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Holiday Gatherings Can Reveal Declining Capacity in Aging Family Members

A look in the refrigerator finds expired foods and an elderly relative is asking the same questions repeatedly. The same person who would never let you walk into the house with your shoes on now, is living in a mess. The children agree, Mom or Dad can’t live on their own anymore. They have declining capacity. It’s time to look into other options.

One of the biggest questions, according to the Cherokee Tribune & Ledger-News’ article is “How to pay for long-term care.”

The first question involves the types of facilities. There are many different options but the distinctions between them are often misunderstood. Assisted living facilities provide lodging, meals, assistance with eating, bathing, toileting, dressing, medication management and transportation. However, a skilled nursing facility adds more comprehensive health care services. There’s also the personal care home, which provides assisted-living type accommodations, but on a smaller scale.

The next question is how to pay for the residential care of an elderly family. This weighs heavily on the family. That elderly person is often the one who did the caregiving for so many years. The decline of capacity and the reversal of roles can also be emotionally difficult.

There are a few different ways people pay for care for an elderly family member who has diminishing capacity.

Long-term care insurance, or LTC insurance. Few elderly people have the insurance to cover their residential facility stay, but some do. Ask if such a policy exists, or go through the piles of paperwork to see if there is such a policy. It will be worth the search.

Veteran’s benefits. If your loved one or their spouse served during certain times of war, is over 65 or is disabled and received an honorable discharge, he or she may be entitled to certain programs that pay for care through the Department of Veterans Affairs.

Private pay. If your loved one has financial accounts or other assets, they may need to pay the cost of their residential facility from these assets. If they don’t have assets, the family may wish to contribute to their care.

Another route is to apply for Medicaid. An elder law attorney in their state of residence will be able to help the individual and their family navigate the Medicaid application, explore if there are any options to preserving assets like the family home, and help with the necessary legal strategy and documents that need to be prepared.

Meet with an elder law estate planning attorney to learn what the steps are to help your elderly loved one enjoy their quality of life, as they move into this next phase of their life.

Can you tackle elder law on your own?

Reference: Cherokee Tribune & Ledger-News (November 30, 2019) “How to pay for longterm care.”

Luke Perry’s Estate Planning – How Well Did He Do?

Actor Luke Perry’s estate planning was well-planned, including the use of a revocable trust to pass assets to his heirs in an efficient and private manner.

Forbes’ recent article, “How Luke Perry’s Estate Maximized This Unique California Tax Shelter,” says that media outlets have reported that Perry’s $2 million home in the Los Angeles area had been transferred from his revocable trust to his two children in equal shares. This can be a normal part of the estate administration process, if you are working with an experienced estate planning attorney. However, it also shows some additional sound planning on his family’s part. It looks like the actor’s children took advantage of a unique tax loophole in California, the parent-child property tax exemption. Therefore, they’d have inherited their father’s property tax base, which is an important financial benefit in California, because the home has increased in value significantly since Perry bought it.

The parent-child exclusion gives California property owners some unique benefits, so with proper estate planning, property can be passed on to the next generation. Note that these rules are complex and must be followed carefully, to avoid accidentally triggering reassessment.

In 1978, California voters approved Proposition 13, which rolled back property tax values for existing homeowners to their 1976 value. For new purchases, the property tax rate was set at 1% of purchase price and increases to the property tax base were limited to 2% per year. In 1986, California passed Proposition 58—a constitutional amendment that excluded from reassessment transfers of real property between parents and children. Therefore, when a child inherits their parent’s home, they can also inherit the parent’s property tax base.

While both propositions independently create property tax relief, when combined, it can have extraordinary benefits. Assume that you bought a home for $100,000 in 1979. The property tax base would have been established at 1% of the purchase price ($1,000). This property tax base 40 years later in 2019 would be $2,208. Now, let’s say the $100,000 home has increased its fair market value to $1,000,000. If the owner dies and the property is transferred to their child, their child would inherit the parent’s property tax base of $2,208, and that rate would continue to grow at the 2% rate. Estate planning lawyers know this.

However, this loophole is complicated, because the exclusion allows the transfer up to $1 million of assessed value (and each spouse of a married couple has $1 million to allocate). The assessed value is merely the property tax base, not the fair market value. As a result, provided the assessed value stays within the $1 million of assessed value, parents can transfer property that has increased by millions of dollars. As you can imagine, these rules can have a major effect on beneficiaries. The ability to inherit a parent’s property tax on a home that has increased in value, might result in keeping the family home, instead of having to sell it.

