Elder Law

If a person becomes mentally or physically handicapped to a point where they can no longer make rational decisions about their person or their finances, their loved ones may consider a guardianship or a conservatorship whereby a guardian would make decisions concerning the physical person of the disabled individual, and conservators make decisions about the finances.

Typically, a loved one who is seeking a guardianship or a conservatorship will petition the appropriate court to be appointed guardian and/or conservator. The court will most likely require a medical doctor to make an examination of the disabled individual, also referred to as the ward, and appoint an attorney to represent the ward’s interests. The court will then typically hold a hearing to determine whether a guardianship and/or conservatorship should be established. If so, the ward would no longer have the ability to make his or her own medical or financial decisions.  The guardian and/or conservator usually must file annual reports on the status of the ward and his finances.

Guardianships and conservatorships can be an expensive legal process, and in many cases they are not necessary or could be avoided with a little advance planning. One way is with a financial power of attorney, and advance directives for healthcare such as living wills and durable powers of attorney for healthcare. With those documents, a mentally competent adult can appoint one or more individuals to handle his or her finances and healthcare decisions in the event that he or she can no longer take care of those things. A living trust is also a good way to allow someone to handle your financial affairs – you can create the trust while you are alive, and if you become incompetent someone else can manage your property on your behalf.

In addition to establishing durable powers of attorney and advanced healthcare directives, it is often beneficial to apply for representative payee status for government benefits. If a person gets VA benefits, Social Security or Supplemental Security Income, the Social Security Administration or the Veterans’ Administration can appoint a representative payee for the benefits without requiring a conservatorship. This can be especially helpful in situations in which the ward owns no assets and the only income is from Social Security or the VA.

When a loved one becomes mentally or physically handicapped to the point of no longer being able to take care of his or her own affairs, it can be tough for loved ones to know what to do. Fortunately, the law provides many options for people in this situation.  
 

You may have seen the article in last weekend’s Star and Tribune detailing the changes to our statutory power of attorney document titled “Power-of-attorney law addresses ‘rampant’ abuse“ and wondered if the power of attorney document you have safely tucked away with your estate planning documents is still valid. 

First of all, few legal documents are more fundamental than a Power of Attorney (POA). In fact, every “legal” adult should have one. Like most legal tools, the POA can be tailored to fit nearly every need. The broadest POA is the “General Durable POA.” This gives the agent you appoint authority to do nearly every legal and financial act you can do for yourself, even when you are incapacitated. That is broad authority. In the wrong hands, it can be more than dangerous.  But, do not think that a power of attorney is not worth having because n the right hands, it can be a true blessing to allow a loved one to take care of your affairs when you are not able to. 

The POA discussed in the tribune’s article is the statutory power of attorney and some safe guards have been built into a new version of the document based on a law passed in April of this year.  Parts of the law become effective in August with the rest of the law becoming effective in January of next year.  The next time you update your estate planning documents, your statutory power of attorney may look a little different but this is an effort to better the procedure for allowing another individual to step into your financial shoes if you are incapacitated or geographically unable to act on your own behalf.  This document is an invaluable tool for a family member, close friend or relative to take care of your financial matters at a time when you cannot do so. 

 

 

Many grandparents who are financially stable love the idea of making gifts to their grandchildren. However, they are usually not aware of the myriad of issues that surround what they may consider to be a simple gift. If you are considering making a significant gift to a grandchild, you should consult with a qualified attorney to guide you through the myriad of legal and tax issues that are involved in making such gifts.

Making a Lifetime Gift or a Bequest:  Before making a gift, you should consider whether you want to make the gift during your lifetime or leave the gift in your will. If you make the gift as a bequest in your will, you will not experience the joy of seeing your grandchild’s appreciation and use of the gift. However, there’s always the possibility that you will need the money to live on during your lifetime, and in reality, once a gift is made it cannot be taken back. Also, if you anticipate needing Medicaid or other government programs to pay for a nursing home or other benefits at some point in your life, any gifts you make in the prior five years can be considered as part of your assets when determining your eligibility.

What Form Gift Should Take:  You may consider making a gift outright to a grandchild. However, once such a gift is made, you give up control over how the funds can be used. If your grandchild decides to purchase a brand-new sports car or take an extravagant vacation, you will have no legal right to stop the grandchild. The grandchild’s parents could also in some cases access the money without your approval.

