Life Estates

There are two different types of life estates. The first is called “life estate with powers”. A life estate can allow a person to live in the home while transferring eventual ownership to children, for instance, when the homeowner passes away. The “life estate with powers” gives the owner the right to change his mind if he decides he does not want to leave the property to the individuals named in the deed, or if he wants to sell or otherwise dispose of the property before he dies. Simply put, the term “with powers” means that the homeowner is not giving up the potential to exercise full power over the real estate by changing his mind.

The second type of life estate is known as “without powers”. That means that the life estate transferring eventual ownership to someone else is an irrevocable transfer. That is to say, unlike a life estate “with powers”, this type of life estate does not allow the homeowner to change his mind once the life estate deed is signed.

Because of these differences, a life estate with powers would appear to be the best way to go. However, there is a glaring exception. And that is if a person contemplates being on Medicaid, retaining a life estate with powers would affect the person’s eligibility for Medicaid. That is so because the real estate would be considered an asset of the Medicaid applicant since he has ultimate control over the real estate. By contrast, a life estate without powers, since it is an irrevocable gift, means that the only ownership interest that the applicant has is the right to live in the property. The value of that interest is considerably less than, for instance, the power to sell the real estate. 

What is a Health Care Power of Attorney?

If you are unconscious and in a hospital, who will decide the medical care you will receive?

Typically, next of kin would serve in that role. But what if there is a difference of opinion among your loved ones? Who will then make the decision? If you have not made a selection of a representative or there is a conflict among your next of kin, the realistic answer is that the doctors will. You can avoid this result by signing a Health Care Power of Attorney which appoints individuals in the order of your choosing to make health care decisions on your behalf.

Who Makes a Decision When the End is Near?

A living will, or advance directive, is a document that allows you to specify what treatment you want and don’t want if your health condition is considered terminal or you are in some permanent irreversible condition and are, in essential respects, unconscious. You can direct that doctors do certain things or withhold certain treatment if you are in those conditions. That means that the doctors will be given authority to act independently of what your loved ones might wish – that might be good or that might be bad. On the other hand, you can leave the final decision to your loved ones through a Health Care Power of Attorney you have granted to them to make such decisions.

Do You Have a Power of Attorney? Is it up-to-date?

A financial power of attorney is a document which allows someone else to act on your behalf if you are sick or out of the country. This power can be used to pay your bills and access your bank account, for instance. When you hear the term “attorney”, you probably think of a lawyer (also known as an attorney at law). The term actually means “representative” and the power of attorney document allows you to select people of your choice to make decisions for you. If you don’t have a “power of attorney” document and necessary financial decisions must be made when you are unable to make them yourself, your loved ones or others will need to go to court to have a guardian appointed. That will result in needless expense, aggravation, and delay.

Are There Options to Nursing Homes?

Many people end up in nursing homes for their final years. But there are alternatives. With proper support and community involvement, it is increasingly likely that an individual in need of nursing home-type assistance can receive such attention while remaining in his or her home. Unfortunately, a person on Medicaid, under current law, will find it very difficult to accomplish that. However, if an individual has obtained long term care insurance which provides sufficient benefits, the policy can provide funds for nursing care and other care such as food preparation to allow the person to remain at home (also known as “aging in place”).

Easing the Stress of a Senior Move

Moving to smaller quarters after the children move out or retirement kicks in can be stressful and a pain…so many memories and deciding what you can’t take with you.

You can stage a garage sale and endure the hassle if you enjoy bargaining over the value of your personal property collected over many years.

For most, though, using a professional is a better idea and an auction house might generate more money.

For local on-site “tag sales” (estate sales), consider “Caring Transitions” (410-951-4111). For auctions off-site, I’ve used Caplan’s Auction Co. in Savage (410-750-7678) and Associated Auctioneers in West Friendship (fairgrounds) (410-489-7200).

Good luck and think positively! No more snow shoveling to do.

Death Brings Myriad Emotions

When a loved one dies, particularly if it’s a spouse, the survivor is often overwhelmed by a variety of emotions. Here is a list of what might be encountered:

Shock: The survivor may be stunned by the turn of events, even after a lengthy illness.

Disorientation: Some may experience confusion and have trouble focusing.

Denial: The loss might seem like a bad dream. The survivor may withdraw from daily activities or experience a flurry of activity and return to work and hobbies shortly after the death.

Anxiety: Extreme worry about the future may lead to paralysis of thought or action.

Guilt: Wishing one had done things differently, or been there more, even if he or she was caring and concerned at the time of illness.