Luke Perry’s estate planning is a rare example of a celebrity with excellent estate planning. To do the same, work with a qualified estate planning attorney.

The best advice is to be even and fair to your children.

Reference: Forbes (November 14, 2019) “How Luke Perry’s Estate Maximized This Unique California Tax Shelter”

Elder Law is About Protecting Assets From Long-Term Care Costs

Can You Tackle Elder Law on Your Own?

What usually happens when people do their own estate planning or work on elder law issues, without a lawyer who has years of practice? They may not incur the costs on the front end, but the costs, in financial and emotional terms, often arrive just when the individual or their family is most vulnerable. That message comes through loud and clear in the article “Do-it-yourself elder law estate planning can be risky” from a recent article in the Times Herald-Record.

Let’s clarify the two different areas:

  • Estate planning is about leaving assets to heirs with a minimum of court costs, legal fees and avoiding will contests.
  • Elder law is concerned with protecting assets from the cost of long-term care and empowering people who will be able to make legal, financial and medical decisions on your behalf, if you become incapacitated.

Two of the most important documents in an elder law estate plan are the Powers of Attorney (POA) and health care proxies. If these forms are not prepared correctly, problems will ensue. In some states, like New York, the POA form is long and complicated. Banks and financial institutions will refuse to recognize the form, if they are not completed correctly.

A POA needs to include the “Statutory Gifts Rider,” which allows broad giving powers to the elder law attorney to save assets, even on the eve of the person being admitted to a nursing home. Someone who is not an elder law attorney is not likely to know what this is, or how to prepare it.

There will be similar issues to a do-it-yourself health care proxy. Here’s just one example of the many things that can go wrong: an agent may not make decisions about withholding certain extreme life support measures, even if they are in possession of a valid health care proxy. There needs to be a living will from the individual that explicitly states their wishes regarding withholding heroic means and/or artificial measures. Without the proper document, the person could remain on life support for months or years, even if this was not their wish.

A do-it-yourself approach leaves much to chance. As a result, the potential for problems is enormous. A far better solution that spares spouses and loved ones, is to work with an experienced estate planning lawyer. Can you put a price on peace of mind?

Learn how long-term care costs can affect your estate plan.

Reference: Times Herald-Record (Nov. 23, 2019) “Do-it-yourself elder law estate planning can be risky”

Tips for Choosing a Fiduciary

One of the important tasks in creating a complete estate plan is selecting people (or financial institutions) to represent you, in case of incapacity or death. Most people think of naming an executor, but there are many more roles, advises the article “What to consider when appointing a fiduciary?” from The Ledger.

Here are the most common roles that an estate planning attorney will ask you to select:

  • Executor or personal representative, who is named in your will and appointed by the court to administer your estate.
  • Agent-in-fact (under a durable power of attorney) who manages your financial affairs while you are living, if you are unable to do so.
  • Health care surrogate who makes health care decisions on your behalf while you are living, if you are incapacitated.
  • Trustee of a trust document; administers the trust that you have created.
  • Guardian: a person who makes health care and financial decisions on your behalf, if the court determines that other roles, like health care surrogate or agent-in-fact, are not sufficient.
  • Guardian for minor children: person(s) who make decisions for your children, if you are not able to because of death or a loss of capacity before the children reach adulthood.

The individuals or financial institutions who take on financial roles are considered fiduciaries; that is, they have a legal duty to put your well-being first. Their responsibilities may include applying for government benefits, managing and invest your assets and income, deciding where you will live and working with your attorneys, financial advisors and accountants.

Many people name their spouse or eldest child to take on these roles. However, that’s not the only option. A few questions to consider before making this important decision include:

  • Does this person have the experience, skill and maturity to manage my financial affairs?
  • Does this person have the time to serve as a fiduciary?
  • Would this person make the same health care decisions that I would make?
  • Can this person make a difficult decision for my health care?
  • Does this person live near enough to arrive quickly, if necessary?
  • How old is this person, and will they be living when I may need them?
  • What kind of response will my family have to this person being named?
  • Are my assets substantial enough to require a financial institution or accountant to manage?

These are just a few of the questions to consider when choosing fiduciaries or health care agents in your estate plan. Speak with your estate planning attorney to help determine the best decision for you and your family.

Sometimes choosing a bank as a trustee or executor instead of a family member makes more sense.

Reference: The Ledger (Oct. 16, 2019) “What to consider when appointing a fiduciary?”

