Patinelli & Chang, LLP

When Is the Best Time to Disinherit a Child?

“I have a sister, who I have not seen or heard from in 40 years, when she said she hated all of us and never wanted anything to do with us again. She even gave up her 5-year-old son for strangers to adopt and would not let my parents adopt him.”

This may sound like something out of a Dickens novel, but sadly, it is someone’s real life. A woman is mourning the loss of her mother. She is the trustee and only beneficiary of her mother’s trust, as explained in the article “It’s never too early to disinherit children” appearing in the Santa Cruz Sentinel. After disappearing for decades, her sister visited with the mother a few times a year toward the end of the mother’s life. Now the sister has retained an attorney to challenge the trust, accusing the woman of elder abuse and stating that the mother was insane.

What can this sister expect?

The goal of the formerly absent sister is to get the trust thrown out, so that the estate will pass equally between the two sisters. She can accomplish this, if she is able to invalidate the trust and invalidate any prior wills the mother may have signed disinheriting one sister and leaving everything to the other sister.

She may not have a case with a lot of merit, but it is going to cost a lot to defend the estate plan. She may be hoping for a quick payoff.

Whether the case is successful may depend upon the circumstances surrounding the creation of the trust. In the best case, the mother would have gone to see the attorney by herself and created the trust with zero involvement of the sister who is the trustee. Even better would be if the trustee sister didn’t know a thing about the trust or the estate plan, until after it was completed.

Here’s the concern: if the mother created the trust only after she became dependent on the more involved sister, and if that sister selected the attorney, made the appointment and had a conversation with the attorney about how awful the other sister was, then it will be hard to prove that the trust was set up purely on the mother’s wishes.

It’s an odd lesson, but in truth, it’s never too early to take steps to disinherit children. If someone knows that they are going to create an estate plan that is going to make one or more people very unhappy, the sooner they document these wishes, the better. It should be done while the person is still living independently and does not require a lot of help from any family member.

Keeping the people who will benefit from the disinheritance out of the creation of the estate plan is best, since it further removes them from involvement and is better when they are accused of being manipulative.

The best tactic is to create an estate plan with the help of an experienced estate planning attorney who can serve as a neutral and unbiased witness and can testify to the fact that the person knew what they were doing when the estate plan was created.

Reference: Santa Cruz Sentinel (June 2, 2019) “It’s never too early to disinherit children”

Seniors, Stay Safe—Here’s How

“You’ve heard all the advice for keeping your identity safe in today’s day and age. Don’t give out personal information on the phone. Legitimate agencies will never call you and demand payment over the phone. Never wire money to a stranger. These tips have kept you safe for years.”

However, this good advice may not be enough today. As we age, we become more vulnerable to scammers and identity thieves. In 2017, more than a third of complaints to the Federal Trade Commission were from seniors, reports My Prime Time News in “Senior Identity Theft: How to Stay Safe.”

Why are seniors more vulnerable to theft? There are a number of reasons. One is that you are a far more interesting target for thieves now, than you might have been earlier in your life. You’ve got a lifetime of savings set aside for retirement. While you’ve got that nice nest egg, it’s possible that you may not be up to date on all of the latest ways that thieves use technology to scam people.

Not all seniors know that caller ID can be fooled into showing that a call is coming from Social Security, when it’s really coming from overseas. Email design is so sophisticated that it is easy for an email to be created using logos and typefaces that make it appear like it does come from a big bank—but it’s from a spammer.

Prevention is the best medicine when it comes to identity theft. There are several steps you can take to protect yourself:

• Be smart about your personal information. Never give your personal information out to anyone, don’t answer calls from phone numbers you don’t recognize and don’t reply to emails from unknown senders.
• Prevent checks or personal information from falling into the wrong hands, by ensuring that Social Security benefits, pension funds and any other retirement income checks are direct deposited into your accounts. All it takes is one paper check from the mailbox for someone to do serious financial damage to your life.
• If you are the caretaker of a family member, proactively protect their finances from fraud. If you have power of attorney, monitor their credit reports to ensure that no new accounts are opened in their name.
• If a loved one has accidentally given out personal information, have an initial fraud alert placed on their accounts for one year. If they’ve already been a victim of identify theft, have an extended fraud alert place on their accounts.

