Ask Liz Weston

Get smart with your money

elder law

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

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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.

Are sons plotting–or genuine?

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Dear Liz: I read your response with interest regarding the two sons in their 60s who were pressuring their parents into taking a reverse mortgage, according to a neighbor who wrote to you about the situation. You may be correct that the sons are trying to get an early inheritance, but you may also be very wrong. The sons may feel well off enough that they don’t need an inheritance and that the money would be better spent by the parents to enjoy their remaining years.

As a reverse mortgage loan officer, I’ve had seniors who are not cash-poor and house-rich go on extended vacations, purchase income properties, buy long-term healthcare policies and fund a research and development project for an invention, to name a few uses. I even know someone who bought a Ferrari, which had been a lifelong desire.

Reverse mortgages are no longer considered to be a loan of last resort. They are, in fact, a source of tax-free cash used in a variety of ways such as preserving and prolonging taxable cash assets, and for seniors who don’t need cash to live on, they may be used by their financial planners for arbitrage purposes.

By the way, I did like your reference to elder care attorneys. Many seniors think it’s a waste of time or way too expensive, but I frequently refer my clients to them as well. They are almost always able to justify the expense in the savings they produce for their clients.

Answer: While there can be many reasonable uses of reverse mortgages, remember that the parents in this case are in their 90s. This may not be a time in their lives when they’re longing for adventure travel, hot cars and investment real estate. It’s certainly not a time in life when they could buy affordable long-term care policies.

There could, however, be another explanation, as the following reader outlines:

Dear Liz: I just read your column about the neighbor’s concern that an elderly couple was being pressured by their sons to get a reverse mortgage. I am glad you mentioned the possibility of fraud by the sons. The elderly are vulnerable and need advocates.

The concerned writer needs to consider another option. Maybe the elderly couple is not doing as well financially as they portray. I was once a concerned neighbor to an elderly widow. As a ploy to remain independent, she was not always upfront about how well (or not well) she was doing. In her case it was health issues that she would hide or downplay (money was not an issue). Though all the neighbors cared and looked out for her, we did not have all the facts that the family had and the family was not aware of all we knew. The concerned neighbor should reach out to the sons. Hopefully the sons are looking out for their parents’ best interests and the neighbor can assist the sons in that common goal.

Answer: Your neighborhood is to be commended for trying to help an elderly person in poor health. Intervening in a financial matter, however, could be fraught with peril and lead to an ugly confrontation with the sons. That’s why directing the parents to an elder law attorney — one affiliated with the National Academy of Elder Law Attorneys at http://www.naela.org — probably would be a better course. The attorney could better protect the parents against potential financial abuse while assessing whether they might need more help than they’re letting on.

Is a reverse mortgage a good option for this couple?

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Dear Liz: I try to watch out for my neighbors, a married couple in their early 90s. Two of their three sons, who are both in their 60s, want them to get a reverse mortgage. The couple’s house is paid off as well as their cars. They pay all their monthly bills with Social Security and his pension. They have a living trust as well. Neither I nor the couple see any reason or upside but the sons are pressuring. Any input?

Answer: A reverse mortgage is typically a last-resort option for elderly people who are strapped for cash and who have few options for generating income other than tapping their home equity. The couple you’re describing does not seem to fit that profile.

The sons, however, may fit the profile of greedy relatives who can’t wait for their inheritances and who are trying to get their mitts on some money early (possibly squeezing out the third brother).

That assessment may be too harsh, but you might encourage the couple to talk to the attorney who drew up their living trust about this. If that attorney isn’t experienced in helping the elderly protect themselves, a field known as elder law, you could help them find someone who is by getting referrals from the National Academy of Elder Law Attorneys, http://www.naela.org. If the two sons have any role in handling their parents’ money should the parents become incapacitated, it might be prudent to replace them or at least name another trusted party to serve with them.

Your neighbors also should consider letting the third son know what his brothers have been trying to do. In some families, the best defense against greed is an ethical relative who can keep his eye on the rest.

Elderly mom isn’t the only one overdue for estate planning

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Dear Liz: Could you advise us on how to protect our 93-year-old mother’s assets if she should become ill or die? She does not have a living will or a trust regarding her two properties.

Answer: “If” she should become ill or die? Your mother has been fortunate to have had a long life, presumably without becoming incapacitated, but her luck can’t hold out forever.