How Do I Protect My Elderly Parent from Scams and Elder Abuse?

According to a 2015 study by True Link Financial, seniors lose $36.48 billion each year to elder abuse, usually financial elder abuse. The FINRA Investor Education Foundation reports that more than 8 in 10 seniors are solicited for potentially fraudulent offers, adding that “Americans age 65 and older are more likely to be targeted and 34% more likely to lose money once targeted than respondents in their 40s.”

Kiplinger’s recent article, “Defrauding the Elderly: Watch for These Danger Signs,” explains that advancing age can have some impact on an individual’s emotional and physical health that may lower their defenses against elder abuse and fraud. Let’s look at some common frauds.

Wire transfer scams: A retired 80-year-old businessman contacted by fraudsters who said they wanted to do business with him. He wired them $400,000, and when he found out he’d been defrauded, he complained to the scammers. They had him contact some new crooks who said they could get his money back if he would wire them $400,000—which he did.

Gift card scams: These can be used to launder money, without even having to physically send the cards anywhere. A scammer convinces the elderly victim to get several cards and load them with money. They then have the victim scratch off a protective strip on the back of the card to reveal its code number, take a picture of the number and then text the picture to a cellphone number.

Computer-hacking scams: A common elder abuse scam designed to victimize seniors is a contact from someone who says they’re a Microsoft employee. The scammer says the senior’s computer has a virus or some other problem, which they’re happy to fix. The senior just has to click on an email link or download an attachment the rep sends them and pay a fee. The scammer thus gets control of the victim’s computer.

Door-to-door scams: A scammer knocks on a senior’s door and says her trees need to be trimmed or gutters need to be cleaned. There are numerous cases where seniors have paid upwards of $30,000 to trim the hedges at their house. There are no service rendered: the crooks just wait and reappear to help the elderly person write a check for their services.

Family member financial abuse: Elder abuse and financial fraud in a family can be hard to resolve. It’s hard to know if an elderly parent voluntarily gives gifts to a family member, or if fraud is involved.

Prevention is always the best course of action, so speak to your elderly parents or grandparents about scams.

Seniors are susceptible to physical and emotion health issues that can impact their judgment.

Reference: Kiplinger (October 24, 2019) “Defrauding the Elderly: Watch for These Danger Signs”

How Blended Families Can Address Finances and Inheritance Issues

The holiday season is a popular time for people to get engaged, including people who have been married before. If that’s you, understand that blending families means you’ll need to deal with inheritance and finance issues, says U.S. News & World Report’s article “6 Financial Considerations for Remarriage.” The best time to have these conversations is before you walk down the aisle, not afterwards.

Look at your budget and talk about how things will work. That includes day-to-day expenses, monthly expenses and large purchases, like houses, vacations and cars. Talk about a game plan for going forward. Will you merge your credit card accounts or bank accounts? What about investment accounts?

Financial obligations outside of the marriage. Two things to check before you wed: your divorce papers and the state’s laws. Does anything change regarding your spousal support (alimony) or child support, if you remarry? It’s unlikely that you would lose child support, but the court may determine it can be reduced. The person who is paying child support or alimony also needs to be transparent about their financial obligations.

Review insurance and beneficiaries. One of the biggest mistakes people in blended families make, is failing to update beneficiaries on numerous accounts. If your divorce papers do not require life insurance to be left for your spouse on behalf of your children (and some do), then you probably want to make your new spouse the beneficiary of life insurance policies. Investment accounts, bank account, and any other assets where a beneficiary can be named should be reviewed and updated. It’s a simple task, but overlooking it creates all kinds of havoc and frustration for survivors.

What will remarriage do to college financing options? A second marriage may increase a parent’s income for college purposes and make children ineligible for college loans or needs-based scholarships. Even if the newly married couple has not blended their finances, FAFSA looks at total household income. Talk about how each member of the couple plans on managing college expenses.

A new estate plan should be addressed, even before the wedding takes place. Remember, an estate plan is for more than distributing assets. It includes planning for incapacity, including Do Not Resuscitate Orders (DNR), powers of attorney for finances and for health care, designations of guardianship or consent to adoption, various trusts and if needed, Special Needs planning.

Create a plan for inheritance. If either spouse in a blended marriage has children from a prior marriage, an estate plan is critical to protect the children’s inheritance. If one spouse dies and the surviving spouse inherits everything, there is no legal requirement for the surviving spouse to pass any of the deceased’s assets to their children. Even if you are in mid-life and death seems far away, you need to take care of this.

