OHIO ELDER LAW BLAWG

Nicholas Flamel and the Prepaid Funeral

I recently recommended to a client that he prepay his and his wife's funeral.  Not just preplan, but prepay. I was met with great resistance to this idea. Often, as in this case, the resistance generally boils down to one of two issues:

1. prepaying for my funeral is not good financial sense

2. I am not going to preplan my funeral, that's morbid!

Both may be true. However a prepaid funeral plan should still be considered, and even if one decides not to prepay, a preplanned funeral should still be considered.  

First of all, as to the morbidity of the thing, we all must understand and accept that for the last several millennia, everything that was born eventually dies.  I know this is news to everyone, but it's true.  Even Nicholas Flamel, who famously created the the Elixir of Life (a potion that prevented death as long as one continued taking it) in Harry Potter, ends up dying.  As I recall, when Flamel decided to stop taking the elixir of life, he took enough to prepay and preplan his funeral.  (This clearly was what Dumbledore meant when he said Flamel took enough of the elixir to “get his affairs in order.”)

Anyway, a preplanned funeral can be a gift to those who you leave behind, because it saves them the guesswork of what you would have wanted.  A prepaid funeral allows them to not have to worry where the funds are going to come from.  It also allows you to do this planning in a time of relatively low stress, as opposed to the time of high stress immediately after a spouse or parent has died.  Funerals can be expensive, and buying one when under stress may lead to impulsive purchases, and excess spending.  It will even allow you to shop around.  With a married couple's funerals often costing as much as a new car,  shopping around may be a good idea.

The question of whether it is a sound financial decision for you to prepay a funeral is a question that must be answered on a case by case basis.  When spending down to qualify for Medicaid, it is typically a good idea. For some, it is better to have the funds invested and earning some financial return.

There are some resources available if you are considering a prepaid funeral. The Funeral Consumers Alliance is that sells an end-of-life planning kit, "Before I Go: You Should Know." The Consumer’s Alliance is a a nonprofit, educational organization.  The International Cemetery and Funeral Association website has additional information and Federal Trade Commission offers publications that can help when planning a funeral: "Funerals: A Consumer Guide." And "Paying Final Respects: Your Rights When Buying Funeral Goods and Services."

You also can call us if you have other questions.

 

Facebook: A new tool for "grandparent scam"

Watch those privacy settings...

The Better Business Bureau of Northeast California is warning older adults about a telephone scam that preys on grandparents by duping them into thinking they assisting grandchildren in an emergency. 

 

In the scam, the grandparent gets a call from a young person claiming to be the grandson or daughter who is in legal trouble out of the country and needs needs emergency cash.  To stress the urgency, calls are usually made in the middle of the night, and the scammer insists that funds be sent by wire or overnight delivery.  While in previous scams grandparents could test the scammer by asking personal questions only certain people could answer, such as the name of a childhood pet, their nickname, or the college they attended, the new scammers use information garnered from social networking sites.

 

The bureau said a Sacramento grandmother was contacted this week by young woman who claimed to be her granddaughter. The girl said she was in trouble in Canada and needed the victim to wire her $4,500 to get out of jail.  Even after asking several questions, the grandmother said she was absolutely convinced the girl was her granddaughter.  The BBB said the scammer was looking at a Facebook page the real granddaughter had posted, and simply reading off dozens of facts about the family, addresses, and where she went to college.  The information was easily accessible because the granddaughter's Facebook privacy settings weren't high enough, allowing her account to be viewed by just about anyone.

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Trusts are Good and Trusts are Bad

Like anything in life, there is a good and a bad side.

Last week when the market went down 1000 points, that seemed like bad news. However, some lucky soul out there was probably buying Accenture for 1 cent a share, and it bounced back up to its pre-crash status of some $40.  So, it was bad, yes, but it also was good, wasn't it?

When planning for nursing home eligibility under Medicaid, trusts can be...well, good or bad.

Trusts can be great tools for controlling assets after your death, estate tax savings, privacy, and wealth preservation.  However, when a revocable living trust (a trust that you can terminate or change at will) holds assets and you apply for Medicaid, certain strange things can happen. 

Things that normally are NOT counted for medicaid purposes suddenly ARE counted.  For instance, if you put your house in a trust, Medicaid will count it as an asset whether you are living in it or not.  However, if it is OUT of a trust, and you or a spouse are living in the house, Medicaid will NOT count the house as an asset. 

Is this bad, or is this good?  Well, it all depends. 

With a married couple, usually we want a great deal of countable assets when you first go into a facility, but very few assets after that.  Why?  Because generally a spouse who goes to a nursing home has to somehow use 1/2 of the assets he and his wife have collectively on the first date he went into institutional care. 

