Stapleton Elder Law

Some Elder Financial Abuse is All in the Family

Educational programs, along with increased staffing at district attorney’s offices are great, but when abusers are family members, it’s hard to protect seniors.

It’s not pleasant to contemplate, but according to TC Palm, in “For seniors, financial scams may be closer than thought,” one financial study found that as many as 71% of elder financial abuse cases are thought to have been committed by the adult children of seniors.

In some instances, it can be an impatience to inherit or having a sense of entitlement because their care of the parent can justify their accessing funds to which they feel entitled. This could involve frequent dinners out, filling up the gas tank, or paid vacations for all their help … and typically the rest of the family has no idea that it’s happening. It’s not uncommon to have a sibling who cares for the senior parents end up feeling entitled to a tropical vacation, a new car, or a down payment on a house on the parents’ tab, while the other siblings are unaware that this is happening to their parents.

Many state laws aren’t sufficient to protect elders in these types of situations. Currently, investigations go nowhere because, in many cases involving familial elderly abuse, it’s one person’s word against the other.  Therefore, what can a person do to protect a senior when the adult children have reasonable explanations for money spent or money that’s needed?

With rates of elderly abuse running this high, specifically financial abuse, seniors are advised to develop a financial plan with a trusted person, so that more than one adult child or one adult child and spouse are involved with their financial situation.

Estate planning and elder law attorneys can help with planning and strategies to prepare for these financial possibilities in a family. Financial and estate planning can provide answers to questions about how bills will be paid if the person becomes incapacitated, and address potential feelings of entitlement as well as the potential for discord among children.

These are admittedly tough topics and some families will no doubt encounter challenges when taking the bull by the horns, but it is better to get these issues out in the open and prepare for what may occur.

Preparing for all possible outcomes, from good health to incapacity, will give you peace of mind and lets your children know that you are ready for the eventualities of your later years. Your surviving spouse and family will be stronger for it.

Reference: TC Palm (FL) (December 14, 2016) “For seniors, financial scams may be closer than thought”

To learn how you can protect yourself from financial abuse, please visit our website.

When Should I Start Taking Social Security?

For most individuals, the longer the delay, the better, but what if your situation is different?

Choices that you make about Social Security can make a big difference in your retirement income. Most people understand that the longer they wait to take benefits, the higher their monthly payment will be.  However, as reported in Kiplinger’s December article, “Social Security: Delay or Hit Go?,” that’s not the right answer for everyone. You’ll be able to make a better decision, if you understand how Social Security rules work and by making an honest assessment of your individual situation.

Social Security 101. First, a short tutorial on Social Security benefits and how they're calculated. What the federal government deems you to be at full retirement age benefit begins between ages 65 and 67, based on when you were born. The amount of money that you receive is based on an inflation-adjusted average of your 35 highest-earning years. You can begin collecting Social Security benefits as early as age 62—but your monthly benefit amount will be permanently locked in at about 30% less than your full benefit amount, which depends on your current age, full retirement age, and income. If you can delay taking your benefits, they’ll grow. If you delay until age 70, your monthly Social Security benefit will be about 135% of your full benefit.

Whether you’re better off waiting to get fewer years of higher income or starting earlier to get more years of lower income really depends on your individual situation. Some of the factors that should be considered include other income sources, your life expectancy, your spouse's benefits, and your risk profile. While there's no one correct answer to the question, there are some ways of thinking about benefits that can help you to find the right answer.

Spousal Benefits. If you're married or were married for more than 10 years and didn’t remarry, you may be eligible for spousal benefits at a maximum of 50% of your partner's full retirement age benefit.

Interest Rates. Each year you delay taking benefits "earns" you an additional 8% in Social Security income down the road, giving you a very attractive rate of return—and Social Security is guaranteed. Social Security benefits are also indexed to inflation, so when you begin receiving your checks the income will keep pace with the rising cost of living. Think about that fact when choosing between starting Social Security and using your investments to supplement retirement income. It is also important to understand that your decision could affect your estate plan, since using your investment assets could result in less money in your estate.

Longevity and Health. People who rely on Social Security to fund their retirement may not have the option to delay taking benefits when they retire. If your health is poor and you don’t expect to live into yours 90s or even 80s, then delaying benefits may not be a priority for you.

Some of these issues are easier to grapple with than others. Generally speaking, consider all of your circumstances, from retirement income to longevity, before making a final decision about Social Security benefits.

Reference: Kiplinger’s (December 2016) “Social Security: Delay or Hit Go?”

To learn more about social security  and retirement planning, please visit our website.

 

Assign a Power of Attorney to Protect Yourself and Family Members

The power of attorney does not mean you are yielding control of your life. Instead, it will protect you, should something unexpected occur.

There are many unexpected ups and downs in life, and having an estate plan in place is how responsible adults do their best to protect themselves and their families, according to The Villager, in a recent article, “Power of attorney protects loved ones.”