Speak with an estate planning attorney who can help you create the necessary documents. You should also talk with your children, at the age appropriate level, about your plans, so they understand that they are being planned for and will be taken care of in the new family.

Blended families in second marriages face unique estate planning issues.

Reference: U.S. News & World Report (Nov. 18, 2019) “6 Financial Considerations for Remarriage”

Should I Use a Bank as My Executor Instead of a Family Member?

You can choose anybody you like to be the executor of your will but consider who will do the best job.

Executors are legally responsible for several tasks, including identifying everything in the estate, collecting all the assets and paying the debts and liabilities. Finally, the executor makes distributions to beneficiaries, in accordance with the terms of the will.

nj.com’s recent article on this topic asks “Should I choose a bank to be the executor of my will?” The article explains that there are a few advantages to designating a bank as an executor.

Banks are in the business of managing money and are experienced in administering estates.

This typically means they may be able to settle the estate more quickly and efficiently than a family member.

Banks have policies and procedures in place to make certain that the assets are protected from mismanagement and theft.

Banks are impartial parties that cannot be influenced by beneficiaries. This can be a big headache for a family member asked to be executor. Relationships can deteriorate over the enforcement of the terms of a will, especially when one sibling is named to oversee the estate and has the authority over the administration of the estate—perhaps to the detriment of her brothers and sisters.

One distinction from using a family member is that while an executor is entitled to compensation, family members frequently waive this. However, banks charge fees for serving in this role, and these fees may be higher than you’d expect.

For example, the bank’s fee might be up to 4% of the first $100,000, then decrease incrementally until it’s just 0.5% of values over $9 million.

One other note to keep in mind is that many banks won’t serve as executor, unless the estate is substantial enough to meet the minimum fees charged by the bank to serve as the executor.

Read here what an executor actually does.

Reference: nj.com (November 5, 2019) “Should I choose a bank to be the executor of my will?”

Why is Ashton Kutcher So Stingy with his Kids’ Inheritance?

Ashton Kutcher says he’s not setting up an inheritance trust fund for his kids but instead is planning to educate them on the value of hard work. Ashton Kutcher said, “My kids are living a really privileged life, and they don’t even know it.”

The actor has an estimated net worth of $200 million.

Business Insider’s recent article, “Ashton Kutcher says he’s not setting up a trust fund for his kids, and his parenting approach echoes what billionaires like Warren Buffett and Bill Gates have said,” reports that Kutcher’s parenting approach is similar to other well-known wealthy individuals. Elton John, Sting and Simon Cowell have all revealed they don’t plan to leave their children a lot of money. Instead, they plan to emphasize educating them on the value of hard work.

Likewise, many billionaires aren’t leaving their children much money. For example, Bill Gates has announced that he would leave $10 million to each of his three children. That’s just a fraction of his $108 billion net worth.

In a 2013 Reddit “Ask Me Anything” forum, Gates said: “I definitely think leaving kids massive amounts of inheritance money is not a favor to them. Warren Buffett was part of an article in Fortune talking about this in 1986 before I met him, and it made me think about it and decide he was right.”

Mr. Buffett said he has pledged 100% of his estimated $87.3 billion fortune to various charities. Instead of giving each of his three children inheritances in the millions or billions, he’s promised to give about $2.1 billion of Berkshire Hathaway stock to each of his children’s charities.

Buffett’s decision might arise from his views on dynastic wealth, or the pattern of families passing money down from one generation to the next. Buffet has been vocal about his efforts to decrease the vast wealth sitting in the hands of a few influential people.

“Dynastic wealth, the enemy of a meritocracy, is on the rise,” Buffett said in 2007. “Equality of opportunity has been on the decline.”

Older generations might consider restricting their children’s access to family wealth because of highly visible heirs and so-called trust-fund babies, who show off their wealth on social media. Parents may want to include provisions to ensure that any trust can be modified in the future.

Learn about how to protect a child’s inheritance from divorce or lawsuits.

Reference: Business Insider (November 10, 2019) “Ashton Kutcher says he’s not setting up a trust fund for his kids, and his parenting approach echoes what billionaires like Warren Buffett and Bill Gates have said”

What Is Probate and How to Prepare for It?

