expenses associated with caring for children. In addition, it can be more difficult for DINKs to identify someone that they trust as a fiduciary to make end-of-life decisions for them and protect them from others taking advantage of them in later years.
See Amy Tripp, When Elder Law Meets DINK Planning, Wealth Management, June 24, 2014
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Friday, August 1, 2014
As I have previously discussed, Donald Sterling lost his attempt in probate court to stop the Clippers sale. The story of Donald Sterling serves as a reminder that estate planning is not just about what happens to assets after death, but should include careful planning of what happens in case of incapacity. The Sterling case came down to whether Donald Sterling’s diagnosis of mental incapacity and Shelly Sterling’s actions of taking over the trust were proper under the family trust provisions. When a clause is written for incapacity, it is important that the grantor pick their successor carefully and remember that the person closest to them, such as a spouse, may not always be the best person to take over their business. It is also important that various possibilities are considered and specifically planned for, such as intermittent or resumed capacity.
See Darla Mercado, Donald Sterling’s Battle Holds a Harsh Lesson for Advisors, Investment News, July 30, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.