Checks and Balances In Designing A Trust
December 11, 2008
Every once in a while we’ll hear a story about a family for whom a trust was more of a hindrance than a help. Most often it’s because the trust was not created properly, or was old and outdated and hadn’t been reviewed by the grantors on a regular basis. But sometimes the conflict is more personal.
The possibility for conflicts within trust administration is no reason to keep from creating a trust; rather, it is why it is important to have a system in place to resolve these conflicts when they crop up.
Options for conflict resolution or prevention may include having a dispute mediation clause in the trust document itself, nominating co-trustees whom you know will be able to work well together, or nominating a Trust Advisor (also called a Trust Protector).
A Trust Advisor is separate from the Trustee. The Trust Advisor may be a professional, often an attorney, who can serve as a mediator between the beneficiaries and the trustee should any disagreements crop up. In addition to serving as a mediator in case of conflict, your Trust Advisor will also be the first person any of your beneficiaries can call on if they have questions about administration or distributions, or conflicts with the Trustee. A Trust Advisor may also be given powers to modify the trust provisions to ensure ongoing compliance with law and changing circumstances, even after the incapacity or death of the Grantors.
Whatever your situation or preference there are options and tools to ensure that your wishes are carried out and your beneficiaries are provided for with as little conflict as possible.
Give the Gift of Peace of Mind
December 9, 2008
The holidays are the perfect time for family reunions, family bonding, family fun …and, according to the Wall Street Journal the perfect time for parents and children to talk about family finances, family estate plans, and family decisions about end-of-life issues. After all, there are relatively few times each year in the lives of most families when everyone is gathered in the same place.
“While there’s no need to try to answer difficult health-care or legal questions on Christmas Eve,” says author Tom Lauricella, “the holidays offer a chance to start important conversations.” Lauricella points out that the holidays offer not only a chance for parents and grandparents to discuss some of these issues with their grown children, but also a chance for grown children to reassess how their elderly parents or grandparents are faring—and issue just as important as a discussion of retirement or estate planning.
So this year, along with the egg-nog and presents, families might want to consider the gift of peace of mind that comes with a bit of frank talk, surrounded by the love and cheer of the season.
Should You Be Responsible For Your Parents’ Care?
December 5, 2008
Jane Gross over at the New Old Age Blog recently wrote a post about the prospect of enforced filial responsibility. Filial responsibility laws are patterned after Elizabethan Poor Laws and state that adult children are responsible for the basic needs of their parents, just as you would be for the basic needs of your spouse or your children. “Basic needs” includes food, clothing, shelter and medical care.
According to Ms. Gross, the filial responsibility laws are still on the books in 30 states, including California, Massachusetts, Indiana and Pennsylvania! (Gross includes a link in her post to a document listing all 30 states with filial responsibility laws.) These laws haven’t been enforced in a long time, but with the current economic crisis, and the rumor of dwindling Medi-CAL and Social Security resources as baby boomers age, is it such a far stretch to imagine that those laws may be enforced again someday? Perhaps even someday soon?
How hard would that be on the sandwich generation? It really wasn’t that long ago that elderly parents lived with their children. There was a time when it was not unusual to have three generations in one house; it was the norm, in fact.
Were these laws to once again be enforced, the real issue would not be food or shelter; rather, it would be medical care, daily home care, and length of life. The fact of the matter is that we are living longer today than we ever have. In some cases those added years are high-quality, but often those years are spent in a slow decline into Alzheimer’s or dementia, both of which eventually require round-the-clock care. With modern families generally needing two incomes just to stay afloat, where would that care come from?
This isn’t an issue that we necessarily need to worry about right now, but it is one that is important to consider. Most of us would choose to take care of our parents rather than see them out on the street, regardless of whether or not we were required to by law, but the cost of doing so rises every year—and rises with every year we add to the average life-span. What happens when it’s not just the impoverished elderly we need to worry about, but newly impoverished middle-agers as well?
Special Needs Trust May Prolong Life of Beneficiary
December 4, 2008
Individuals with mental illnesses already have a number of unique challenges to face, and now Time Magazine tells us they have one more terrifying prospect, because, according to Time’s recent article by Kate Torgovnick “on average, people with severe mental illness die 25 years younger than the rest of the population.”
There are many contributing factors to this shocking figure, but one of the main reasons the article gives is that “people with serious mental illness tend to be low on the socioeconomic totem pole and don’t often get the best available health care.”
The real tragedy in this scenario is that it doesn’t have to be this way. With the right planning—either by the individual in question or by loving friends and family—someone with a serious mental illness could still have access to the best medical care. And a special needs trust complete with provisions for an advocate or an advisory committee will provide the beneficiary with further protection; someone to ensure that his or her needs are being met, and any ailments are taken seriously by medical professionals.
With enough education and planning, perhaps we can improve the situations of those with mental illnesses… and change that shocking mortality rate as well.
Forced Divorce for Seniors?
December 3, 2008
Growing old alone can be tough, but it might be what many of our parents and grandparents will be forced to do in order to protect their assets and still qualify for Medicare. In her article Caring for Aging Loved Ones Can Be a Catch-22, journalist Gail Sheehy describes how she learned the hard way about Medicaid’s “policy of pauperization” when she supported her husband during his long battle with throat cancer. For California readers, the Medicaid program is known as “Medi-CAL”.
“If the couple first exhausts all their remaining assets, then Medicaid will cover nursing care. And if Sheehy, in her late 60s, wasn’t willing to give up all her assets and income?
‘Then, you need to divorce him,’ the geriatric care manager told her.”
It seems that at a time when couples most need the health, security, and emotional support that come from a loving spouse, they learn that they may not be able to afford to be married!
But the difficulties don’t end there. The U.S. News & World Report article above shows that a “policy of pauperization” is only part of what’s wrong with our long-term healthcare system. Poorly trained caregivers, piecemeal medical treatment—these and more are what await you if you’re a middle-class aging American.
So when you’re investigating how to protect your assets and your future with an estate plan, be sure to find out how you can achieve the same goals in the event that you need long-term care as well.
Jinies.com