Facebook Rss Twitter Youtube MSN

Elder Care Category

Incapacitated parent? Tread carefully

May 04, 2009 | | Comments Comments Off

Dear Liz: My father-in-law was diagnosed with Parkinson’s disease a few years back and his condition has steadily worsened. He can no longer write checks or keep track of due dates. My mother-in-law now must step in to maintain the family’s books, which she has never done before. I hope to work with her to develop a basic budget, but therein lies another problem. My father-in-law has made a very decent living and until he became sick, neither of them needed to worry about basic daily expenses or even small luxuries. As the medical bills mount, she is concerned that expenses are outpacing income, but he is reluctant to economize. To develop a budget would mean confronting his illness head-on, something he has managed to avoid for almost four years. Do you have any advice on handling this process of ceding financial control from an ill spouse to the partner?

Answer: Incapacity is hard for everyone involved, but failing to acknowledge the new reality could leave your in-laws in dire financial straits.

It often helps to involve a trusted third party who is not a family member. Your father-in-law may well resent your intrusion into their finances but may be willing to work with an accountant or a financial planner, particularly if it’s framed as a way to help his wife deal with her new responsibilities.

Your in-laws also should consult an attorney experienced in estate planning and elder care issues. At some point, paying for long-term care is likely to be an issue, and an attorney knowledgeable in this area can make appropriate recommendations.

Whatever you do, tread softly. You don’t have this disease and can’t know how he feels — or how she feels, for that matter. Offer to help, give your support, research and recommend appropriate resources, but try not to judge or impose your idea of a solution on this couple. This is their path to walk, not yours.

Comments Comments Off

Getting on the Will for Helping Now

Nov 13, 2006 | | Comments Comments Off

Dear Liz: A distant relative who is 75, single and blind asked me to help with her financial affairs because she trusts me and no one else. After a year, I realized that taking care of her required more time than I originally anticipated. Recently, I asked her 40-year-old son to take over because I wanted out. The son said he did not want anything to do with his mother because she is an obnoxious person, and no relative can get along with her. However, he does want to inherit her assets, including three properties: a house and two condominiums.

 

It’s true that she is obnoxious and cheap she gave me a check for $100 for all the hours I put in for her last year; I gave the check back to her. I don’t want any of her money while she is alive. Is there a legal way for me to ensure that I will inherit one of the properties after she dies? I’m worried that if she writes me into her will she could always change her mind.

 

Is there a legal document other than transferring ownership right now that guarantees I will take ownership of one of the properties after she dies? I wouldn’t want her to be able to sell, give that property away or borrow against it during her lifetime. I am willing to keep helping her, but only if I am assured that I will inherit one of the properties. If that is not possible, then I really do not want to be involved in her life any longer.

 

Answer: The only way for you to get what you want, said Pasadena elder law attorney Ruth Phelps, is to persuade her to place the real estate in an irrevocable trust with you as the beneficiary.

 

There are a few problems with this scheme. Given that she’s not exactly the trusting type, she most likely will not agree to this. If she did, the transfer could be considered taxable income to you, Phelps said, since you’re receiving the property in return for services rendered.

 

After her death, you might well face a claim of “undue influence” from the son, who could argue that you forced her into this transfer. Of course, you might be able to discourage a court fight if she included a “strong, comprehensive no-contest clause,” Phelps said, that would cause the son to lose any inheritance if he disputes yours.

 

You have a couple of other options. You could keep track of your hours and expenses, Phelps said, and make a claim against her estate after she dies. You have no guarantee your claim will be honored; if it’s rejected, you’ll have to decide whether to sue.

 

You can also charge your relative a reasonable hourly fee for the work you do for her. You say you don’t want to take her money during her lifetime, but it’s hard to see how scrambling after an inheritance is a better or a more honorable  option. Family members really should help each other without demanding a condo.

 

And don’t forget that you can just back out now. If this woman can’t handle her own affairs and her son refuses to step in, the court can appoint a conservator to take care of her. In most families, there are better courses of action than to involve strangers, but that might not be true in yours.

Comments Comments Off

Be Cautious with Reverse Mortgages

Jul 18, 2005 | | Comments Comments Off

Dear Liz: This is not a question, but a comment on a recent column regarding reverse mortgages. Although your information was factual, reverse mortgages are not a prudent choice and should be considered as a last resort only. I investigated this option for my parents, and the fees are unbelievable: a minimum 2% origination fee and an annual 0.5% service fee to send out their checks. This does not factor in the other closing costs (title, escrow, appraisal, etc.). If you understood the usury involved by the lenders, you could not recommend it in good faith.

 

 

A: The fees that come with reverse mortgages can be steep compared with a conventional mortgage, which is why it may not be the best option for many borrowers.

