Food for Thought
Beware the Family Caregiver
by Paul Mawn on 08/22/19
We have all heard sad stories in the
media about predators targeting the elderly.
Often these stories involve phony investment scams, reverse mortgage
scams, or lottery scams. Sometimes we
hear about a sinister nurse’s aide who steals an elder’s identity and cleans
out the elder’s bank accounts. In almost
all of these media accounts, the con-artist is an outsider who comes into the
elder’s life, wins their trust and steals their assets. Yet, you may be surprised to learn that most
financial exploitation of the elderly is not done by opportunistic strangers,
but by close family members.
When family members exploit the
elderly, the culprit is often the family caregiver—the family member who lives
with the elder providing care, companionship and assistance. This person usually has the motive, means and
opportunity.
The motives can be tricky to pin down,
and can be related to family dynamics that go back decades. Yet, for larcenous family caregivers, one of
the strongest motives is usually a sense of entitlement related to the
sacrifices inherent in the caregiver role.
When one family member is doing the bulk of the caregiving for an
elderly loved one, it is only natural that they can feel overwhelmed and
resentful of other family members who are not contributing as much. Most caregivers have the strength of
character to deal with these difficult feelings in a constructive way. Yet, some caregivers allow these feelings to
fester, which can lead to, among other things, a sense of entitlement. Often this sense of entitlement will drive the
morally weak caregiver to justify a decision to financially exploit their loved
one.
When you are dealing with a morally
weak caregiver, the bad news is that the opportunity to pull off a heist is inherent
in the caregiving role. Usually the
caregiver lives with the elderly victim, who becomes more and more dependent
upon them as time goes by. As the
elderly victim becomes more and more reliant upon them, the dishonest caregiver
will enjoy more opportunities to increase the subtle and not-so-subtle pressure
on the elder to give them control of their assets. Some of their standard textbook plays are to
get themselves named survivor on the bank accounts and the deed to the house, and
to convince the elder to execute a power of attorney that enables them to move
assets from the elder’s accounts to their personal accounts.
The good news is that most family
caregivers are honest, caring people who truly are making a great sacrifice to
honor their loved ones and to assist the family as a whole. In these situations, I would advise all other
family members to make sure that they thank them, show appropriate appreciation
and offer to help out whenever they can.
Living by this Golden Rule is not only the right thing to do, but it
also has the practical benefit of dampening any resentment that may be brewing
inside the caregiver—resentment that could blossom into financial
exploitation.
If you have any concerns about a
caregiver in your family, you should talk to a qualified elder law attorney,
who will be able to help you with both preventative
and remedial measures.
Preventative measures keep the theft
from happening in the first place—kind of like investing in a good security
system for your home. Such measures can
include drafting instruments that name the elder’s most trustworthy and
suitable family member or friend to make medical decisions for them and/or to
handle their finances in the event that they ever need assistance. Preventative measures are most effective when
a qualified elder law attorney works with an elder who is still relatively
independent, and mentally sharp.
Remedial measures are taken when some
damage is already done—kind of like calling ServPro after the basement
flooded. Such remedial measures could
include a strongly worded letter from the attorney to the culpable
family caregiver; a petition to the Probate Court to have a more responsible
family member appointed conservator; a complaint filed with the Department of
Social Services Elder Abuse Unit; and, if necessary, a complaint with the local
police. With remedial measures, I always
counsel restraint at first. One can
always escalate the remedial measures if necessary, but one cannot always heal
the divisions that more extreme measures (like calling the police) can cause
within the family.
For many people, their family is
their most prized asset—a wonderful gift that keeps giving. Most people have such high regard for their
family that they do not want to think about the possibility of a family member
doing them wrong. Yet, sometimes, a
little bit of wise planning might be needed to protect the family from itself.
Beware the Agency Caregiver
by Paul Mawn on 07/25/19
If you have an aging loved one who has agency-assigned companions or home health aides, you need to be mindful and watchful of these caregivers. Many of them are looking for an opportunity to financially exploit your loved one.
As we age, we become weaker more dependent on others and generally more trusting. We become less able to protect and defend ourselves. Caregivers know this, and many of them, given the right opportunity, use their position to financially exploit the elderly person in their care.
These sharks in scrubs work their craft in a predictable pattern. At the onset, they try to establish a close family-like bond between themselves and their victim. They will shower the victim with love and affection, bake them cookies, give them small gifts and cards, and perform special tasks that go way beyond the call of duty. As time goes by, they will encourage their victim to become progressively more dependent upon them, discouraging the victim from doing too many activities on their own, asserting more control over the running of the household. Likewise, they will try to isolate their victim from others, reinforcing the victim’s dependence on the caregiver and shielding their activities from their prying eyes of family and friends.
Having established trust, dependence and isolation, the rogue caregiver starts to cash in. They may start by encouraging and/or accepting disproportionate gifts from their elderly victim for Christmas, birthdays and other occasions. At some point, they usually start bringing their personal financial problems to the victim’s attention—they can't pay the rent, can't pay the electric bill, can't make the car payment, can’t pay the special tutor for their special needs kid, can’t afford the co-pays on prescription drugs for their elderly mother, etc., etc. They will complain that the agency underpays them, regardless of what they actually get paid. Whether they come right out and say it, or whether they imply it, the threat to your loved one will be made clear—unless your loved one is willing to supplement their income, they will have to move on, and your loved one will be taken care of by a “stranger.”
