603-924-3050
RUNYON LAW OFFICE, PLLC
  • Home
  • Our Attorneys
    • L. Phillips Runyon III
    • Jaran R. Blessing
    • Jacqueline M. Blessing
  • Areas of Practice
    • Estate Planning
    • Probate and Trust Administration
    • Elder Law
    • Business Formation, Representation, and Succession Planning
    • Real Estate Transactions
    • Federal Student Loans
  • Staff
  • Food for Thought
    • Suggestions for Senior Dilemmas - 03/03/2020
    • SECURE in the Knowledge - 02/06/2020
    • Holiday Semi-Legal Offerings 12/19/2019
    • From One State to Another - 11/20/2019
    • What to Do with Those Documents - 06/05/2019
  • Contact Us
  • Food for Thought Archive
  • Your Thoughts
  • Directions
  • Our Town
  • Vital Signs Material
  • ABA pro bono letter

An Important New Law by Phil Runyon

2/17/2015

 

An Important New Law

This is the time of year when new laws take effect, and I want to tell you about one of them that may pertain to lots of families.  I'll preface this by saying that it's purely hypothetical information to advance your legal knowledge - and that I'm definitely not disparaging the reputation of any real person who may read this message.  Disclaimers are an important legal tool.

To boil it down, the new law makes it a criminal offense to breach a fiduciary duty to, or to otherwise exploit, an elderly, disabled or impaired adult.  The most likely way this might occur is for a guardian or the holder of a power of attorney to use the vulnerable person's resources for the guardian's or holder's personal advantage, So, the agent (that's what we'll call the fiduciary) might make a "loan" or "gift" to himself from the person's funds, or spend the person's funds on things that only benefit the agent - like a new bicycle or set of golf clubs that few people in wheelchairs could probably use.  Sure, some powers of attorney allow the agent to make gifts, even to the agent (we often include those provisions), but an agent who actually does so is treading on very thin ice and had better proceed with extreme caution.

First of all, full disclosure - in writing - is an absolute must, not only to the person whose funds are involved (if he or she is competent to understand), but also to any other family members or eventual beneficiaries whose interests might be adversely affected.  One common example is when an elderly person has established a history of making birthday or holiday gifts to family members, and the agent is perpetuating that practice.  Not only should the gifts be comparable to those the person made herself, but there should be no gifts at all made unless there are still plenty of resources left to provide for the disabled person's care and needs. 

In another message I wrote about entering into a care agreement with an elder, in order to help keep the person at home and perhaps to benefit a family member who may be providing the services.  I emphasized the need for a clear, written agreement there, but it's also critical that the compensation paid be reasonable for the services provided.  In other words, the agent may be running afoul of the new statute if he uses the elder's funds to pay his spouse or children way more than a third party would command to provide the same services.

And I can tell you from long and unpleasant experience that there's nothing that drives a nasty wedge between, say, the elder's agent and his or her siblings than to have the siblings decide that their inheritance is being depleted by the agent without their knowledge and for suspect or downright improper purposes.  That may be a mouthful, but it's one you don't want to try to swallow.  Plus, it's not only a scenario that might require the agent to disgorge all his ill-gotten gain - together with the attendant attorneys' fees of everyone else involved - but since January 1it might result in law enforcement consequences, as well.

One last point that might soften some of the intimidation I may have created:  The new statute really just codifies the state of the law as it's always existed for fiduciaries - albeit adding some sharp teeth.  It's not intended to punish agents doing the best they can for their elders, or to hold them personally responsible if decisions made carefully and in good faith simply don't pan out through no fault of the agent.  Here's my rule of thumb when you're an agent and on the fence in one of these situations: 
Is the decision you're about to make one that you'd want described on the front page of the local paper?  If not, then you probably know what not to do.



Posted 02/17/2015 Misc.

A Caring Alternative by Phil Runyon

2/17/2015

 

A Caring Alternative

This message is about what more and more of us are trying to do to make life as pleasant as possible for our venerable but vulnerable elders.  I'm sure nearly all of you have a family story about a beloved grandparent or crotchety old uncle who lived with you (or someone in your family) when you were a kid.  That was the norm a generation or more ago, when the recourse to nursing homes was much less prevalent than it's become.  

The paradigm seemed to shift in the '60s or '70s when both parents in a family had to leave home for work and there was no one left in the house all day to make sure the lovable oldster didn't fall or leave the stove on.  The trouble is, even if a nursing home seems the only alternative, the cost of such care has exploded much like college tuition, and the tab for a year in an institutional residence can now top $100,000.  Sure, there's Medicaid to pay the tuition if skilled nursing care is called for, but that usually requires the senior to deplete nearly all his or her assets first, or go through elaborate machinations to put those hard-earned assets out of their reach.  Neither of those scenarios has ever looked appealing to me, for reasons that are pretty obvious.