So, if you and your spouse have $100,000 in cash, and you own a house worth $100,000 that is titled in your joint names, the house is not counted, and you will have $100,000 in countable resources and you will have to spend $50,000 (half of the $100,000 you have) before the spouse in the nursing home can get Medicaid to pay. 

But what if you have the house in a trust before you go into a nursing home?

Now you have $200,000 alltogether: $100,000 in cash, and $100,000 in a house.  The house is counted as an asset because it is in the trust!  So Medicaid says, you have $200,000 and you need to get rid of $100,000 before you are eligible for Medicaid! That becomes easy. If we remove the house from the trust and put it in your name, viola!  You have $100,000 in cash, and Medicaid can no longer count the house as an asset because its now in your name.

On the other hand, some people apply for Medicaid with the house in trust, and don't realize that it will be counted, and may end up getting their Medicaid application denied.

So, that's kinda bad.

So there you are, trusts are good and trusts are bad. Either way, it pays to have someone experienced review the situation if you or a loved one is either going into a nursing home, or has been diagnosed with a condition that may cause a stay in a long term care facility.

-Todd

Few Lessons Learned from Terri Schiavo

It was five years ago that the battle over Terri Schiavo blazed through congress, the headlines and the Florida and United States court systems.  Despite the clear need for advance health care directives such as health care powers of attorney or living wills, it doesn't appear that any more of us have them in place now than back then.

Experts estimate 20 to 30 percent of adults have advance directives in the US, the same as before the Schiavo case.  Even older Americans, who fill out such forms at higher rates, have changed little from 2005.

Shrill scare talk of "death panels" and other misinformation may have taken its toll on people signing advanced directives. 

Advance directives are simply instructions to allow or prevent certain treatment when you can't speak for yourself.  An advance directive can direct agents or physicians to use all available technology to keep one alive, or to allow the removal of life sustaining treatment or food and hydration. 

Don't hesitate to call if you have questions.

Clocks Falling Back? Don't cause a Heart Attack... (But watch out for daylight savings time)

So, how much sleep do you need?  What are the effects of not quite getting enough?

An interesting finding in a study that having just one extra hour of sleep may make a difference in your cardiovascular health, and may even prevent heart attacks.

The study found that when clocks are set forward, and we lose an hour's sleep, the rate of heart attacks goes UP 5%.  When clocks are set back, and we get an extra hour, the heart attack rate drops. 

More and more evidence that sleep can drastically help health and mental clarity seems to be discovered every week.  

So, getting to bed an hour early now might be a good idea, especially with the clocks moving forward Sunday, March 14, 2010 at 2 a.m. for daylight savings time. 

Click for news Video

Untangling the Estate Tax Mess

The US Estate Tax exemption of $3.5 million has not been extended into 2010.  (yet) Therefore Congress has essentially allowed the estate tax to expire for this year.  However, don't start hoopin' and hollerin' yet, because there is a capital gains tax that heirs will have to pay on inherited property that was not there before.  

Just when we may start to get used to the new laws, 2011 will see the return of the estate tax, and we will go back to year 2001 figures which will sport a 55% tax rate on assets over  an exemption of about $1 million a person.

Unless it changes midstream.  This may be exactly what happens as there is talk of Congress reinstating the estate tax at 2009 levels and doing it retroactively to the beginning of this year. 

The lack of a government blueprint for the estate and capital gains tax has made it very difficult for estate planners and clients to properly plan over the last ten years.  This latest uncertainty is not helping matters any.

For instance, if your grandfather dies 2010, you will not know if there will be estate taxes owed, or capital gains taxes owed. If you are a  trustee,  administrator or executor,  you probably won't feel all that comfortable paying money out of your trust or estate when the government might turn around and tell the heirs that they have to pay the money back for taxes.

While I always encourage questions, answers in such a volatile landscape don't come easy.

-Todd W. Bartimole

Witness Intimidation in Elder Exploitation: Moon the Victim

A 58 year old woman who appeared in court to support her daughter in law who allegedly financially exploited an elderly couple by stealing $250,000 is herself accused of intimidating witnesses, elder abuse, and indecent exposure after Mooning the elderly couple and telling them to "kiss her ____."  (The blank is a three letter synonym for "Donkey," as you might have guessed.

Katherine Patterson rode up an elevator in the courthouse where her daughter in law's case was proceeding and found the elderly victims riding in the same car.  She allegedly made faces at them and exposed her right buttocks and thigh. The elevator encounter was apparently not the first time there were words between the alleged victims and Katherine Patterson.  Patterson allegedly screamed at the couple earlier this month.

The elderly couple, who have medical problems, were apparently upset by the actions of Patterson.  