The word probate is from the Latin word, meaning “to prove.” It is the court-supervised process of authenticating the last will and testament of a person who has died and then taking a series of steps to administer their estate. The typical situation, according to the article “Some helpful hints to aid in navigating the probate process” from The Westerly Sun, is that someone passes away and their heirs must go to the Probate Court to obtain the authority to handle their final business and settle their affairs.

Many families work with an estate planning attorney to help them go through the probate process.

Regardless of whether there is a will, someone, usually a spouse or adult child, asks the court to be appointed as the executor of the estate. This person must accomplish a number of tasks to make sure the decedent’s wishes are followed, as documented by their will.

People often think that just being the legally married spouse or child of the deceased person is all anyone needs to be empowered to handle their estate, but that’s not how it works. There must be an appointment by the court to manage the assets and deal with the IRS, the state, creditors and all of the person’s outstanding personal affairs.

If there is a will, once it is validated by the court, the executor begins the process of identifying and valuing the assets, which must be reported to the court. The last bills and funeral costs must be paid, the IRS must be contacted to obtain an estate taxpayer identification number and other financial matters will need to be addressed. Estate taxes may need to be paid, at the state or federal level. Final tax returns, from the last year the person was alive, must be paid.

It takes several months and sometimes more than a year to go through probate and settle an estate. That includes distributing the assets and making gifts of tangible personal property to the heirs. Once this task is completed, the executor (or their legal representative) contacts the court. When everything has been done and the judge is satisfied that all business on behalf of the decedent has been completed, the executor is released from their duty and the estate is officially closed.

When there is no will, the process is different. The laws of the state where the deceased lived will be used to guide the distribution of assets. Kinship, or how people are related, will be used, regardless of the relationship between the decedent and family members. This can often lead to fractures within a family, or to people receiving inheritances that were intended for other people.

Learn how good estate planning can avoid probate.

Reference: The Westerly Sun (Nov. 16, 2019) “Some helpful hints to aid in navigating the probate process”

Comparing Types of Memory Care Facilities

If your aging loved one needs specialized care because of Alzheimer’s disease or another form of dementia, you might be searching for the right memory care facility. There are several types of care options. Some assisted living developments have onsite memory care units. A dedicated facility only accepts residents with a need for specialized care. The highest level of memory care is an Alzheimer’s care unit, usually with 24-hour supervised care.

It is easy to get overwhelmed by these options. If you are trying to find the best placement for your loved one, you might benefit from some help comparing types of memory care facilities.

Specialized Memory Care

A facility that focuses on memory issues might use one or more of these terms:

  • Memory Care Unit
  • Alzheimer’s Care Community
  • Specialized Care Units (SPU)
  • Dementia Care Community

There is no federal regulation of assisted living facilities. No category of assisted living is growing faster than memory care. Because assisted living and memory care are lucrative businesses, some unscrupulous companies might claim to provide better care than they actually do. Always check with your doctor and local social service agencies about these types of centers.

Visit several facilities, so you can compare the physical layouts, cleanliness, activities and interaction of the staff members with the residents. A memory care facility should have a mindful design that keeps the seniors safe but does not make them feel as if they are in a prison. High-quality design features can help to prevent injuries from falls, reduce anxiety, increase social interaction and allow residents the opportunity to walk around safely.

An assisted living center might claim to provide memory care, but genuine memory care includes round-the-clock supervision by well-trained professionals in a more restrictive environment than a typical assisted living facility. For example, people with dementia tend to wander off and leave the center, often in the middle of the night. People have met with tragic ends to their lives from exposure to the elements, drowning and foul play in these situations.

The Cost of Alzheimer’s Care

There are several different levels of care for people with Alzheimer’s disease, depending on the stage and severity of the illness. A person can receive Alzheimer’s care at a variety of continuing care retirement communities (CCRCs). Here is a comparison of the cost of the different types of CCRCs that offer memory care:

  • Home care: $16 to $28 an hour
  • Independent living center: $1,500 to $6,000 a month
  • Assisted living facility: an average of $4,000 a month
  • Residential care: $3,500 to $4,500 a month
  • Skilled nursing care: an average of $7,441 a month for a semi-private room and $8,365 a month for a private room
  • Hospice care: $41 an hour or $193 a day

These average prices can be quite different from the cost where you live. Always get a written list of all the fees the facilities charge. Make sure you know what the basic monthly cost includes and what will generate an extra expense.

Use this checklist when visiting assisted living facilities.


A Place for Mom. “What is Alzheimer’s Memory Care?” (accessed November 21, 2019) https://www.aplaceformom.com/alzheimers-care

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