Couple Steals from Grandparents via POA

In another example of a good concept gone bad, KUSA TV in Colorado, reported that a Commerce City couple has pleaded guilty to stealing more than $200,000 from their grandparents.

William Young, 41, and his wife, Karen Young, 42, both pleaded guilty to theft of an at-risk adult.

Young had power of attorney for his grandmother, Francies, between June 2009 and December 2012. Investigators discovered that Young and his wife emptied the Gibbs’ bank accounts and used their credit cards for personal use. In total, the Youngs’ stole $227,000.

William Young faces a four to 12 year sentence. Karen Young faces one to three years in prison.

Powers of Attorney are excellent vehicles for facilitating the management of one’s affairs if they become incapacitated. Unfortunately, they can also be abused by the holder of that power. Great care should be taken when selecting the person or persons that you want to step in and manage your affairs (for your benefit) should you be unable to. Often, a professional fiduciary who is accountable to a court or other regulatory agency can be a better option.

Book Offered on Financial Caregiving

I am pleased to announce the publication of my first book, What You Need to Know: The Adult Child’s Guide to Becoming a Financial Caregiver. The book is a culmination of both my professional and personal experience in working with older clients and their families, as well as working with my own parents. Three years ago, I became a financial caregiver to my parents. All of the years I had spent advising others about this reality came home and I realized that it’s one thing to advise others about this; quite another to actually be in the role. Even with my recent experience, I understand that my parents’ situation will be different from everyone else’s. I am less the “expert” than a fellow caregiver with thousands of others who entered this chapter in the relationship with their parents, not knowing what they need to know. I confess without hesitation that I am not the answer-man when it comes to the delicate issues surrounding this role. I doubt anyone is. Instead, the book focuses on what I refer to as the Four P’s – People, Property, Programs, and Plans – and what the financial caregiver needs to know about each.

The book can be ordered on Amazon for $14.95, or if you’d like a free copy, just email me at drussell@pinntrust.com and send me your mailing address. I’ll be glad to send it to you.

Long Term Care not a priority among candidates

According to a recent article published by Forbes contributing author, Howard Gleckman, long tem care issues are not high priority items for discussion. This despite the fact that the fastest growing segment of our population are the octogenarians, those 80 and over, who are likely to place a heavy demand on long term care services.

Most presidential candidates don’t care enough about long-term care services to bother to describe their views on issue. Of the five candidates surveyed by 15 national advocacy groups only two–President Obama and former House Speaker Newt Gingrich–responded to five questions on long-term care. Neither of the two GOP frontrunners, Mitt Romney and Rick Santorum, answered the survey. Nor has Ron Paul.

See Long-Term Care Services: Forgotten By Most Presidential Candidates. Forbes 2/22/2012

Planning for Veterans Benefits

Today we celebrate Veterans Day. If you have Veterans as clients, there are several benefits available to veterans and their families, some less known than others. The best way to help your clients discover whether they qualify for these benefits may be through a visit to the local Veterans Administration Office. The VA also operates an excellent website and each of the benefits can be found there with a little digging. Below is a summary of those benefits. To learn more about these and other benefits available to the families of Veterans, click the image to the left, or go to http://www.va.gov/opa/publications/benefits_book/federal_benefits.pdf.

Geriatrics and Extended Care: The Veterans Administration’s Office of Geriatrics and Extended Care, offers programs and services for Veterans who may be chronically ill, elderly, or in poor health. Veterans can receive long-term care programs and services at home, at VA medical centers, or in the community.

Veterans Pension Program: This pension is a benefit paid to wartime veterans who have limited or no income, and who are age 65 or older, or, if under 65, who are permanently and totally disabled.

Aid and Attendance and Housebound benefits: Veterans who are more seriously disabled may qualify for Aid and Attendance or Housebound benefits. Aid and Attendance (A&A) and Housebound Benefits are paid in addition to monthly pension Neither benefit may be paid without eligibility for the pension.

Dependent Indemnity Compensation (DIC): This benefit pays a monthly income to a surviving spouse or other dependents of a veteran who meet the eligibility requirements. DIC also may be paid to certain survivors of veterans who were totally disabled from service-connected conditions at the time of death, even though their service-connected disabilities did not cause their deaths.