Depression: Lingering sadness or a melancholy that comes and goes even years later.

Vulnerability: Others may seem to be out to fool the surviving spouse—and that may have a measure of truth in it. It is wise to proceed into new areas of interest with caution.

Loneliness: Despair at returning to an empty house, especially at night. This emotion may prompt some to latch onto other people just because they are available.

These feelings usually pass with time. But, it might be several months or much longer depending on the individual. For most, there will come a time when the survivor is able to accept what has happened and resume “normal” activities, although certainly never forgetting. Despite what some well-meaning friends might say, life will never be the same.

The progression of grief is necessary to recognize because until these unavoidable emotions have dissipated, the survivor is not in a proper frame of mind to make long-term decisions whether it be about legal, financial matters or family.

Need for Caution in a Hospital

All of us at one time or another are likely to be hospitalized. Understandably, we expect to be taken care of and for medical personnel to do their jobs in a competent and professional manner. Unfortunately, with shocking frequency, that is often not the case.

According to Consumer Reports, more than 400,000 people a year die in American hospitals due to staff mistakes.

The best protection you can have against some of these mistakes is to have a family member or a close friend visit you frequently while you are hospitalized and do his or her best to monitor the care and attention received.

That person -- and you, if you’re able -- should verify that you are receiving appropriate medication, are protected against falling out of bed if that is a risk, and that medical personnel are faithful in following sanitary practices. For instance, does a doctor or nurse use an antibiotic lotion before touching you? (One usually doesn’t focus on this obvious fact: Hospitals are full of germs that may cause infections.) 

Spotting Signs of Alzheimer’s Disease

There is a common misperception that memory loss is a reliable forecast of the onset of Alzheimer’s disease. That is not true.

To be sure, loss of memory is one of the symptoms of Alzheimer’s. However, simply being forgetful as one ages does not automatically mean one has Alzheimer’s. All of us are forgetful at times. The fact that one forgets the name of an old boyfriend or what he or she had for dinner last Saturday is not significant.

Memory loss that matters is of the sort that affects one’s ability to function in daily life -- as in forgetting where one lives. (A failure to recall where one left the car keys does not qualify.)

And, do note that Alzheimer’s often includes the person displaying confusion, agitation and mood, and personality changes.

Does Attitude Affect the Onset of Alzheimer’s?

Recent research suggests that people who are optimistic and feel a purpose in living are able to ward off Alzheimer’s symptoms better than those who do not share such attitudes.

Surprisingly, a of people whose brains show the presence of Alzheimer’s disease never exhibited memory loss or intellectual impairment. Of course, these findings may simply be coincidental but, certainly, having a purpose in life gives life meaning, and certainly leads to a higher degree of happiness as opposed to others who are not upbeat.

There is certainly no downside to trying to make one’s life more meaningful.

Make A List of “Need To Know” Information for Your Loved Ones

When the time comes, alas, as it does for all of us, to leave this earth for our eternal reward, the ones left behind often don’t have a clue as to what to do next. Don’t put your family in that bind.

Compile a binder or make a list of where your assets are with account numbers and addresses, including bank and brokerage accounts. Provide information on your life insurance. Indicate whether you have a safe deposit box and where the key is located. Make note of any special assets such as coin and stamp collections, and the like, which may be hidden somewhere in your house. List names, addresses, and contact information for your lawyer, accountant or financial planner.

In other words, don’t leave your loved ones in the dark. Don’t compound the grief your loved ones will feel by leaving them in a quandary about what to do. 

Nursing Home Contracts: READ BEFORE YOU SIGN!

When a person enters a nursing home or assisted living facility, typically the arrangements are made by a loved one. That individual should be acting on behalf of the parent or spouse. Thus, financial obligations should be the obligation of that person and not the person helping him or her. The nursing home would love to have another individual “on the hook” for care obligations. You are not required to assume that liability. Be sure that you don’t assume a financial responsibility that you didn’t intend to undertake. Read carefully. Best of all, have a lawyer review the document before you sign it.

Do You Have Backups for your Powers of Attorney or your Will?

Many people think that they only need to name one person as their personal representative (executor) or power of attorney-holder. Because, they say, if something happens to that person, they’ll have time to appoint a replacement. Alas, human nature being what it is, they may delay acting until it is too late.

By naming a back-up when the legal papers are first prepared, you’re much less likely to have a power of attorney that can’t be used because the person named is no longer “available”.

