HGC, an Aging-In-Place research and product development company based in Connecticut partnered with non-profit Arctos Foundation to survey Americans’ preparedness for long term care.
Most respondents have not spoken with a family member or loved one about wishes for Long Term Care.
Those with a spouse or partner are more likely to expect a need for long-term care services and supports, but are no more likely to have long-term care insurance in place.
The Georgia Supreme Court has suspended a state appeals judge with pay during an ethics investigation.
The court suspended the judge, Christian Coomer, on Wednesday, Law360 reports.Coomer is accused of making himself a beneficiary and his wife the executor when drafting wills for a then-client, according to Law.com, Law360 and the Daily Tribune News.
Coomer is also accused of drafting an irrevocable living trust for the client that designated Coomer as the trustee and beneficiary, with the power to transfer funds to himself while the client was still alive, according to the Dec. 28 charges by the Georgia Judicial Qualifications Commission.
In this episode of the case files, I discuss the Texas case of Ramirez vs. Rodriguez, et. al., a case that involves four sibling co-trustees and the attempt by three of them to remove their trouble-making brother because of his hostile actions. Is being a royal pain in the derriere enough to remove a trustee from office.
This case reminds me of a scene from an episode of The Marvelous Mrs. Maisel, an Amazon original series that I have featured in the video.
Both this case and the scene from the series drive home the point that sometimes mixing family and money can be an explosive combination.
Texas Attorney Virginia Hammerlewrites about the dangers of leaving cash hidden around the house or elsewhere as inheritances to be discovered after the owner’s death.
Your cash may never be found. Your house and/or its contents could burn up, get sold in an estate sale or be blown apart by a tornado. The dog could eat it. It could turn into a block of moldy and unrecognizable paper.
When you are doing your estate planning, do not forget to make a plan for distributing your cash. Here’s why you should have a plan in place.
Few things sound as bad as being in the hospital alone. Healthcare workers have become surrogate mothers, fathers, friends, and children, in this new-normal of self-sequestered living. To exacerbate matters, hospitals are often in need of critical medical documents such as emergency contacts, healthcare directives, DNR (Do Not Resuscitate) Orders and the like.
To help with the latter problem, the American Bankers Association (ABA) has released its Mind On Your Loved Ones App that allows family members to store this critical information on their smart phone or tablet, and share it with medical professionals and hospitals if they cannot be present.
Having this information in the hands of those we’ve entrusted to carry out our wishes if we’re unable to speak for ourselves is important. Even more so now that we cannot be assured that our loved ones will be at our side if current events prevent it.
Mind Your Loved Ones, known as MYLO, is a mobile app that gives individuals the ability to store their own and their loved one’s critical medical information, health care directives, and other related data on their Apple or Android phones, iPads® or tablets. ABA members can download the app at a discounted price.
You may find that you have been named as executor (executrix if you are female) of your parents’ will. After reading the duties below, you may not want the job. It is a tiring, time-consuming, and frequently a thankless responsibility that you may want to resign from– and certainly have the right to do so.
Some of the more important duties and responsibilities of being an executor include:
Find the latest will and read it.
File a petition with the court to probate the will.
Assemble all the decedent’s assets.
Take possession of safe deposit box contents.
Consult with banks and savings and loans in the area to find all accounts of the deceased. Also check for cash and other valuables hidden around the home.
Transfer all securities to your name (as executor) and continue to collect dividends and interest on behalf of the heirs of the deceased.
Find, inventory and protect household and personal effects and other personal property.
Collect all life insurance proceeds payable to the estate.
Find and inventory all real estate deeds, mortgages, leases and tax information. Provide immediate management for rental properties.
Arrange ancillary administration for out-of-state property.
Collect monies owed the deceased and check interests in estates of other deceased persons.
Find and safeguard business interests, valuables, personal property, important papers, the residence, etc.
Inventory all assets and arrange for appraisal of those for which it is appropriate.
Pay valid claims against the estate. Reject improper claims and defend the estate, if necessary.
Pay state and federal taxes due.
File income tax returns for the decedent and the estate.
Determine whether the estate qualifies for special use valuation under IRC Sec. 2032A, the qualified family-owned business interest deduction under IRC Sec. 2057 or deferral of estate taxes under IRC Sees. 6161 or 6166.
If the surviving spouse is not a U.S. citizen, consider a qualified domestic trust to defer the payment of federal estate taxes.
File federal estate tax return and state death and/or inheritance tax return.
Prepare statement of all receipts and disbursements. Pay attorney’s fees and executor’s commissions. Assist the attorney in defending the estate, if necessary.
Distribute specific bequests and the residue; obtain tax releases and receipts as directed by the court.
Establish a testamentary trust (or pour over into a living trust), where appropriate.