Identity theft is rampant in this brave new world and can happen even when we are watching for it. Take any steps you can to keep your personal information safe, so you can enjoy a fulfilling retirement and avoid a financial disaster.

Reference: My Prime Time News (June 2, 2019) “Senior Identity Theft: How to Stay Safe”

Should I Help My Aging Parents Manage Their Investments?

“Sooner or later everyone loses a step, and the results can be disastrous for older investors who choose overly risky holdings, forget to monitor their portfolio or fall prey to con artists.”

As Americans live longer and their portfolios grow for extended periods of time, their adult children should be watching carefully—but how closely? That’s the question posed by the article “How to Help Aging Parents Manage Portfolios,” from U.S. News & World Report. There is no one answer, and it is a delicate situation. It is also more so for some families than others.

It’s not easy to talk with parents about their finances and their vulnerability to scam artists. Today’s thieves are also savvy. They use Facebook and other forms of social media to learn about family members travelling outside of the country, then call the elderly parents and pose as the grandchild needing money immediately for an emergency.

Older adults, who are lower in numerical skills, tend to rely on their emotional response in making financial decisions. Loneliness and depression, common in aging seniors, also increase the risk of becoming a victim of a scammer. That’s especially so, in the case of someone who has recently become a widow or widower.

It’s often hard for the senior to discuss finances with their children, unless they have done so over the course of their children’s lives and are comfortable doing so.

The biggest marker for many elderly people, is the loss of their ability to drive. That’s followed by the inability to handle one’s own finances.

However, this problem is only growing, as investors live longer and portfolios continue to grow over the course of their lifetimes. It only takes a few mistakes for an impact to hit the portfolios and often there’s no recourse.

The first step for adult children is to be aware of any signs of mental decline. Just be careful not to jump every time someone can’t find the right word or remember someone’s name. Keep an eye on their behavior: a formerly neat person who is now leaving bank statements lying around open on their desk, past-due notices arriving or an extreme amount of mail from questionable charities (versus large nationally-known organizations). This mean it is likely they are having a problem handling day-to-day finances.

Don’t confront the issue in a challenging manner. Have a pleasant conversation, possibly starting with a talk about your own finances and how you speak with your own children, or plan to, to get them moving into the topic. Once they are comfortable talking about money, start discussing other important issues, like whether they have a will, medical directive or power of attorney.

These are not always easy conversations, but they are necessary. Ask if you can accompany them to a meeting with an estate planning attorney and be ready to help but not dominate the conversation. Treat them with dignity to make this potentially troubling process less burdensome.

Reference: U.S. News & World Report (Oct. 22, 2018) “How to Help Aging Parents Manage Portfolios”

Will SAFE Act Really Make Seniors Safe?

“In an attempt to take a step toward countering some of the negative impact of elder financial abuse, the government recently passed the Senior Safe Act in May 2018, as part of a bipartisan banking reform set of laws. “

Elder abuse costs millions of Americans an estimated $2.9 billion annually. The expectation is that these numbers are only going to increase, as the scams targeting the elderly become more and more sophisticated. This is according to Forbes in ““After SAFE Act Passage, The Battle Against Elder Financial Abuse Remains Far From Over.”

The aim of the Senior Safe Act is to encourage financial institutions of all kinds to play a larger role in fighting against elder financial abuse. The law, which was modeled after the Senior Safe program created in Maine, requires financial institutions to train employees on detecting activities that may indicate elder abuse is occurring. If the employees are trained, the Senior Safe Act also provides a reporting process and liability protection for those who report the possible abuse.  It is thought that the liability protection would make those individuals reporting the possible abuse more proactive.  However, there are still some problems with this.

Some advisors report being reluctant to report any client who seems to be suffering from mental deficiencies or elder abuse. The problem, advisors say, is that they are not trained and won’t feel confident in making a judgement about competency. Some court cases have put the onus on the advisor, when selling certain products or strategies but advisors lack both the training and the ability to make a medical diagnosis of senior clients. Without the ability to identify competency, it is very likely that any reporting will only take place well after the elder financial abuse has taken place.

Another issue is that family members or friends are typically the ones who commit elder financial abuse. The victim usually does not want to press charges, fearing that the person will become angry with them and withdraw their emotional support. Being dependent upon the same person who may have perpetrated financial abuse, puts the elderly person in a no-win situation.