Beware of Joint Bank Accounts Among Family Members

Joint bank accounts with parents and children listed are a convenient way to avoid probate and simplify inheritance after the “last” parent dies.

Unfortunately, there are potentially very serious risks if a child abuses his right to withdraw joint funds originally owned by the parents. Anyone listed on a joint account can withdraw the entire account balance.

There are also risks for the child who withdraws such funds even if the intention is to benefit the parent.

Under Maryland law, as interpreted by the Court of Appeals, the child is vulnerable to criminal charges of theft lodged by a disgruntled parent. The Court ruled this year that being on a joint account no longer makes one a “co-owner” automatically. If, for instance, the parent adds the child to his account for “convenience” (“to help dad with banking needs”), the child becomes a fiduciary to that parent with special responsibilities and both criminal and civil liability risk if alleged to have acted improperly concerning that parent’s “funds”.

The moral: The “easy way” to share control of assets and do “estate planning” on the cheap may not be the best way for all concerned.

Please let me know if you want to review your bank accounts and estate planning situation with me.

Read To Live Longer?

An Australian study found that regular members of book clubs lived longer than those who joined but dropped out. The results seem odd since belonging to a book club isn’t likely to impact health benefits not available to non-members. More probable is that being in a regular group setting provides the socializing, as humans, we all need, with the added bonus of reading providing mental stimulation. Loneliness contributes to depression which certainly shortens life.

Feeling in Control -- A Key to Longevity

Studies make clear that people possessing a sense of independence (“being in control”) outlive those who don’t.

How can that be fostered? Families of loved ones and their caretakers need to focus on presenting choices, not decisions.

Of course, some dependence is unavoidable (isn’t that so for all of us?). But, the need to deprive the person of a say in some matters (driving a car, for instance) shouldn’t disqualify him from making any decisions. The reality, however, is that it’s easier to make all choices for that person.

Resist the temptation.

At the very least, let the person pick out what to wear each morning and make other simple choices.

Others recognizing the areas of independence that can be safely honored enhance the “cared-for” person’s sense of self- worth and extends his life. (Who wants to be entirely dependent on the decisions of others for his existence?) 

Computer Use Holds Dementia at Bay!

Studies show that the risk of suffering from mild-cognitive disorder (MCI) – often, although not always, a precursor to dementia – decreases substantially for those who are mentally-stimulated. Desirable activities include weekly computer use, playing cards and reading.

Beware of Scammers!

A recent Wall Street Journal article warned that authorities are fighting a scourge of phone crime enabled by cheap technology that blasts out nefarious calls and hides wrongdoers’ whereabouts. The scammers are heavily targeting the elderly, often posing as cash-strapped grandchildren, tax collectors or providers of technical support.

Fully robotic robocall schemes leave automated messages directing recipients to call back certain numbers. Those who comply encounter a person and a pitch. In another tactic, fraudsters, often overseas, hop on the line when someone picks up. India, The Philippines, Costa Rica and Peru are among countries where such operations are most prevalent.

Also, fraudsters use robocalls and caller IDs to imitate the Internal Revenue Service.

The callers falsely and aggressively claim recipients owe back taxes and face immediate legal trouble. 

Note: The IRS will send you a letter first – not a phone call – if you owe back taxes. The IRS scam is among those disproportionately targeting the elderly.

When A Loved One Dies…

Scam artists and ID thieves are often on the alert.

Head them off by notifying credit bureaus (TransUnion, Experian & Equifax), the banks and financial institutions the person did business with, and don’t forget to notify Social Security, too.

Does Testosterone Halt – Or Roll Back – Male Aging?

Sorry, too good to be true for most men.

Studies have shown benefits in sexual performance for some older males, but not for most. And testosterone did not help with stamina or energy levels, contrary to the ads promoting the supplement.

If you are tempted nonetheless, be forewarned. There are credible reports that users are at greater risk of heart attacks and strokes.

Transferring Partial Ownership Interest to Your Children While Retaining Your Right to Live There

Last week, I discussed the dangers of transferring one’s house to children outright. However, it is possible for you to transfer partial ownership interest to your children which will result in their being the complete owners of your property after you die or give up your right to live there.

It is called a life estate. In this form of real estate ownership, you can transfer full ownership of the house to your children (or anyone else for that matter) at the event of your death while retaining the right to live in your home for the balance of your life (“life estate”).

Think of it as lifetime tenancy. In the normal rental transaction, a tenant has the right to occupy property for a specified period of time either in months or years. A life estate tenancy is for the duration of one’s life. Although your children may be designated as the full owners of the property upon your passing, they have no rights to the property while you are alive.