Death Pension: Similar to the Veterans Pension mentioned above, the VA provides pensions to low-income surviving spouses and unmarried children of deceased veterans with wartime service. The death pension provides a monthly payment to bring an eligible person’s income to a level established by law. The payment is reduced by the annual income from other sources such as Social Security. The payment may be increased if the recipient has unreimbursed medical expenses that can be deducted from countable income.

Burial Benefits: The Department of Veterans Affairs offers several burial and memorial benefits for eligible survivors and dependents. These benefits may include internment at a state or national Veterans cemetery, plot, marker and more. VA’s National Cemetery Scheduling Office or local national cemetery directors verify eligibility for burial. A copy of the Veteran’s discharge document that specifies the period(s) of active duty and character of discharge is usually sufficient to determine eligibility. In some instances, a copy of the deceased’s death certificate and proof of relationship to the Veteran (for eligible family members) may be required.

Thank a veteran. Write your will.

Court Appointed Conservator Misappropriates Funds for Elderly

A court appointed conservator in Alabama has been sentenced to three months in Federal prison and ordered to reimburse more than $100,000 of misappropriated funds for several elderly wards. Zondra Hutto was a Tuscaloosa county conservator and was routinely appointed as conservator for elderly wards of the county. As the county’s conservator, Hutto was responsible for the finances of elderly people who were unable to manage their affairs. According to the indictment, which resulted from an audit of her conservator accounts, Hutto knowingly allowed her legal assistant to use funds belonging to her wards for personal gain. Audits of her accounts reveal that Hutto would approve payment for services that were never performed, and “charged thousands of dollars in unneeded postage, storage and lawn care fees.” To read the full article, click here.

Conservatorships are something we usually advise our clients to avoid. They can be a costly and humiliating process for the ward. But they also provide a system of oversight – annual audits and fidelity bonds – and it was this oversight that led to Hutto’s indictment. Powers of Attorney and Living Trusts can avoid conservatorships, but these documents generally waive the requirement that the person(s) holding the power provide accountings to the court or post bond. In this case, the Court did its job. With the rise in elder abuse even among family members, I wonder if we will start seeing less of these waivers in the future.

Compensation for Child’s Care of Parent Not Tax Deductible Absent Written Agreement

Many adult children provide care to parents with chronic health impairments, often at great time and economic costs to the caregiver children. We frequently get questions about whether such parents can pay the children for care services and whether the children must claim those payments as income on their taxes.

A recent Tax Court case addressed a different twist on this subject – whether a deceased parent’s estate could deduct the caregiving charges from the child.
The United States Tax Court recently held that a New Jersey estate may not deduct a child’s charges for long term care provided to a deceased parent absent a written agreement by the parent to pay the child for the care. Estate of Olivo v. Commissioner (U.S. Tax Ct., No. 15428-07, July 11, 2011) http://www.ustaxcourt.gov/InOpHistoric/OLIVO.TCM.WPD.pdf. The estate claimed the child and parent agreed orally that the estate would pay the child for extensive long term care the child provided over many years. While the Tax Court acknowledged the child provided the care, the child’s law practice suffered dramatically as a result of devoting so much time to the parent’s care, the parent needed the care, and the care had substantial value, the Tax Court held that absent a written agreement, the estate didn’t satisfy its burden to prove the existence of a binding obligation to pay for the care.

The estate also couldn’t deduct the value of the child’s services in quantum meruit, a legal theory allowing payment where it would be inequitable to deny payment to a person who confers a benefit on another. Essentially, quantum meruit allows a plaintiff to recover the reasonable value of services that are accepted by the recipient of the services and provided with a reasonable expectation of payment. However, New Jersey’s Supreme Court has held that services by family members residing in the same household are presumed to be provided for free and the estate lacked evidence to overcome the presumption. Waker v. Bergen, 132 A. 669, 669-670 (N.J. 1926).