So, what's the solution, if there is one?  Clearly, if the elderly family member needs services we just can't provide at home - real medical procedures or care we're just not physically capable of handling - then the choices may be limited.  But if we're just talking about making sure medications are being taken when they're prescribed, making sure diets are healthy and meals are being eaten, and ensuring that emergency services are called in should the need arise, then maybe home care is something we can handle.  Still, if there's no one at home most of the day, maybe even those functions are more than we can safely provide for.

How about this, though.  What if one of the family members who's been going to a job somewhere everyday decides to take on the job of caregiver him- or herself?  And I don't mean just giving up that additional income, but getting paid to provide the home care.  Nearly any way you cut it, that's bound to be less expensive than paying for institutional care, and it keeps the cost of care in the family instead of having it fly out the window.  Not to mention the all-important goodwill factor.

So what's the catch?  There's no real catch as long as you go about this process on a business-like, arms-length basis.  That is, instead of pouring over the detailed care contract with a nursing facility, you yourself sign one with your senior family member.  The contract comprehensively spells out all the services you're going to provide at home and sets a compensation rate that's generously comparable to what you'd pay a third party to come in for the same purposes.  Then you both actually sign the agreement and keep it for later documentation, if that becomes necessary.  When might that be, you say?  Well, if it turns out that Mom or Grandpa can't stay with you right up to the end and really needs a nursing home at some point, you'll be able to establish that the funds received for your services were a contractual obligation and not just a monthly gratuity.  If the former, then those payments won't be disqualifying gifts for Medicaid application purposes, but if the latter, then no matter how much value you've provided at home, those monthly stipends will be treated as voluntary gifts - and delay, perhaps for a significant period, the ability to qualify your elder statesperson for Medicaid benefits.    

Yes, this is one area of the law where oral contracts, though often valid and enforceable under other circumstances, just won't cut the mustard.  They have to be in writing and signed up - before the services are actually provided. 

Posted 02/17/2015 - Misc.

Reversal of Fortune by Phil Runyon

2/9/2015

 

Reversal of Fortune

I've written before about the wonders of reverse mortgages, so take a look at our website for all the pros first - before I toss a thimble of cold water on this hot concept for cash-strapped seniors.  
 
As Fred Thompson and Henry Winkler have told us, these mortgages are for the 62+ folks who have comfy homes that they don't want to give up, but who need additional income to keep up with their real estate taxes or other living expenses.  The idea is that you get approved for a mortgage amount based on the value of your home and certain actuarial factors - then the lender pays you a monthly stipend for the rest of your life or until you decide you really do want/need to sell.  At that point, whatever you've been paid, plus the interest the lender is charging (they're not doing this for free, no matter how wonderful Fred or Henry makes it sound), get repaid, like what would happen with a regular mortgage.

That all sounds fine, but what if you die while you still own the house and with a large reverse mortgage balance outstanding - and your spouse still needs a place to live?  That can be a problem if only one of a couple owns the property and took out the mortgage just in the decedent's name.  The obvious solution to that snag would be to make sure the mortgage is in both names, so the survivor can also stay at home, if so inclined. 

Or more troubling, what if both parents are now gone, but there's a child who wants to keep the old homestead - maybe the child has been living there providing care for Mom or Pop?  Can that child assume the mortgage and start making monthly payments?  Unfortunately, somewhere in the fine print it clearly says no.  So, unless the child can qualify for a new mortgage on his/her own - and pretty quickly - the child either has to sell, or Fred and Henry are going to drop the hammer and foreclose.  That could not only dislocate a loyal but vulnerable child, but also result in a forced sale at a depressed price that wipes out whatever equity the property may have.
 
The key to avoiding these and other unanticipated results is to get the answers about likely scenarios before innocently signing up for a reverse mortgage and having the bottom fall out later on when there aren't any decent options.  For example, before proceeding, try to determine whether anyone in the family is likely to want to keep the house once all the seniors are gone.  If not, then the house will be sold anyhow and a reverse mortgage may make perfect sense after all.  If so, however, it's important to discuss the situation with the lender before proceeding.  Maybe instead of a reverse mortgage, it might make sense to consider a plain old equity line of credit that the lender would allow to be assumed by the interested offspring.  Of course, if the lender commits to that, make sure they put it in writing, as your helpful loan officer will undoubtedly be working somewhere else when the time comes. 

Posted 02/09/2015 Misc.




    Archives

    April 2019
    February 2019
    July 2018
    March 2018
    October 2017
    July 2017
    October 2016
    June 2016
    March 2016
    January 2016
    December 2015
    October 2015
    August 2015
    July 2015
    June 2015
    May 2015
    February 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    October 2013
    September 2013
    August 2013
    July 2013
    May 2013
    April 2013
    March 2013
    February 2013
    November 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012

    Categories

    All
    Asset Protection
    Estate Planning
    Miscellany
    Probate
    Real Estate
    Tax Planning

Copyright ©  2012-2022 Runyon Law Office, PLLC