MONEY: A TOUCHY
By Carol Abaya, M.A.
my parents are in the hospital.† My name is not on their bank account.†
How can I pay their bills?
Answer: † You
need to get POA cards for every account from all the banks your
parents deal with as well as for any bank vault.† Take the cards to the
hospital, and have them sign the cards - with a notary public witnessing
them signing .† Most hospitals have one available at no or minimal
Question:† My husband,
68, has had a stroke, is in a coma, and needs special nursing care.† Iím
told I cannot just sell our summer home.† Why not?† I own it with him.
though you jointly own the home, he must sign the sales contract and deed
- unless you have Power of Attorney.† No POA; no sale!
Question:† My sister
and I have lived together for 15 years.† She is now legally blind and
canít handle her finances.† I have no idea what her income is, or whether
or not she even has a will.† And I canít pay her bills.† She refuses to
discuss these issues with me as well as her son.† Guidance please.
Answer: † All
of these situations emphasize the importance of everyone, regardless of
age, having a Power of Attorney document drawn up and signed.† There are
no guarantees in life, so everyone should choose someone else they
trust to help out when needed.
If a person refuses
to sign a POA, then family members have to hire a lawyer and go to court
to be appointed guardian or administrator.† This is a costly procedure.†
The judge might even appoint a complete stranger, who not only is paid
a fee, but who also might make decisions contrary to what the person and/or
Everyone has the
choice to protect him/herself or leave important financial living and
medical care decisions to chance or strangers.
Giving another person
POA does not mean you give up your rights or ability to handle your own
affairs.† You still can do everything for yourself.† Look at a POA representative
as a ďhelperĒ rather than ďcontroller.Ē
I had POA for my
father for three years before I used it.† And that was only when he, at
93, said he didnít want to be bothered any longer with paying the household
Question:† My father,
69, recently sold his business (a retail store) and has a modest amount
of cash, plus IRA money, life insurance and $50,000 in stock.† He refuses
to even discuss, much less do anything in relation to estate planning.†
He says itís none of our business, and he knows what heís doing.† Heís
being bombarded by various brokers and financial planners, who advise
all kinds of complicated ďplans.Ē† Guidance please.
Answer: † Complicated
and costly-to-establish estate plans often achieve little or nothing.†
With all the information ďout there,Ē itís easy to be confused and ill-advised.
Besides wanting to
keep financial information to himself, your father may not want to admit
he finds these decisions - which can be tough - confusing.
Iím not a lawyer,
but here are some simple guidelines for him .
- Put down on paper
all assets, the value, and how it is owned (e.g. with or without your
mother).† Most people have no idea what they really have.
- If total assets
are more than $675,000 (2001), then some planning is warranted.† If
under, donít worry about it.
- If over $675,000
(2001), look at how assets are owned.† It doesnít make any difference
when one of your parents dies.† But it will when the second does.
- Split asset ownership.†
Donít have everything in joint tenancy.
- Have a Will that
sets up a marital trust.† That way, the assets of the survivor can be
minimized.† Yet the survivor will have the income.
- The owner of the
insurance policy and the beneficiary should be the same. This takes
it out of probate and avoids estate taxes.
- Donít set up a
Revocable Living Trust expecting to avoid all taxes.† They donít work
that way, even though some planners say they will.
- If various properties
are owned jointly, change deeds to read tenants-in-common, rather than
joint tenancy.† The deceasedís share should go into the marital trust,
with the survivor having life rights and the ability to sell.
By splitting asset
ownership and establishing a marital trust by Will, heirs can
save thousands of dollars.
- Marital trusts
established by a Testamentary Will are only beneficial if a coupleís
assets are not owned jointly.† If all or most of the high valued
assets are jointly held, then there will be no assets available to fund
a marital trust when the first spouse dies.
Question:† My younger
brother, who lives near my parents (82 and 87), has Power of Attorney
for them.† I live 500 miles away.† They refuse to discuss their finances
with me or tell me what they have.† I have a right to know.
Answer: † Sorry!†
You have no legal right to know if your parents donít want you to.†† Itís
their money, and they can do with it what they want as long as they are
mentally competent.† Your brother is responsible to your parents only
and doesnít have to give you any information.
At the same time,
you might tell your parents you are concerned.† And you would like to
know, in general parameter terms, if they will be financially secure in
the long term or whether you should put aside some of your money for their
If you think large
sums of money are being taken by your brother, you can go to court now
or after their death and ask for an accounting by your brother
Do keep in mind that
even though your brother may have POA, he may not be ďexercisingĒ it.†
Your parents can continue to handle their own finances and bills.† My
father handled all his affairs and paid household bills until six months
before he died at 94.† It was only then that I Ďexercisedí the POA.
had to take over my fatherís (85) finances.† Until now, I had no idea
what he had.† The amount is more than the $675,000 that can be willed
(left to heirs) without having to pay taxes.† What should I do?
Answer: † Regardless
of how much over the $675,000 mark, donít rush to ďgiftĒ or transfer money
or other assets.† You might make mistakes that can be more costly in the
end.† And do not put bank accounts or assets in joint names -- e.g. yours
and your fatherís.† Youíre endangering your fatherís money.
If the amount is
a little over $675,000, donít worry too much.† Make sure your father has
sufficient income from his investments to cover his care and living costs.†
This is the first priority.† Then he might ďgiftĒ money to family members
-- yourself, other children and/or grandchildren.† He can gift up to $10,000
a year to as many people as he wants to.†† Or he can pay for his grandchildrenís
college tuition.† The check should be payable directly to the college,
and not the grandchild.
If the amount is
well over $675,000, you should sit down with a certified elder law attorney
who is also knowledgeable about tax implications.† Do not use the lawyer
who closed on your home purchase to develop an estate plan.
and then interview them beforehand.† Make sure they are really knowledgeable.†
The National Academy of Elder Law Attorneys (520-881-4005) can give you
names of certified attorneys in your area.† Or you can write to me and
Iíll send you some names.
As you handle his
finances, make an inventory of what he has and do keep very careful records
of what you do and the bills you pay.
Question:† My uncle
recently passed away.† My aunt (83) is extremely worried about what will
happen to my cousin (48) who is disabled, if she has to go into a nursing
home.† She wants to make sure my cousin has enough money for his care.†
We need sound advice.
Answer: † Sound
advice will come only from an attorney who specializes in disability and
Medicaid law and estate planning.
The most common vehicle,
however, is to transfer some assets into a trust solely for the benefit
of your cousin.† Assets in this kind of trust are not included in your
auntís assets if she needs Medicaid paid-for nursing home care.†
Question:† My parents,
finally, have signed Power of Attorney and Living Wills and want to put
them in their vault for safe keeping.† Their friends are telling them
to keep the documents at home.† What happens if there is a fire?† Guidance
Answer: † Whoever
has POA should also be on the bankís vault card for easy access.† I keep
copies at home and the original in the vault.† My eldest has POA at the
bank.† In the case of Testamentary Wills, if by your state law your bank
freezes access to vaults after death, do keep the original with the lawyer.†
Or the person who has POA, if he/she lives nearby, can get the will from
the vault toward the end.† I keep certain important papers and files in
fire proof cabinets at home.
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