 

That’s one reason borrowers applying for a federally insured reverse mortgage must undergo special counseling to help determine whether these loans are the best choice. You can call the Department of Housing and Urban Development at (800) 569-4287 for a referral to a HUD-approved housing counseling agency.

 

Origination and servicing fees can vary substantially from lender to lender. That is why it’s important to shop around to get the best deal.

 

The earlier column mentioned the AARP booklet “Home Made Money,” which you can download from its website (www.aarp.org) or order by calling (800) 209-8085. If you have any questions after reading the booklet, you can call the same number to be directed to the AARP Foundation’s Reverse Mortgage Education Project.

 

You might also check out the website maintained by National Center for Home Equity Conversion, an independent, not-for-profit organization that provides consumer information at http://www.reverse.org .

 

Reverse mortgages can be a prudent option for elderly homeowners who want to remain in their homes, but you’re right that they should understand the costs before they proceed.

Categories : Elder Care, Q&A, Real Estate
Comments Comments Off

About Reverse Mortgages

Jul 04, 2005 | | Comments Comments Off

Q: My mother, who just turned 77, lives on Social Security. Although she’s grateful for her checks, they’re just not enough to ease her financial worries. I am able to help her pay for some of her medications each month, but she still barely makes ends meet. She invested in an IRA while she was working, but this year she will draw the last of her money from that account. Is there a safe and smart way she could borrow money against her house, which is paid off? Would she have difficulty getting a loan because of her age?

 

 

A: There’s at least one kind of loan where your mother’s age will actually help her get more money than she might otherwise: a reverse mortgage.

 

Reverse mortgages allow older people to borrow against the equity in their homes and receive either a lump sum or a monthly check. The older you are, the larger the amount you can typically receive. If your mother’s home is worth $200,000, for example, she could boost her monthly income by $699 to $777 with a reverse mortgage. If she were 10 years younger, the amount she would get could be as low as $319 a month.

 

These payments would continue until she dies, sells the home or permanently moves out, at which point the loan must be repaid. Typically, the repayment comes from the proceeds of selling the house; any remaining equity in the home would go to her heirs.

 

AARP has a free booklet about reverse mortgages called “Home Made Money” that you can download from its Web site (www.aarp.org) or order by calling (800) 209-8085. You might also check out Tom Kelly’s book, “The New Reverse Mortgage Formula” (2005, Wiley Publishing) for help in evaluating the various reverse mortgage products.

Comments Comments Off

Who to See About IRA Advice?

Apr 26, 2005 | | Comments Comments Off

Q: I need help with deciding on where to take my 81-year-old mother to review her huge stack of IRAs and advise her on what to do with them. I have no clue on how to read them and neither does she.  Do I take her to a financial advisor? A tax pro?

A: You may need both if she hasn’t started tapping this money and it’s held in traditional IRAs instead of Roth IRAs.

That’s because withdrawals from traditional IRAs are supposed to start in the year after the taxpayer turns 70-1/2. Failure to do so incurs substantial penalties. If your mother hasn’t begun withdrawals, she’s going to want to consult a tax professional on the best way to make things right.

Once that’s done–or if she’s been making the proper withdrawals all along–it’s time to consult an objective financial planner with experience in advising people in retirement. (You can get referrals from the National Association of Financial Advisors at (888) FEE ONLY, among other sources.) How her money should be invested depends on her risk tolerance and objectives.

The planner will probably recommend streamlining all those accounts. There’s generally no need to have multiple traditional IRAs, and all those accounts make tracking her finances much more difficult. Besides, she may be paying fees that she could probably avoid by combining her accounts.

Comments Comments Off

Variable Annuities for Seniors?

Apr 24, 2005 | | Comments Comments Off

Q: In the past, you’ve mentioned that variable annuities aren’t a good investment for seniors. Why, then, does an official at our bank try to convince us to put our savings into one? We are in our early 80s and have always had certificates of deposit at this bank.

A: The answer is pretty simple: profits. The bank can make a lot more money from you if it can sell you a variable annuity, compared to what it can make selling you a CD.

At your time of life, though, variable annuities don’t make much sense. It typically takes 15 to 20 years for the tax advantages of a variable annuity to offset the increased costs, and chances are pretty good you won’t live long enough to see that day. Annuities also come with surrender charges that can cause you to lose 10% or more of your cash if you need to tap your savings in the first few years; with a CD, you’ll typically lose only a few months’ interest if you need to make an emergency withdrawal.

Regulators have repeatedly warned banks and brokerages about pushing annuities on seniors. If this official persists in hounding you, you might mention that fact and suggest he call the Securities and Exchange Commission or the National Association of Securities Dealers if he needs more details about why these investments are often inappropriate for seniors.

Categories : Annuities, Elder Care, Q&A
Comments Comments Off