Transferring your real estate to your children while retaining a life estate is the best way to transfer real estate to your children while protecting your right to remain in the home.

Another option that is popular is to add a child to your deed as a co-owner and include language in the deed designating that the survivor will inherit the entire property. There is a danger to doing that that most people do not appreciate. If you transfer any portion of your immediate ownership rights in the real estate, you are transferring the right to sell that interest. As a practical matter, if you and a child for instance, have a falling out, that child can put his 50% interest on the market. That means that there would be a likely co-owner who is a stranger. The more likely scenario is that the entire home would be put on the market and sold so that the child could take his share from the proceeds. That would leave you without a home.

Is It a Good Idea to Transfer Ownership of Your Home to Your Children?

Usually not. You may want to do so because you wish to avoid probate and have your children be secure in the knowledge that the home is theirs. Further, they may have promised to let you live there as long as you want or can.

WARNING! If you give up all ownership in your home, you no longer have a right to live there.

Your children may display selfishness and greed that you would have considered unthinkable, but we know it happens all the time. What are you going to do if the house is sold out from under you?

And what if the owners experience serious debt problems and the creditors go against the home (remember, you no longer own it)? Where will you live after you’re forced out?

Please don’t misunderstand. Most children would not abuse a parent’s trust, but are you willing to bet your home on the belief that such trust will not be violated? The temptation of money can cause even loved one to do things “out of character”. There are better options which may allow you to “have your cake and eat it, too”. I will discuss those in next week’s blog.

How Will I Pay for a Nursing Home?

Medicaid (government welfare) was long-used as the preferred way by many of preserving family assets while also receiving necessary care. This was accomplished by what is known as Medicaid planning. Because of recent changes in federal law designed to tighten eligibility requirements, the advantages of such planning have been greatly reduced. As a consequence, long term health care insurance has become a much more desirable option for serving the same the purpose.

Looking for a Nursing Home?

A source of information and ratings on quality of care in the 17,000 Medicare and Medicaid-certified nursing homes is the country can be found at http://www.medicare.gov/NursingHomeCompare.

Included are health inspection results and complaints with detailed and summary information about deficiencies found during the three most recent state inspections and recent complaint investigations.

Keep Hope Alive

As we travel the latter years of life, many of us become depressed, less optimistic and lose hope. Fight it!

Sure, it’s understandable to think that your “best years” are behind you, and you may be right. So what?

Your life is not over. Think of all that you can do. Volunteer. Visit old friends. Make new ones. Spend more time with family. Stop putting off doing things you’ve long wanted to do. Your life is still worth living.

That is what hope is all about.

And hope will keep you going in ways that seem surprising.

Not just your outlook will improve. Research shows hopeful people are physically better off than those who are not. You’ll be sick less often, have lower stress, and sleep better. And, perhaps most importantly, you’ll enjoy life more.

Calcium Pills May Not Help

As we reach 50 years or so, our bones can lose calcium and weaken as a result. Understandably, many people take calcium supplements in efforts to stymie, if not reverse, the process. Warning! Studies show no positive results. In fact, constipation, kidney stones and cardiac problems have been noted.

Hearing Loss May Foretell Dementia

The American Medical Association has reported a study that found that people suffering from hearing loss are more likely to suffer a decline of cognitive ability (dementia). The more serious the hearing deficit, the greater the mental impairment.

What does that mean? For baby boomers with parents who are showing signs of being “hard of hearing”, it means that procrastination in getting important legal documents prepared and signed must stop. You’ve been given a clear warning. Make sure your parents (and you, too) have wills or living trusts and powers of attorney for finances and health care. Don’t wait until they are no longer competent. You will have waited too long.

If I can help, please let me know.

Money Management & Old Age

As we age our sharpness for financial affairs dulls particularly if dementia is involved. Bills are paid late, if at all. Checks are written and not posted in the ledger. So overdrafts frequently occur. And we become more vulnerable to solicitations from suspect charities.

You can help a parent or other loved one I this predicament if you are willing to step in.

There are services available which will help seniors organize their financial affairs (sort of like “bookkeeper plus”). Costs are rather modest. You, of course, can directly help, too. You should have the person’s financial power of attorney.

I can help with all of these needs and concerns.

Reminder: Check Your Credit Report!

Please remember that it is essential for everyone to check their credit history on a regular basis to be sure that it’s accurate and does not contain false or fraudulent information. Security breaches are now a common occurrence.

