Ask Liz Weston

Get smart with your money

elder care

Q&A: To help elderly dad hold off mooching adult kids, call in the experts

By

Dear Liz: My dad, age 90, needs personal care and I am trying to get him to move out of his house to a senior residential place. He is in agreement, but it is taking a long time to make this happen. He owns his home free and clear and, along with the sale of his home, has enough financial assets to cover these costs.

The problem is my two sisters’ husbands, who overspend and are in debt. These two guys continue to pressure my sisters to ask my dad for money for such things as their mortgages, expenses for their children and credit card debt. My sisters are not just starting out — they are in their 50s! Not only that, when I ask them for help with our dad, they flake out on me. I’ve told them that the financial assistance can’t continue because Dad will need his money to pay for his care.

I feel that my sisters’ and their husbands’ behavior is senior financial abuse. I read that this situation happens a lot in families, where the kids will milk an elderly, wealthy, sympathetic parent or grandparent, sometimes draining their savings. Or one dysfunctional sibling with take financial advantage of a parent, while other siblings in the family struggle with making ends meet. In our family, both my sisters have children, so my dad feels a soft spot for helping them out. I am single, no children, and I am treated differently. I do struggle to make ends meet. My dad is sometimes even reluctant to reimburse me $20 for gas that I spend driving him around and doing shopping and errands.

I’m trying to remain on good terms with my sisters but it is getting tough. Is there any financial advice or references you can give in my situation?

Answer: You’re right that most financial abuse of the elderly is committed by people close to the person, typically family, friends or caregivers. The toll isn’t small, either. A survey by Allianz Life Insurance Company found that the average victim lost $30,000 and 1 in 10 lost more than $100,000.

Family members may not see what they’re doing as abuse. They may think that they “deserve” the money or that it’s some kind of advance on a future inheritance. They also know that Dad just can’t say no and will continue to press him for money as long as they’re allowed to do so.

You and your dad should consult an elder law attorney to discuss ways your dad can be protected against predators. You can get referrals from the National Assn. of Elder Law Attorneys at naela.org, and the attorney can discuss your options.

One obvious solution would be for Dad to hand over his checkbook to you, which would give you the unpleasant job of standing up to your brothers-in-law. You’re certainly in a better position to do so than your elderly father, but he may not be willing to give up control or you may not want the job.

Another option is hiring third parties. Daily money managers provide personal finance and bookkeeping services to elderly clients. They can keep a watchful eye on transactions and spot signs of fraud. You can get referrals from the the American Assn. of Daily Money Managers at aadmm.com. Hiring a geriatric care manager also could be a good move. The manager could assess your father’s health, living and financial situations and help craft a plan to help him move forward. Referrals are available from the Aging Life Care Assn. at aginglifecare.org.

Q&A: How to protect an elderly widower from financial predators

By

Dear Liz: Our mother recently died after a long illness. Our father is in his 70s and is getting a lot of attention from ladies at his church and the senior center. We’re concerned because of a pattern we’ve seen in other families, where the widower remarries and the new wife convinces him that his kids are only after his money. When he dies, she gets everything. The kids and grandkids are left out in the cold. We love our dad and don’t want him to think we’re gold diggers. We also don’t want someone to take our father from us and take advantage of him. What can we do?

Answer: If your father is willing to consider it, an irrevocable trust could go a long way toward protecting his assets from avaricious future wives and any number of other financial predators, including scam artists and unethical financial advisors. The trust could continue to pay income to him while allowing the underlying assets to be transferred at his death to the heirs he chooses now, when his judgment is presumably not impaired.

This is not a do-it-yourself project. Transferring assets to an irrevocable trust could create a gift tax issue for your dad. An attorney who specializes in trusts will have to carefully craft the language to avoid that, Los Angeles estate planning attorney Burton Mitchell said.

The problem may be convincing your dad that he’s vulnerable to impaired judgment. Although our financial decision-making abilities peak in our 50s and our cognitive abilities decline fairly rapidly after age 70, our confidence in our abilities continues to rise as we get older.