A power of attorney (or “POA”) is a document that allows a person to designate a person or organization to manage his or her affairs in the event he or she is unable to do so. The specific laws for creating a power of attorney vary based on the state where a person lives, but there are some basics common to all.

Without a POA for financial, medical, and other pertinent information, family members may be unable to act without court intervention. In those cases, the state may appoint a person to make decisions for an individual, if there is no POA.

The main types of POA are the general power of attorney, health care power of attorney, durable power of attorney and special power of attorney. While some of the responsibilities in these documents can overlap, there are some legal differences. A durable power of attorney concerns all of the appointments involved in general. The document will remain in effect or take effect, if a person becomes mentally incompetent. Certain powers of attorney may terminate at a specific time.

Depending on the terms of the document, an agent appointed through a power of attorney may make decisions in the following areas for an incapacitated individual: banking, the sale or purchase of property, filing tax returns, coordinating government-supplied benefits, deciding medical care and making estate-planning decisions.

A power of attorney sounds like a straightforward document, but it is most effective when it is part of an overall estate plan. An experienced estate planning attorney will be able to create a plan that includes this and other critical estate planning documents that every family should have.

Reference: The Villager (December 14, 2016) “Power of attorney protects loved ones”

To learn more about the importance of having a Power of Attorney, please visit our website. 

This New Yorker’s Legacy Won’t Be Blurred, Even by a Mystery

Beloved photographer Bill Cunningham recorded both street styles and high society for decades.

Bill Cunningham’s photos for The New York Times often included a group of regulars, one of whom has claimed that his will has been fudged, according to the New York Post’s Page Six in “Muses claim Bill Cunningham’s will was ‘fudged.’” Whether the claim is founded or not, no one in the group was named in the will, so according to Page Six, they won’t be able to challenge it in court.

Lebenthal was photographed by Cunningham regularly. She says that Cunningham, who died in June 2016 at 87, asked her for estate planning advice in 2014 and 2015. Lebenthal told the newspaper, “Bill came in and gave me his will, I saw it … A year later, there’s this totally different will.”

Lebenthal noticed that the will she saw did not mention Cunningham’s photographic archives. She raised concerns when he told her that he just wanted to have his collection thrown away. She claims to have then discussed his donating the photos to the New York Historical Society.

In a 2014 handwritten letter, Cunningham wrote Lebenthal, “Thank you for caring about all that end of life stuff … I have to start the process.”

In December 2015 he wrote, “Thank you for your [letters] to help me put my affairs in order. I have put off to [sic] long but must do it now … doing it would give me peace of mind.”

The New York Post reported in August 2016, that when Cunningham passed away, he had a 2010 will that named a niece and an attorney as executors. The will stipulated that his valuable catalog of photos and negatives was to go to his niece.  However, Cunningham had also filed a 1993 will with New York Surrogate’s Court for safekeeping.

Lebenthal and her group have hired an investigator to look into the will on file and claims that there are many things that don’t add up. She claims that the new will had suspicious “smudge marks” from alleged water damage, inconsistent “stapler marks” and a notary stamp she believes to be “fishy.”

Bill Cunningham was an institution in New York City, and Lebenthal told Page Six that she loved him like a father. Attorney Richard S. Peskin, a co-executor of the 2010 will, declined to comment on the story and says that he has not heard from Lebenthal.

Reference: Page Six (December 13, 2016) “Muses claim Bill Cunningham’s will was ‘fudged’”

To learn more about creating a will that reflects your goals, please visit our website.

Make This Year’s New Year’s Resolutions More Likely to Succeed

Instead of tackling the entire known universe, boost your chances for success by picking only one area to improve, and making it your top priority.

2016 may be remembered for many things, from a grueling presidential election to the loss of such notables as Prince and Princess Leia. We can only imagine what 2017 will bring to the world stage. Closer to home, we hope that you have the opportunity to take a pause and reflect on your hopes and consider some good advice from an article in US News, “A Simple Resolution for the New Year.” The takeaway: don’t just come up with resolutions, come up with a plan and stick to it.

We all like the idea of making a New Year's resolution…it’s based on our desire to improve. Good intentions go a long way, but we’ve all fought through the jammed gym in January, only to hear crickets while you exercise in March. Instead of biting off more than you can chew—so to speak—find one thing and make that your focus for all of 2017.

While a recent survey found that 40% of respondents put exercise and diet at the top of their resolution lists for 2017, right behind at 37%, was getting a better handle on money and saving more. Regardless of your age, here are simple and obtainable financial resolutions to think about for every generation.

Millennials: Try living on a cash basis for one month. This can be a real eye-opening experience and make you more aware of new debt. In addition, you can see the true cost of living expenses, which can help you to use better budgeting habits.

Generation X: Protect your family and yourself. Many of these folks are now parents and are also focusing on careers. They’re reaching their maximum earning potential. A great resolution for Gen Xers is to purchase life insurance and/or disability insurance, in the event something was to happen to you or your spouse. You should also be sure that your 401(k) is being maxed out to leverage the full employer match. Look into developing a financial plan and examine tax planning to maximize savings.