Elder abuse prevention, financial and otherwise, should start years in advance, at the first signs of declining physical and mental health. It should begin with a plan for managing financial assets and having the proper legal documents in place, including a will, power of attorney, general durable power of attorney, healthcare directive and other estate planning documents.

By being proactive while the individual is still relatively well and healthy, it may be possible to create protections that will be crucial later in life. Speak with your estate planning attorney now, to make sure that your estate plan is in place, so you and your family are protected.

Reference: Forbes (July 23, 2018) “After SAFE Act Passage, The Battle Against Elder Financial Abuse Remains Far From Over”

Buzz Aldrin, Second Man to Walk on the Moon, Is Fighting Back

“The 88-year-old astronaut, who participated in the historic Apollo 11 mission in 1969, is in the midst of a legal battle, since his family claims he has dementia and is vulnerable to manipulation.”

 

With his family claiming that he has dementia and is vulnerable to being manipulated, Buzz Aldrin has filed a lawsuit accusing two of his own children and his former manager of taking advantage of their roles in managing his assets. He says the Buzz Aldrin Space Foundation is using its resources against his wishes, by funding “future educational endeavors” instead of current ones, according to an article in MarketWatch titled “Buzz Aldrin is fighting his family’s claim of dementia—revocable trusts can be flawed.”

 

The lawsuit claims that the family and former manager have forbidden him to marry someone.  It also contends that they are moving money from his accounts without his consent or knowledge, in some cases moving money to his company, Buzz Aldrin Enterprises. His children said in a statement that the allegations are a result of the increased confusion and memory loss he has experienced in recent years.  They say this can be refuted by witnesses and bank or business records. They asked a Florida judge to appoint them as co-guardians because of his reported decline, so they can make decisions on his behalf.

 

Aldrin has a revocable trust with his son Andrew named as a trustee, which states that Andrew must give written permission before any changes can be made. Aldrin was scheduled to take a competency test in June, although the results have not been released yet.

 

Revocable trusts are great tools to avoid probate and allow the owner to remain in control, while they are alive. They can also be used to state who will take care of your children.  They provide flexibility for your wishes after death.  However, they are not always the best protection.

 

In the best situation, the family sits down and has a conversation, while the person is still fully functioning. This allows them to be part of the decision-making process. The challenge with dementia is that the person may not be aware of the prior agreement.

 

Reference: MarketWatch (July 2, 2018), “Buzz Aldrin is fighting his family’s claim of dementia—revocable trusts can be flawed.”

An Important Webcast on Elder Abuse

Two federal agencies have announced that they will hold a joint webcast to talk about preventing the financial abuse of the elderly.

In the last few years, the federal government has greatly stepped up its efforts to fight back against the financial abuse of the elderly. Criminal cases against scammers and abusers have increased greatly as a result.

Despite these efforts, many people believe that elder abuse is still on the rise in America. The increasing number of elderly people in the U.S. are an attractive target for abusers. The government might be picking up its efforts. Think Advisor reports that two agencies have announced they will be holding a joint webcast on the issue in "Treasury's Crime Unit, Consumer Bureau Team up on Elder Fraud Prevention."

The Bureau of Consumer Financial Protection and the Treasury Department’s Financial Crimes Enforcement Network are urging coordination between various groups involved with preventing the financial abuse of the elderly. Coordinating between different agencies is important,  since different agencies need to work together to not only prevent abuse, but also to detect it when it happens and prosecute it.

The federal government continues to take the issue seriously and is looking for more ways to prevent the problem.

Reference: Think Advisor (May 29, 2018) "Treasury's Crime Unit, Consumer Bureau Team up on Elder Fraud Prevention."

Elder Law Month

There are many legal services available to seniors. May is a good month for them to get informed about their options, since it is Elder Law Month.

 There are many elderly people in the U.S. who suffer from legal problems without knowing there might be assistance and remedies available to them. For example, many elderly people are the victims of financial abuse.  However, they do not know their legal options. Instead of doing something to stop the abuse, they allow it to continue due to lack of knowledge.

That is a problem. No elderly person should have to suffer from abuse of any kind. Now is a good time for the elderly to get informed about their legal options for all sorts of things, as News 4 San Antonio points out in "Protecting senior citizens from abuse and providing legal services."