Financial literacy expert Lewis Mandell likens it to driving ability. Other research has shown that older drivers often don’t perceive their driving skills as deteriorating, despite declines in sensory ability that come with aging, said Mandell, author of the book “What to Do When I Get Stupid: A Radically Safe Approach to a Difficult Financial Era.”

But the same research found that when the drivers took an objective test that demonstrated their decrease in skill, they were more willing to alter their driving behavior to reduce the probability of accidents.

It may help to have a third party, such as a fee-only financial planner or an estate planning attorney, talk to your dad about the importance of protecting his assets at this stage in his life.

If that effort fails and he marries the type of woman you fear, try to remain in his life, no matter what. She may try to pick fights with you and then demand he take her side as a way of isolating him. Avoid conflict where possible and maintain contact with regular calls, letters and visits. It will be harder for her to demonize you if you remain a constant, loving presence in his life.

Thursday’s need to know money news

By

Zemanta Related Posts ThumbnailToday’s top story: How paying off your student loans could actually lower your credit score. Also in the news: What to expect from the Social Security Administration’s new strategy, how you could benefit from a financial pro, and why millennials still aren’t saving enough money.

I Paid Off My Student Loans & My Credit Score Dropped?!
Yes, you read that correctly.

Here’s what the Social Security Administration’s new service strategy means for you
Prepare for long wait times

Top 8 Reasons You Need A Financial Pro
It’s good to have a sounding board.

Why Millennials Still Don’t Save Enough
It’s not too late.

Facing Alzheimer’s? Prepare for the financial punch now
Making the difficult decisions.

Tuesday’s need-to-know money news

By

istockphoto-break-the-bankToday’s top story: How to build your financial flexibility. Also in the news: What to do before you take that walk down the aisle, how to save money using one of the internet’s biggest time vampires, and why caregivers need to enlist a financial advisor.

Downward Dog, Downward Debt: Building Your Financial Flexibility
No mat necessary.

What To Do Before You Say ‘I Do’
So that you don’t end up wishing you hadn’t.

How to Save Money With Pinterest
Your four thousand pins on six hundred boards could finally pay off!

Why Caregivers Should Enlist A Financial Advisor
The day-to-day care is difficult enough.

When to Spend Your Time Versus When to Spend Your Money
Both are valuable, but only one can’t be replaced.

“Look back” rules limit Medicaid transfers

By

Dear Liz: You had an interesting column recently about the filial responsibility laws that most states have on their books requiring adult children to support indigent parents. I have friends that transferred their parents’ funds to the grandchildren so the parents will qualify for Medicaid. Doesn’t the government see through this scam? Besides being unethical, it should be illegal.

Answer: The government does indeed see through transparent attempts to artificially impoverish older people to qualify for Medicaid, which offers nursing home care for the indigent.

Medicaid has “look back” rules that examine asset transfers made within the previous five years. Transfers made during that period can delay the older person’s eligibility for the program. In other words, your friends’ maneuvers may well backfire. You should advise them to consult an elder law attorney. Referrals are available from the National Academy of Elder Law Attorneys at http://www.naela.org.

Parent’s medical bills may be tax deduction

By

Dear Liz: The writer who wrote in about her mother’s medical bills should check to see if she took those bills as a schedule A deduction on her 2010 and 2011 federal tax returns. She still has time to amend those returns, if that is useful.

Answer: That’s a terrific suggestion. The writer’s mother may qualify as her dependent if the writer covered more than half of the mother’s necessary living expenses, including in-home care, and the mother’s situation met certain other requirements, such as not having gross income in excess of IRS limits. Gross income does not include nontaxable Social Security checks or other tax-exempt income. The limits for gross income were $3,650 in 2010, $3,700 in 2011, $3,800 in 2012 and is $3,900 for 2013, said Mark Luscombe, principal analyst for CCH Tax & Accounting North America.

Even if the mother didn’t qualify as a dependent, a deduction may still be possible, Luscombe said. As long as the writer provided more than one-half of the mother’s support, the writer might still be able to claim a deduction for medical expenses if all of the writer’s medical expenses, including those paid for the mother, exceed 7.5% of the writer’s adjusted gross income in 2010 and 2011. (The medical expense deduction threshold increased from 7.5% to 10% in 2013 for those under age 65.)