Estate Planning Practice Blog

Caregiving and the Case for Testamentary Freedom

Joshua C. Tate, Assistant Professor of Law, Southern Methodist University - Dedman School of Law; University of Pennsylvania Law School, has written another informative article. This time he writes about "Caregiving and the Case for Testamentary Freedom."

Excerpted from his abstract:

The article explores how almost all U.S. states allow individuals to disinherit their descendants for any reason or no reason, but most of the world's legal systems currently do not.

Tate contends that broad freedom of testation is defensible because it allows elderly people to reward family members who are caregivers. It deals with the growing problem of eldercare and how increases in life expectancy have led to a sharp rise in the number of older individuals who require long-term care, and some children and grandchildren are bearing more of the caregiving burden than others.

Recent econometric studies, not yet taken into account in legal scholarship, suggest a tendency among the American elderly to bequeath more property to caregiving children. A competent testator, rather than a court or legislature, is in the best position to decide how much care each person has provided and to reward caregivers accordingly rather than to have laws in place that punish them.

Very interesting. You can download it here in pdf format. Be sure to scroll down and click on one of the downloadable links.

Elder (Abuse?) Article from New York Times

Posted on Christmas Eve,  should elders be less accountable for their investing mistakes?

Read here for the article and links previous articles in the series.

The "Nursing Home" Visits.

Recently I visited three different clients at their home or care facility regarding initial intake and execution of documents relating to their care. 

We don't mind making the visits, but they are harder to schedule as we are busy and driving across town does require more time than if you were able to come into the office. It is also a little bit intrusive having an attorney walk into your world rather than you walking into our world (via our offices) for the legal assistance you need.

It all starts when a family member calls me to tell me that they need a power of attorney to manage their loved one's financial affairs and an advance health care directive to make medical decisions.  Sometimes they ask for a Living Trust too. By then, however, they are most concerned with making immediate decisions and not so much about what happens when the person passes away.

Granted, it is a hard situation for everyone. 

No one enjoys getting too old to be able to manage their own affairs as they once did.  And younger family members and other loved ones do not know what to do or how to tap into community and government resources for their elderly loved ones.

But having estate planning documents in place while you are able to manage your own affairs and initiate contact with an attorney of your own choosing can go a long way to protect you when you get older. It will make it easier for your loved ones to help you if that time comes.

More on Elder Abuse. A Useful Primer on Financial Elder Abuse.

The California Bankers Association is the largest banking trade association with a very informative website on issues involving banking. One issue that is prevalent day in and day out in the banking industry is financial elder abuse.

Banks and their employees are often in touch with their elderly clients more than any of us. Simply because people bank often. Bankers and their staff see clients all the time and may be in a good position to prevent elder abuse.

The Calbankers website has a very nice primer and training materials on financial elder abuse.  Also available on the site is a sample fraud alert form that bankers can use to help their elderly clients spot financial elder abuse. It is a form that bankers ask clients to complete regarding their banking transaction if the banker suspects that something is amiss.

See also my post yesterday on California's elder abuse statutes for more information.

Elder Abuse

California has elder abuse statutes to protect the elderly from a myriad of physical, financial, emotional and other types of abusive situations.

In California, an elder is considered anyone age 65 or older.

This group of statutes is commonly known as Elder And Dependent Adult Civil Protection Act.  To read the statutes directly, click here and scroll to Chapter 11.

One of the key things when approaching the topic of elder abuse is prevention.

It can happen to the best of us.

Here are some things to consider and have in place for yourself and your loved ones to prevent elder abuse from occurring:

1. Advance Health Care Directive – provides for care in accordance to your wishes and nominates conservator in case one is needed for your care.
2. Revocable Trust – you can choose your successor trustee to handle your assets privately, save  money on probate fees and costs, save an enormous amount of time and a good trust will contain a no contest clause.
   
3. Durable Power of Attorney – you can choose who you want to manage your financial affairs if you are alive but unable to do so.
   
4. Will – functions as a back up to your Revocable Trust and should contain a no contest clause.
5. And most importantly, have someone on your side who cares about you. This is often the most critical component as it may require to have a loved one always on the look out for your best interests.

Talk to your estate planning attorney for more information.

Scams Against Older Adults.

A fellow blogger and employment law attorney in Seattle, D. Jill Pugh,  alerted me to this neat online article in the Seattle Times about scams against the elderly.

What's neat about this article is that it contains audio clips of what the scammers say... play the clip for an older loved one in your family to see if they already receive phone calls like this.  The article also discusses common scams and some ideas to mitigate scammers from reaching your elder loved ones.

Of course, it follows my Thanksgiving week theme of starting discussions about legal matters like estate planning and now elder law issues with your loved ones at the dinner table. Talking Turkey works!

WSJ: Adult Guardianship Cases Rise

The Wall Street Journal recently published some really good tips for avoiding or preventing conflict in adult guardianship proceedings. This came out in their Personal Journal section on August 17, 2006, for those of you who have online subscriptions to view the article on site.

Adult guardianship proceedings are called conservatorships in legal terminology.