Elder Abuse Costly

A recent study produced by Virginia Tech and the National Adult Protective Services Association stated that “[e]lder financial abuse costs older Americans more than $2.6 billion per year and is most often perpetrated by family members and caregivers.” The report also indicated that the recession has made older people more vulnerable to this type of exploitation.  Family members and caregivers are the perpetrators in about 55 percent of the cases.

The report also mirrored what I see in my practice, that the typical victim is female, frail, cognitively impaired, trusting of others, and lonely or isolated. 

One of the problems in elder abuse is that the elderly person who is being exploited does not tell anyone, and may not even know that they are being exploited.  It is my opinion that it is always inappropriate to allow a hired caregiver to manage the financial affairs of an elderly person living at home alone, and it is a good practice to have a third party looking at the checking and other accounts to insure that a child who is handling a parent's expenditures are appropriate.

My office deals with the financial (and other) exploitation of the elderly.  If you have questions about this subject, please don't hesitate to call.

Oops! Forgot the residuary clause!

I was reminded of a case I worked on several years ago by client of mine who was asking what a residuary clause was.  A residuary clause is a statement in a will or trust that deals with "the residue," or whatever is left over.

A residuary clause might say something like: "Any remaining property held by me at the time of my death, whether real, personal, tangible or intangible, I leave to the non-profit organization Wild Vegan Harley Riders of North Eastern Ohio."

Such a provision in your will is usually preceded by specific bequests, such as "I give my $5,000 cd in Joe's Bank to my daughter Penelope," or "I give my post year 2000 soda pop can collection to my son Pepe."  Boy won't he be happy!

One of the purposes of a residuary clause is to make sure that if you forgot something, the executor and the court know who to give the leftovers to.

A local lawyer went to visit a man who, for all outward appearances, had very little property to leave anyone.  He had a ramshackle house, and told the lawyer how he saved money by frequenting the local food bank each month.  So, the lawyer asked his client what he did have, and he replied that he had a small CD and his very modest home.  He left each to a particular person, and the lawyer drew up the will, neglecting to insert a residuary clause in case there was some other property that the man and his lawyer did not discuss.

The man eventually died, and the lawyer, who was also the Executor in the will, was very surprised to find about $2.4 million dollars in the man's basement, all with nowhere to go.  The will had no residuary clause!

As there was no residuary clause, the Executor had to find the man's next of kin.  The deceased man had no children, and no brothers and sisters, no parents or aunts or uncles or first cousins, and to make a long story short, there were at least 104 beneficiaries entitled to that money.  The beneficiaries were spread all over the world, many in Eastern Europe who probably never knew this man existed!

After a great deal of time and attorney fees to both the executor and the attorneys representing the heirs, both known and unknown, the Estate was settled.   

One has to wonder whether that is what the client would have wanted.

Make sure that your attorney knows what he or she is doing when they prepare estate planning documents.  Leaving out a little clause can lead to very surprising results!

Disasters Waiting to Happen . . .

    This weeks disaster: Multiple Agents in a Power of Attorney.

    I received a call today from a client today whose mother did many things right with regard to her Estate Planning.  She saw a lawyer, she completed her will, and her health care and financial powers of attorney, and some other legal documents.  Unfortunately, she tried to be too fair to her children, and now we have a problem.

    Pretty much all of my clients love their children, and want to treat them equally.  So, when appointing their agent in a power of attorney, they invariably want to appoint both (or all) of their children.

    In most cases: bad idea.

    While it may be convenient for all of your children to be able to act, it leads to disaster when your kids don't agree.  If there is disagreement as to a course of action, who is in control then?  One of the points of having powers of attorney is to have someone in control when you are unable to act. When you put two people in control, any little disagreement can spoil your Estate Planning.    My client today was frustrated because her sibling wants their mother in a nursing home because it  will be cheaper, but my client wants mom to stay at home, where she believes mom will receive better care.

    While a good elder law attorney may have a client address this issue in writing, most attorneys do not.  Without clear direction, this situation will often end up in court, with a judge or magistrate determining who is in charge.  If there is enough friction between the children, a third party who is unrelated may be appointed by the court.

    A different client's mother had medical power of attorney that appointed all four of her children as co-agents.  The four kids hated each other. These four children couldn't agree on whether mom should have a flu shot, never mind whether a feeding tube should be removed!  That case ended up in probate court, with a lawyer being appointed as guardian.

    In some circumstances there may be good reasons for appointing co-agents which  outweigh the general rule not to do so.  One of the main reasons we create estate planning documents is that we want to keep our decision making with those who we trust, and out of the hands of courts.  Appointing one person at a time will help make sure you are in the hands of trusted family members, not strangers.