Vulnerable elders will often give in to this threat. The victim may pay the caregiver a supplemental salary and/or pay the caregiver’s personal bills directly and/or “lend” money to the caregiver. Some victims even allow the caregiver to drive them to the bank, or to the caregiver’s favorite estate planning attorney. This is scary stuff.
If you suspect that a current caregiver is taking advantage of your loved one, report it to their agency, and get a new caregiver assigned. If you believe the elder has been seriously exploited, consider notifying the Connecticut Department of Social Services Elder Abuse Unit and/or the local police department in the victim’s town. If things have progressed to this point, you should also consider consulting a qualified elder law attorney, preferably one with litigation experience and a background in criminal law.
Following the above recommendations may take a bit more time in the short run. Yet, in the long run, these precautions could help your loved one avoid a financial crisis, and you and your family will sleep better knowing that your loved one is protected. As Ben Franklin wisely stated, “An ounce of prevention is worth a pound of cure.”
Do I Need a Will or a Trust?
by Paul Mawn on 07/20/19
As an estate planning attorney, I
hear this question a lot, but a better question would be, “Do I need just a
will, or should I also have a trust?”
That’s a better question because all
people need a will, while some people
would also benefit from a trust.
A trust, on the other hand, is a written instrument created by a person, the maker or “settlor,” that provides that a named third party, a “trustee,” will manage certain of the settlor’s assets for the benefit of a beneficiary (or beneficiaries) named in the trust. Commonly, settlors will name themselves and/or family members as beneficiaries. Of course, the beneficiaries do not have to be family members, they could be friends, charitable organizations, or any other person or entity. Trusts can be set up so that the settlor can revoke them at any time during his or her life, or they can be set up as irrevocable trusts, trusts that can never be changed after they are executed. Trusts can be structured in a multitude of different ways to accomplish a wide variety of estate planning objectives.
There can be many advantages to having your assets in a trust. For instance, they give you greater control during your lifetime over how you distribute your assets to the people you care about. The assets in trusts do not pass through probate, and this can simplify the administration of your estate by sheltering these assets from probate court. Furthermore, trusts can be structured in certain ways that may help you reduce or, in some cases, eliminate estate/inheritance taxes. Moreover, there is usually no public record of the trust assets, giving you and your family greater privacy. Trusts can be set up to make special provisions for a child with special needs. Trusts are ideal for providing for a child who is not good with money, as they can contain certain “spendthrift” provisions that protect the trust’s assets from a beneficiary’s creditors. People also like to use trusts to keep assets out of the hands of their in-laws, as one can very easily draft clauses that guarantee that distributions go only to blood-relatives. These are just a few of the many advantages trusts can provide. The bottom line is that trusts can provide unparalleled flexibility and utility in helping you reach your estate planning goals.
Unfortunately, trusts have some very distinct disadvantages. First off, they are expensive to set up, and expensive to maintain. Compared to a will, a qualified attorney can easily spend five to ten times more time drafting a trust, and this is reflected in the amount attorneys charge for drafting them. Moreover, after the trust has been set up, there is a lot of expensive paperwork involved, as the Trustee has to file annual state and federal tax returns, and is usually required to file periodic accountings for the beneficiaries to review. This paperwork in turn generates regular billing from the trustee, her attorney and her accountant. Moreover, if a beneficiary is unhappy with the way the trustee is managing the trust, they can bring legal actions that the trustee will have a duty to defend, and the legal fees in these types of disputes can be astronomical. The worst news, not surprisingly, is from the Federal Government. If the trust earns over $12,500 in income, and this income is not distributed, that income can be taxed at a marginal rate of 37% at the Federal level. Adding insult to injury, Connecticut will charge an additional 7% on all federally taxed trust income. Finally, from an emotional standpoint, when a settlor places most of her assets in a trust, she gives up a great deal of autonomy over her finances, and this is especially true if the trust is irrevocable.
Given the potential costs outlined above, when advising clients, my general rule of thumb is that the larger and more complex the estate, the more likely a client is to benefit from having at least some of their assets in a trust. Yet, the decision about whether or not to make a trust should not be determined solely by the size of the estate, because each client has unique needs and circumstances. In the final analysis, you will not be able to make a meaningful decision about whether to set up a trust, or what kind of trust you need, until you have sat down with your attorney, your accountant and, preferably, a competent financial advisor.
Many people make the mistake of
thinking that they do not need a will because they have “everything in a trust.” The problem is that no one—and I mean no one—dies
with “everything in a trust.” Trusts
often do not account for the personal bank account that folks pay their day-to-day
bills with. They frequently to not
include cars, boats, antique motorcycles, coin collections, fur coats, jewelry,
fancy Rolex watches, royalties, shares in small businesses, undistributed
inheritances from other relatives, etc. I
could go on for several pages listing valuable items that are frequently not
included in the trust, but you get the point.
Those assets that are not part of the trust create a lot of loose ends
that have to be tied up in Probate Court.
Moreover, while trustees can be authorized to pay funeral expenses and
other final expenses, they usually look to the will for guidance, and if there
is no will, that could create a lot of unnecessary confusion. So, even if you have a trust, you need a
thoughtful, up-to-date will.
So, if you do not already have one,
have your attorney get started on your will today. You needed one yesterday! If you have a will, and your estate is of any
significance, then you would do well to meet with an estate planning attorney
and explore the possible benefits of setting up a Trust.