FREE credit reports are available from each of the 3 major credit bureaus, Equifax, Experian and TransUnion. These three nationwide consumer reporting companies have a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.

Visit https://www.annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Be sure you are on the "official" www.annualcreditreport.com website. Go to http://www.consumer.ftc.gov/articles/0155-free-credit-reports for more information and important warnings about “imposter” websites to avoid.

The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months so, if you stagger your requests to the companies, you can monitor your credit by requesting a report every 4 months.

Over 80% of the general public does not request credit reports. Don’t allow yourself to fall victim to credit fraud because you failed to regularly check your credit history. It's easy and it's FREE!

Exercise Can Ward Off Falls

As we age, our sense of balance deteriorates, making us more prone to falling. And falls can be serious. We have all heard of older people who fall and break their hips. Such injuries can have devastating effects in the future for such individuals even after surgical intervention.

Interestingly, there is some evidence (although much of it is anecdotal) that exercising can improve one’s balance and increase reaction time. (Many falls occur because a person loses his balance but is unable to move his body quickly enough to recover and, hence, falls). Apparently, a system of exercises from the Orient known as Tai Chi can help. It is particularly useful for older people because it does not involve strenuous activity. There is certainly no requirement that you sign up to lift weights at the local gym!

Tai Chi classes are conducted, for instance, at many senior centers.  

Protecting Elders from Financial Exploitation

In a perfect world, people would not take advantage of vulnerable, elderly individuals. But, of course, that’s not the real world.

Accordingly, here are some tips on protecting those who need it.

·         Provide access to only one account. It is highly recommended that the vulnerable person have direct access to only one checking account. This limits exposure on checks written to charities or criminals.

·         On-line bill pay for monthly bills. Do automatic bill pay for routine bills. That helps with account surveillance.

·         Caution them about email scams. Educate about phishing scams. Advise against opening email or links from unknown senders. Set up regular and automatic computer anti-virus and malware scans.

·         Decrease opportunities for unwanted solicitations. To avoid telemarketing calls, add all phone numbers to the National Do Not Call Registry. Advise the vulnerable person to never give out credit card or Social Security numbers over the phone. To reduce mail solicitations, including “free” credit offers, unsubscribe at www.optoutprescreen.com. 

Do You Need a Living Trust?

You’ve undoubtedly heard the ads on the radio or seen newspaper articles recommending a living trust, instead of a will, as your major estate planning document. Is a living trust better than a Last Will and Testament? It depends.

Generally, the answer is no. Most people are under the impression that a living trust, also called revocable or inter vivos, will save your estate inheritance and death taxes. That is false. There is also a belief that a living trust will avoid the necessity of filing for probate. That is generally true, except that if the reason for someone wishing to avoid probate is to save money, that is probably a false savings, since probate fees in Maryland are approximately one-tenth of 1% of the total estate value. That means that the probate fee on an estate valued at $1,000,000 would be $1,000. The preparation of a living trust is likely to cost much more than that.

However, there are certain circumstances where a living trust is preferable to a will. If an individual owns real estate in more than one state, having a living trust makes the transfer of that real estate easier upon the owner’s death (because technically, the individual doesn’t own the property in various states, his trust does).

A living trust is a private document and, unlike a will, is not required to be filed with the probate court where it would become available for public inspection. Thus, if someone was interested in concealing the amount of his assets or the identity of his beneficiaries, a living trust would be the way to go.

Who Will Know If You’re In a Serious Auto Accident?

Maryland drivers can now add three emergency contacts to their driver’s license so police will know who to call if an accident occurs. The emergency contact information is stored electronically on an individual’s driver’s license and will be available only to authorized law enforcement and medical personnel.

You can go to the MVA’s website at www.mva.maryland.gov and add your three emergency contacts in just a few minutes! Go to the website, click “On-line Transactions”, then click “More”, look under “Other Services” and then click “Emergency Contacts” to add your contact names, addresses and phone numbers.

NOTE:  To perform this Emergency Contact transaction, you must be able to provide your driver’s license number, date of birth, and PIN or last 4 digits of your social security number.

Calming News for Alzheimer’s Patients

Anxious and sometimes violent, Alzheimer’s sufferers are the bane of loved ones and caregivers. At times, it seems as if nothing can be done to help them. But don’t lose hope.

A recent study showed that Nuedexta (a combination of quinidine and dextromethorphan) can help reduce anxiety and agitation. The drugs have been used separately for other treatments for years. Used together, they seem to work for Alzheimer’s patients.