If you find the task to be too over-whelming, talk to your parents about it if you can. Examine their wills to see if anyone is named as an alternate and discuss these duties with that person. You may even find that the person(s) named as executor are no longer living; or they may have named a bank trust department with which they no longer do business. If you feel it is a duty that you can and want to do, be sure to contact a qualified lawyer in your parents’ state of residence to help you in the process.
When a family member has died, it can add insult to injury to learn that you were cut out of the will. Contesting the will is likely an initial thought. We talked to people who have filed will contests, and came up with the top 5 reasons I regret filing a will contest. The reasons are:
I was not honest about my relationship with the decedent.
A will contest is more stressful than I realized.
I was not realistic about decedent’s mental and physical condition.
I did not have a clear idea of what I was fighting over.
I did not realize how much a will contest would cost.
For a breakdown of each of these five reasons, follow the source below.
With the new year, I’ve entered my 36th year in the financial services industry. Just writing this fact feels strange. I’ve never characterized myself as a veteran of the industry, feeling instead that I’ve just hit my stride. The years however tell me differently and it’s easy to understand how senior professionals can feel marginalized. I chose a doctor several years my junior so that as I aged, he’d still be in practice. Understandably now, clients want to know who my back up is “just in case.”
The financial planning industry has done an admiral job of preparing people for two pivotal moments: Retirement – that magic age when one stops earning a paycheck, travels the world, plays golf every day, and enjoys a life of leisure; and Death – the final moment beyond which our assets and legacy are left to our heirs. It has done a poor job of equipping advisors to address the financial planning issues of the period in between. Sure, advisors sell long term care insurance to forty and fifty-somethings for this period, and others sell annuities to seniors skittish about the financial markets, but these are product solutions aimed at the senior market, not financial planning discussions. In a similar way, a walker solves an issue with balance and prevents falls, but a walker is not a comprehensive plan for health and wellness throughout life.
While there are several common financial planning issues for every age demographic, there are also many unique financial planning needs of the senior market.
Common Financial Planning Issues
Ensuring adequate cash flow throughout life.
Evaluating and addressing risks to financial independence.
Determining the financial impact of major life events.
Minimizing income tax.
Allocating investment resources to accomplish current and future goals.
Defining a plan for the distribution of accumulated assets at death.
Financial Issues Unique to Seniors
Plan for downsizing or home modification
Relocation plan if distant from family
Plan for continued social engagement
Family business succession
Identity and fraud protection
Annual Medicare elections
Developing a dependency plan to include
Living arrangements
Persons in charge of financial decisions
Persons in charge of healthcare decisions
Transportation needs
It’s tempting to ask how a plan for continued social engagement is a financial planning issue. With social isolation a major contributor to poor health among seniors[1], and healthcare costs absorbing a significant portion of a senior’s resources, a plan for social engagement as we age should be an integral part of the financial planning conversation with seniors.
Annual Medicare elections are another example of an often-confusing labyrinth of decisions that can have significant financial impact for years.
Identity theft and elder financial fraud are estimated to cost seniors between $3 and $30 Billion a year[2], and nearly everyone I know over age 70 has been targeted. A plan that includes identity theft protection as well as vulnerabilities to undue influence inside of familial relationships needs to be included.
Plans for living arrangements, whether aging in place, or facility care, should be discussed long before the actual need arises. Just as saving for retirement doesn’t begin at age 65, neither should plans for where someone lives out the remainder of their life be delayed until the 11th hour.
Family meetings to discuss an aging client’s dependency plan should be also be held long before a dependency event occurs. It helps assure family members that a plan is in place, informs them as to who-does-what-when, and when done early enough and under the direction of the aging client, preserves his or her seat of honor at the head of the table.
Family Business Succession has been a central component of financial and estate planning for years and is the least neglected area of financial planning for seniors among those who own a multi-generational family enterprise. Still, nearly 60% of the small business owners surveyed by Wilmington Trust, do not have a succession plan in place[3].
In conclusion, financial planning does not end at retirement. As one client reminded me years ago, “retirement is just another word for thirty years of unemployment.” It doesn’t look the same for all seniors but when practiced with integrity, it can be extremely beneficial to the entire family, and rewarding for the financial planner who chooses to serve this market.
[1] National Institute on Aging. (2020). Social isolation, loneliness in older people pose health risks. [online] Available at: https://www.nia.nih.gov/news/social-isolation-loneliness-older-people-pose-health-risks [Accessed 7 Jan. 2020].
[2] Consumer Reports. (2020). Financial Elder Abuse Costs $3 Billion a Year. Or Is It $36 Billion?. [online] Available at: https://www.consumerreports.org/cro/consumer-protection/financial-elder-abuse-costs–3-billion—–or-is-it–30-billion- [Accessed 7 Jan. 2020].