Some of the WSJ tips, paraphrased below, include:

• Create a financial Durable Power of Attorney document to name a trusted loved one to manage your financial affairs if you are unable to make them.
• Create an Advance Health Care Directive designating an agent to make medical decisions for you and document your medical wishes in the same document or a living will.
• Create a Living Trust and transfer your assets into it and designate a trustee to manage trust property if you become incapacitated.
• Talk about your wishes with your agents and trustees as well as other family members.

Reverse Mortgages.

Here is a lengthy, but very clear  introduction on what reverse mortgages are as explained by Byron Warnken, Esq.  at Reverse Mortgage Page. A few of my clients are getting reverse mortgages. Be sure that if you have a reverse mortgage that your home is back into your Living Trust once the reverse mortgage is funded.

First, what a reverse mortgage is NOT:

• A reverse mortgage is not “a way for the bank to get your house”
• It is not a traditional home equity loan
• It is not based on income or credit levels
• It is not available to homeowners under the age of 62
• It is not free money
• It is not a cure-all
• It is not a decision to be taken lightly

What a reverse mortgage is: a good tool for financial planning and flexibility in the golden years.  There are only a very few requirements for eligibility.  The borrower must own and live in the home as a primary residence and be 62 years of age or older.  If husband and wife are both on the title, both must be over the age of 62.   

In addition, the home itself must be of a type that qualifies for the reverse mortgage program.  The vast majority of single family homes qualify, as do most condominiums, town homes, 2-4 unit owner-occupied dwellings and manufactured homes.  Your income and credit levels, however, do NOT matter.

To go through the process of getting a reverse mortgage you will need to speak with a reverse mortgage originator or provider.  This person will guide you through the preliminary steps, including counseling, home appraisals, inspections, and choice of loan specifics.  It is very important to feel comfortable with your lender.  Feel free to speak with as many people as you need in order to gain information and feel comfortable.  Click here for reverse mortgage lenders. 

There are a number of options for how to “structure” the money received.

1. Receive a one time lump sum.
2. Receive the money monthly.
3. Receive a credit line that provides flexibility.
4. Use a combination of the above methods.

Once you receive the money, there are virtually no restrictions on the way in which it can be used. But you must repay existing debt, including the existing mortgage.

You can:

• Make Home Improvements
• Finance Regular Living Expenses
• Ease Healthcare Costs
• Take a Trip to Somewhere You’ve Always Wanted to Go
• Give Gifts to Your Family and Friends

It almost seems too good to be true.  There are, however, as with everything these days, costs involved.  There is an origination fee, closing costs, a servicing fee, mortgage insurance, and interest.  These costs come from the proceeds of the loan.  You pay very little directly out of your pocket. 

You should also know that you cannot lose your home at any time during the life of the loan for failure to make payments.  THERE ARE NO PAYMENTS TO MAKE.  The loan does not come due until you permanently leave the home or the last borrower dies.  The home must be kept up to reasonable standards, it must be insured, and the property taxes must be paid. 

Default risk is one of the ways in which a reverse mortgage differs from a traditional mortgage or home equity loan.  With those traditional products there is a risk of default and therefore a chance you could lose your home.  On the other hand, there are no payments to make with a reverse mortgage.  Therefore, as long as the property is kept to a reasonable standard, you will always have somewhere to live.

In addition, you can never owe more than the value of your home.  Even if you have been paid more than your home is worth, you can only owe the value of your home.  When the loan comes due, you or your heirs can either pay off the loan with existing funds or sell the house in order to satisfy the loan.  Excess proceeds from the sale go to your or your estate.

Can I Help My Aging Parent?

Elder law as an area of law is fraught with sadness and many issues. Watching loved ones age and not be able to handle their affairs as well as they once did is very hard.

If you start to sense that your parent is not doing well or seems to have a harder time managing their life, please consider asking him or her if they have estate planning documents in place.

Estate planning documents like a Will, Living Trust, Durable Power of Attorney and Advance Health Care Directive are very important. Having these 4 documents in place can make it easier to manage someone's affairs while they are still alive, but are slowly losing their ability to manage their own life.

A Durable Power of Attorney allows someone to manage someone else's financial affairs while they are still alive.

An Advance Health Care Directive allows someone to manage someone else's health care decision making in the event they are unable to make their own decisions. It is also where you indicate wishes with respect to end of life choices, funeral wishes, primary care doctors, organ donation and autopsy.

A Will is a document to name who should get what when you pass away. You also appoint an executor to handle your affairs when you die. A Will is only effective when you die. A Will goes through probate though.

A Living Trust allows someone to privately manage the assets in the Living Trust in accordance to your wishes while you are alive but not doing well and upon your death. A Living Trust avoids probate.

Generally, having all 4 documents allows your loved ones to manage your overall well-being without court involvement.

So, be the brave one and ask your dear parent if they have their documents in place? If not, kindly suggest that they contact an estate planning attorney to get their affairs in order while they have their wits about them.

Worried About Your Elderly Relative At Their Home?

If you are worried about a parent or another elderly loved one who lives in a different area from you and it is too far for you to check in on them, request a "well-being" check from local law enforcement. Contact the local law enforcement agency to request an officer or representative to visit your loved one and assess their "well-being." This is especially comforting if you are in the process of making long term caregiver plans, but have yet to put it in place.