May is National Elder Law Month. In many localities, attorneys and senior advocates offer free seminars during the month, so people can learn about relevant services available in their areas. If there are no informational events going on in your area, you can still learn about your options by visiting with an elder law attorney.

The attorney will not only know about legal services for elderly people but other things as well. Most attorneys who specialize in elder law, keep informed about other services for the elderly in their communities, so they can help their clients with an appropriate referral, when needed.

If you have not seen an elder law attorney before, you should do so. You are likely to be surprised by the many things you did not know, and you can learn about benefits.

Reference: News 4 San Antonio (May 14, 2018) "Protecting senior citizens from abuse and providing legal services."

States Should Do More to Stop Elder Fraud

Financial crimes against the elderly are an increasing problem in the U.S. However, most states are not doing enough to fight it.

Every year elderly Americans lose billions of dollars to scams, exploitation and fraud. Criminals target the elderly because they are often an easier target, due to cognitive decline and loneliness.

As the population of the U.S. gets older, more criminals choose to target the elderly as well. This is a national problem that requires national attention to fix completely. However, state governments also need to do their part to protect elderly people in their jurisdictions.

Most are not doing enough. For example, very few states have state level investigative units that are dedicated to fighting elder financial abuse, as the Brookings Register points out in "S.D. a national leader in battling elder fraud."

A few years ago, South Dakota decided there was a problem and started a commission to make recommendations about how the problem should be addressed. One of the results was to create a special unit in their attorney general's office dedicated to investigating and prosecuting the financial abuse of the elderly. More states should do the same.

If your state does not have such a unit, talk to your state representative about it. In the meantime, if you suspect an elderly person is being exploited, an elder law attorney can be helpful.

Reference: Brookings Register (May 8, 2018) "S.D. a national leader in battling elder fraud."

Should Felons Be Guardians?

Many states are grappling with their guardianship statutes, so that they can do a better job of preventing elder abuse. One question that has come up in Pennsylvania, is whether felons should be barred from serving as guardians for the incapacitated.

The U.S. has an elder abuse problem, with an increase in reports.

As many state legislators seek ways to curb this growing problem, they are having to come to terms with the fact that the very people the legal system has in place to protect the elderly, are often the source of the abuse themselves: guardians.

Many states have guardianship laws that are ineffective at protecting the elderly from the abuse. Therefore, state legislatures are debating guardianship laws in an attempt to make them better. One such state is Pennsylvania, as the Reading Eagle reports in "Bill would require background checks for guardianship."

One issue that has caused controversy in Pennsylvania is a proposal that would bar felons from becoming guardians. While that might seem like an obviously good thing at first glance, opponents of the idea point out that it would apply to people who committed felonies in the distant past without further legal problems.

Whatever your opinion is when it comes to felons serving as guardians, it is good that legislatures are discussing the issue of updating guardianship laws to better protect seniors from abuse.

Reference: Reading Eagle (April 14, 2018) "Bill would require background checks for guardianship."

A Faster Way to Stop Elder Abuse

One of the many challenges in fighting elder abuse, is that even when it is discovered, it can be difficult to stop it quickly.

Elder abuse can occur in several different ways.  However, one of the most pernicious ways is when a person entrusted to help an elderly person, uses that trust to gain access to financial account information. The “trusted” person then commits abuse by managing an elderly person's accounts for his or her own benefit.

When this financial abuse of the elderly is discovered or suspected, it is not always easy to put a quick end to it through the legal system.  Therefore, the abuse continues for longer than it should.

To fix this problem, some New Hampshire legislators think they have come up with a solution as Seacoast Online reports in "House bill would help elder victims of financial abuse."

The idea is to create a fast track for disabled people and the elderly to get legal relief, similar to how victims of domestic violence can get protective orders. Some elderly victims do currently qualify for domestic violence protective orders but not all.

The process varies from state to state.  However, all states have some sort of process, whereby a domestic violence victim can get a quick protective order from a judge for immediate relief. Giving the same level of protection to victims of elder abuse, would speed up the process greatly.

Talk to an elder law attorney, if you have questions about what to do in your state to help victims of elder abuse.

Reference: Seacoast Online (March 17, 2018) "House bill would help elder victims of financial abuse."