Kerri, Julie and Mike Kasem have asked a judge to dismiss their wrongful death lawsuit against their stepmother, Jean Kasem, 64, as part of a settlement after a four-year legal feud.
While these cases make the headlines due to the celebrity status of the parties and the amount of money involved, dramas like this for much smaller amounts happen all too frequently. Death and money can bring out the worst of family dysfunction.
How can families prevent this kind of outcome? There is no simple answer, and if the dynamics among the family are already toxic, then it’s even more important that families have a solid, written plan in place before incapacity strikes. It may not have prevented the accusations of wrongful death between the parties, but it could have created a structure of care and wealth distribution that could have neutralized or minimized any incentive for the parties to commit a wrongful death offense.
Unfortunately, no estate plan can prevent an immoral or illegal act; nor can it instill character in the lives of others.
A recent article written by Joe Pinkster for the online magazine, The Atlantic, discusses the issue of inheritance, and specifically whether there exists a magic number that represents an inheritance that is too large[1]. This question has become relevant for many reasons, one being that some wealthy parents are concerned that after a certain point, money passed down will be damaging to the next generation, removing the incentive to be productive contributors to society.
This is not a new question. King Solomon in the Old Testament, clearly pondered the same question during a particularly dark time in his life:
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. And who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. This too is meaningless. So my heart began to despair over all my toilsome labor under the sun. For a person may labor with wisdom, knowledge and skill, and then they must leave all they own to another who has not toiled for it. This too is meaningless and a great misfortune.
ECCLESIASTES 2:18-21 NIV
The question is, should this be a concern of most families given the fact that most people won’t receive vast fortunes from their parents? In fact, research by the Federal Reserve indicates that 85% of inheritances between 1995 and 2016 were less than $250,000 and most were less than $50,000.[2]
From my personal life and professional experience, I have formed this observation: sudden money will bring out a recipient’s best or worst financial behaviors to the degree that they have been prepared for it, regardless of the amount. This is not to say that mistakes with inherited money are necessarily a bad thing. Speaking for myself, the lessons that I have learned through failure are some of my more life-changing ones, and I wouldn’t trade the failures for successes without the lessons.
For those inheriting less than say, $50,000 – the impact of learning through failure isn’t as financially devastating as burning through $5 Million. Older parents who are concerned about their adult child’s ability to manage up to perhaps a $150,000 inheritance may want to consider these less elaborate (and less costly) options than leaving their assets in trusts or other complex arrangements:
Leave it to them unfettered and simply let them do their best with it and hopefully learn a valuable lesson in the process. Losing $50,000 for buying an RV rather than saving it for retirement may be a painful lesson, but one they can likely recover from.
Consider leaving the money to a grandchild’s education account such as a 529 Plan, instead of outright to the adult child-parent.
If the inheritance is paid through an insurance policy, discuss the policy’s settlement options (how the death benefits are paid to a beneficiary) with your insurance agent. One option may be the payment of a monthly amount spread out over a number of years which cannot be altered by the beneficiary.
One exception to these simpler options is if the adult child has a physical or mental disability and receives government assistance such as Medicaid. In such case, working with a Medicaid attorney to create what is known as a Special Needs Trust, may be necessary to preserve these benefits, but this has little to do with the behavioral issues that concerned Solomon or many families today.
What about the small percentage of significantly larger inheritances? Should families be concerned about how the sudden impact of substantial financial windfalls will affect those who inherit? My response is a resounding YES not only to preserve the wealth left to these beneficiaries (The Sudden Money Institute, a think tank and financial consultancy specializing in planning for life transitions such as inheritances, claims that 90% of inherited wealth disappears by the third generation), but also because inheriting sudden wealth can be difficult emotionally as well.[3]
For over two centuries, wealthy Americans have used trusts and other elaborate means to preserve family wealth or family-owned business enterprises, control heirs’ behavior from the grave, or provide financial tutelage until heirs demonstrate the ability to responsibly handle their wealth. Trustees – those who control the purse-strings for these wealthy heirs – are required by law to act in the best interest of these heirs. A good trustee will assume the roles of surrogate and mentor with the beneficiaries under his care and like a good parent, will sometimes allow the beneficiary to fail small in order to learn valuable lessons for when the beneficiary may have responsibility for a much larger fortune later on.
However, no estate plan can instill character regardless of the sophistication of the plan. A healthy work ethic, compassion, integrity, loyalty, fidelity… these are ultimately behavioral choices we all must make, no matter how wealthy we may become. Perhaps this was Solomon’s true lament.
[1] Pinsker, J. (2019). How Much Inheritance Is Too Much? [online] The Atlantic. Available at: https://www.theatlantic.com/family/archive/2019/10/big-inheritances-how-much-to-leave/600703/ [Accessed 29 Oct. 2019].