You could consider making a gift under the Uniform Gift to Minors Act (UGMA) or the Uniform Transfer to Minors Act (UTMA), depending on which state you live in. The accounts are easy to open, but once the grandchild reaches the age of majority, he or she will have unfettered access to the funds. You could also consider depositing money into a 529 plan, which is specifically designed for education purposes. Finally, you could consider establishing a trust with an estate planning attorney, which can be more expensive to set up, but can be customized to fit your needs. Such a trust can provide for spendthrift, divorce and creditor protection while allowing for more flexibility for expenditures such as education or purchase of a first home.

Tax Consequences: If you have a large estate, giving gifts to grandchildren may be a great way to get money out of your estate in order to reduce your future estate tax liability. In 2013, a single person can pass $1 million at death free of Minnesota estate tax, and a couple can pass a combined $2 million without paying Minnesota estate taxes. The federal exemption is much higher but Minnesota imposes a state estate tax after the first million dollars per donor.  In addition, a person can give $14,000 in 2013 to any number of individuals without incurring any gift taxes. A grandparent with 10 grandchildren could give $140,000 per year to all grandchildren (and a married couple could give $280,000), thereby removing that property from his or her estate.

Like most governmental benefit programs, there are many myths surrounding Medicaid and eligibility for benefits. One of the most common myths is the belief that only 50% of the funds in a jointly-owned bank account will be considered an asset for the purposes of calculating Medicaid eligibility.
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The “ostrich syndrome” is part of human nature; it’s unpleasant to observe that which frightens us.  However, pulling our heads from the sand and making preparations for frightening possibilities can provide significant emotional and psychological relief from fear.

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It’s called your “golden years” but for many seniors and baby boomers, there is no gold and retirement savings are too often insufficient to maintain even basic living standards of retirees. In fact, a recent study by the University of Michigan found that baby boomers are the fastest growing age group filing for bankruptcy. And even for those who have not yet filed for bankruptcy, a lack of retirement savings greatly troubles many who face their final years with fear and uncertainty.
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Plymouth Elder Law Attorney Tackles the Sibling Situation

Siblings often have trouble agreeing on anything, so why should it be any different when it comes to Mom and Dad’s elder care?  Unfortunately those of us in elder law see quite often how families have a very difficult time when it comes to determining what is best for aging parents. 

In some cases, one sibling may be expected to take on an unreasonable portion of the elder care with other siblings not recognizing (or possibly not caring) that it is a hardship. Other times, siblings simply can’t agree on the best course of medical intervention or the choice of an assisted living facility.

A Twin Cities elder law attorney can actually help to avoid or work through some of these issues.

The best approach is to start early.  Most siblings can likely agree that having your parents make their wishes known in advance is a good thing.  The attorney can help them draw up some very important documents before they are even needed. 

• Medical Power of Attorney – In Minnesota, this is the first portion of a Health Care Directive.  This names the person responsible for making medical decisions when the parent is unable to do it for himself or herself.
• Financial Power of Attorney – This is used to determine who will have control of the parents’ finances in order to keep the household going, pay medical bills, etc. during an illness or crisis.
• Living Will – In Minnesota, Part B of a Health Care Directive is most similar to a living will.  Part B of the Health Care Directive helps to outline the parents’ wishes when it comes to medical interventions and end-of-life care.  Having this in place takes some of the burden off of the adult children who would otherwise be making these choices.

If possible, it’s best to have all of the siblings aware of and in agreement about these documents, as it can cut down on the amount of frustration later. 

When things do become more intense and these documents come into play, it is still likely that siblings will have disagreements about what is best.  The one who has the largest responsibility for day-to-day elder care may become resentful, while another may also harbor resentments that someone else was chosen to take care of the parents’ finances.  Throw in the emotions that surface when facing your parents’ mortality, and there is potential for a major explosion.

In order to diffuse the situation, an elder law attorney can direct you to other forms of outside help.  For example, some families choose to hire a “geriatric care manager.”  This person is able to manage many aspects of the parent’s care, and because he or she isn’t a family member, much of the associated drama is mitigated.  When a situation has become too out of hand, the siblings may need to agree to use a mediator.  This impartial listener can help to determine the best course of action for getting the parents the care they need while meeting the needs of the siblings as appropriately as possible.