The moral of this case is to document through written agreements at the earliest possible date all payments to family members that are intended to be tax deductible. However, be careful because the family member providing services must treat the compensation as taxable income that generates state and federal income and payroll tax, which could more than offset the value of tax deductions. Also, care agreements always must be reduced to writing before care is provided or the payments likely will be considered gifts that can trigger Medicaid transfer of asset gift penalties.

Thanks to friend and colleague Richard Courtney, CELA, for this article.

Caring for Aging Parents today on SuperTalk FM

David Russell, Sr. Vice President for Pinnacle Trust, will appear today at 9:00 AM on SuperTalk Mississippi. With the challenges that face the 50 plus Americans, SuperTalk Mississippi realized that the fastest growing age group in America as well as Mississippi needs a voice.  That voice is Prime Time Radio.  From topics such as healthcare reform, travel, and finances, Prime Time Radio covers the issues that affect those in the 50 plus age group. 

Russell, a Certified Financial Planner™ with over 25 years experience advising individuals and families, will share from his personal and professional experiences on the things the adult child needs to know about his or her parents’ financial affairs.

To listen online, or to get a listing of local stations that air the program, go to www.supertalk.fm.

Indecent Proposal pits Neighbors against a Florida Millionaire’s Heirs.

In a plot that is thicker than the 2003 Robert Redford film, the real life drama unfolding in Naples Florida, makes that film dull by comparison. The plot in this sure-to-be reality movie involves a disbarred-lawyer-former-escort-service-owner who allegedly loaned the sexual favors of his 62 year old wife to the aging millionaire in exchange for monetary favors that included the financing of a 2.4 million home, club memberships, and the purchase of a $439,000 mountain worth $11,100. This one is worth your read.

Love and war in Port Royal: Millionaire’s children battle for estate vs. ex-neighbor, lawyer

Married Power of Attorney Requires Non-Spouse Agent for Residence

 
My friend and colleague, Richard Courtney has written about important changes to Mississippi law on Durable Powers of Attorney.

It is important for you to have a durable power of attorney (DPOA) that appoints someone to handle your affairs if you become incapacitated from an accident, illness or dementia and can no longer handle your own finances, insurance or other affairs.  The durable power of attorney is an essential component of every estate plan.  However, if you are married and have named your spouse as your only agent in your power of attorney, then you should “fix” your DPOA to be current with Mississippi law.

Click here to view the complete article. 

Double Jeopardy for Baby Boomers Caring for Their Parents

According to a new study by MetLife, nearly 10 million adult children over the age of 50 care for their aging parents. These family caregivers are themselves aging as well as providing care at a time when they also need to be planning and saving for their own retirement. The study is an updated, national look at adult children who work and care for their parents and the impact of caregiving on their earnings and lifetime wealth. Key findings include:

• The proportion of adult children providing personal care and/or financial assistance to a parent has more than tripled over the past 15 years. Currently, a quarter of adult children, mainly Baby Boomers, provide these types of care to a parent.

• Working and non-working adult children are almost equally as likely to provide care to parents in need.

• Overall, caregiving sons and daughters provide comparable care in many respects, but daughters are more likely to provide basic care and sons are more likely to provide financial assistance.

• The total estimated aggregate lost wages, pension, and Social Security benefits of these caregivers of parents is nearly $3 trillion.

• For women the total individual amount of lost wages due to leaving the labor force early and/or reduced hours of work because of caregiving responsibilities equals $142,693. The estimated impact of caregiving on lost Social Security benefits is $131,351. A very conservative estimated impact on pensions is approximately $50,000. Thus, in total, the cost impact of caregiving on the individual female caregiver in terms of lost wages and Social Security benefits equals $324,044.

• For men the total individual amount of lost wages due to leaving the labor force early and/or reduced hours of work because of caregiving responsibilities equals $89,107. The estimated impact of caregiving on lost Social Security benefits is $144,609. Adding in a conservative estimate of the impact on pensions at $50,000, the total impact equals $283,716 for men, or $303,880 for the average male or female caregiver 50+ who cares for a parent.

• Adult children 50+ who work and provide care to a parent are more likely to have fair or poor health than those who do not provide care to their parents.

The MetLife Study of Caregiving Costs to Working Caregivers: Double Jeopardy for Baby Boomers Caring for Their Parents