Your mother needs several legal documents to protect both herself and her assets. Perhaps the most important are powers of attorney for healthcare and for finances. These documents allow people she designates to make medical decisions and handle her finances for her should she become incapacitated. In addition, she may want to fill out a living will, which would outline the life-prolonging care she would and wouldn’t want if she can’t make her wishes known. (In some states, living wills are combined with powers of attorney for healthcare, and in others they are separate documents.)

These legal papers aren’t important just for the elderly, by the way. You should have these too, since a disabling illness or accident can happen to anyone.

Your mother also should consider a will or a living trust that details how she wants to parcel out her estate to her heirs. Of the two documents, wills tend to be simpler and cheaper to draft, but a living trust means the court process known as probate can be avoided. The probate process is public, and in some states (particularly California) it can be protracted and expensive. A living trust also could make it easier for someone to take over managing her finances in case of incapacity or death.

You can find an attorney experienced in estate planning by contacting your state’s bar association. Expertise and competence are important, so you may want to look for a lawyer who is a member of the American College of Trust and Estate Counsel, an invitation-only group that includes many of the best in this field.

If she or you are trying to protect her assets from long-term care or other medical costs, you’ll need someone experienced in elder care law to advise you. You can get referrals from the National Academy of Elder Law Attorneys at http://www.naela.org.

Protecting a parent from financial opportunists

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Dear Liz: I liked your answer to the elderly couple who were being badgered for money by their daughter and her husband. I agree that involving the other daughter can help.

I managed to combat the tendency of family and caregivers to pester my 90-something mom for money by convincing her to give me electronic access to her bank accounts. We did this so that I could pay her bills if she got sick unexpectedly. The other benefit is that I see the small larcenies as they begin to happen. Then I can quickly step in and stop them before they escalate. It is a lot easier having a conversation with someone who has sleazed $100 from her than to deal with the $5,000 theft that motivated me to set this in motion.

She is deeply grateful that she doesn’t have to be the heavy with the people she loves and depends on. You can’t make greed disappear, but it can be managed. I continue to be amazed by how easy it is for people to think that her money (which gives her a sublime sense of security in the midst of physical frailty) is their money because they need it and she is too kind (and dithery) to say no.

Answer: Installing a trusted gatekeeper can be an effective way to keep elderly people from being financially abused. The elderly person can refer all requests for money to the gatekeeper, which in itself is likely to reduce the begging. If a relative can’t perform this function, sometimes an advisor can. Ideally, the advisor would have a fiduciary relationship with the client, meaning that the advisor is legally obligated to put the client’s needs ahead of his or her own. Attorneys and CPAs are fiduciaries, and some financial planners are willing to be, as well.

Son-in-law badgers elderly couple for money

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Dear Liz: I am 84, and my husband is 88. We have two daughters, the elder of whom is married to a very controlling man. In the past, we lent them money and were paid back. But starting in 2009 his small business began to do poorly. They borrowed nearly $100,000 from us. Then in 2010, he begged us to get a home equity loan on our home, which was paid for.

They now owe us $300,000. We make the home equity payments of $800 a month because they are not able to pay that amount. He said he planned to sell a parcel of land to pay us back. Now he wants to borrow from my individual retirement account. He is telling our daughter to go after us and what to do. So I told my daughter and her husband, no more!

We are so sad. We didn’t expect to have money problems at this age. We wanted our estate to be divided equally between our daughters. But we’re wondering if we should make a new living trust to reflect the debt owed to us. Should we consult a lawyer?

Answer: You absolutely need a lawyer. Not just to draw up a new trust but to stand between you and the financial predator you call a son-in-law.

Badgering people in their 80s for money could be considered a form of elder abuse, and the amount he’s squeezed out of you is horrific. If either of you died or became incapacitated, he could swoop in to clean you out completely.

An elder law attorney can help you protect your finances and figure out what to do about this debt. It certainly would be understandable if you wanted to deduct the money you’re owed from your elder daughter’s inheritance, but you can expect this bully to cause misery regardless of what you decide.

Not that you needed more to worry about, but what you’re calling a home equity loan may well be a home equity line of credit. Although home equity loans come with fixed rates, lines of credit do not — which means the payments that are difficult for you to make now will be more expensive when interest rates rise. In any case, you might want to ask the attorney about the feasibility of a reverse mortgage, which could allow you to pay off the loan without having to make further payments.

You can get referrals to the National Academy of Elder Law Attorneys at http://www.naela.org. If your other daughter is trustworthy, please enlist her help in looking for and speaking with an attorney. She needs to know what’s going on so she can help in your efforts to protect yourselves from this man.