Baby Boomers: Review your estate plans. Make sure that your estate plan is up-to-date and, at the same time, review all beneficiaries on life insurance policies, IRAs and other plans.

Whatever generation you belong to, you should be planning with an eye to many years ahead. Americans are living longer, and retirement can last as long as two and even three decades. Throughout the year, you’ll want to make sure that your retirement finances are on track to keep pace with this longer lifespan and cost of living increases. Whether your retirement is near or far, increasing your retirement savings in 2017, even by a small amount, can have a big impact.

Reference: US News (December 20, 2016) “A Simple Resolution for the New Year”

Please visit our website to learn how we can assist you with your estate planning goals this year!

Alleged Abuse of Guardian System Results in Work Group Charged with Finding Solutions

The reporting of exploitation of seniors by a guardianship system that seems to mainly benefit the professional guardians has drawn state-wide attention and hopefully will lead to constructive changes.

A work group focusing on guardianship issues facing Florida’s courts and Florida’s seniors has been established by Florida Chief Justice Jorge Labarga. He noted that removing a person’s rights because they are no longer able to make independent decision is not an easy task for any judge.

The Palm Beach Post, Judge LaBarga’s hometown newspaper, reported extensively on guardianship, particularly how one judge and his wife benefitted. As a result of the coverage, Palm Beach County undertook an overhaul of the system and Circuit Judge Martin Colin announced his retirement. These developments were reported in The Palm Beach Post’s “Supreme Court chief justice tackles senior guardianship as complaints mount.”

Judge Colin’s wife Elizabeth Savitt continues to serve as a professional guardian despite growing complaints by the families of her incapacitated wards. She has taken tens of thousands of dollars from seniors’ bank accounts prior to judicial approval, the Post discovered.

The newspaper contacted numerous guardianship attorneys, all of whom said the state statute does not permit guardians to take fees prior to judicial approval.

The Guardianship Workgroup was established under the Court’s Judicial Management Council, which advises the chief justice and the Supreme Court on long-range issues concerning Florida’s judiciary. Labarga said in a press release that he organized the work group because guardianship caseloads are increasing in both number and complexity. He anticipates that more and more cases dealing with guardianship issues will make their way to court.

Individuals who are judged to be incapacitated by the court are appointed a guardian. If a family member isn’t available, a professional guardian will frequently be appointed and that person will have total control of the person’s finances, medical decisions, and housing. In Florida and in other states, professional guardians have been found to act in their own best interests rather than those of the incapacitated wards. The families of seniors have often been unable to battle professional guardians, who can hire high-powered attorneys paid for by the incapacitated senior.

State lawmakers have passed laws in the last two legislative sessions to increase the state’s regulation and oversight of guardians.

The group has been asked to examine common guardianship issues including restoration of capacity for the individual placed in a guardianship, and fees, which usually mean for the guardian and at least one attorney. The group was asked to provide an interim report to the Court by October 2017, with a final report requested by September 2018.

Reference: Palm Beach Post (October 24, 2016) “Supreme Court chief justice tackles senior guardianship as complaints mount”

To learn more about guardianship, please visit our website.

Can You Enforce Responsible Behavior Through an Incentive Trust?

You know your children best, from the one most likely to succeed to the one most likely to make bad decisions. An incentive trust may be an option if you want to try to change their behavior patterns.

Sometimes, despite everything a parent does, they find themselves with adult children who simply cannot master financial skills.

What can a parent put in place so these adult children comply with certain requirements in order to receive their portion of the estate? You don’t want the money to be spent in the first six months!

The Norman (OK) Transcript’s article, “Incentive trusts can motivate your heirs to better themselves,” provides some information on how it works and some tips to help you create such an estate plan.

An incentive trust is an estate-planning tool used to help motivate your heirs in the direction you want after you pass away. Some or all of your assets are passed to your incentive trust when you die instead of directly to your heirs, like your financial disaster kids. The trustee has the power to distribute funds from the trust only if and when the beneficiaries perform (or abstain from) whatever goal or behavior you have specified in the trust. It can be something like encouraging a granddaughter beneficiary to graduate from college, reward beneficiaries who do charitable work, or supplement the incomes of beneficiaries who elect to go into lower-paying but meaningful careers like social work.

On the flip side, an incentive trust can be set up to penalize beneficiaries who don’t work by cutting off or cutting down their trust distributions. Some trusts will put restrictions on heirs with addictions by requiring that the payments go straight to the rehab facility.

You should also be aware that incentive trusts can have drawbacks. Poorly constructed incentive trusts can have a high risk of unintended consequences. For instance, you may want to set up an incentive trust that provides a financial incentive for beneficiaries to be employed full-time—but if one becomes ill or is seriously injured in a car accident and is unable to work, they’d be punished unfairly.

In addition, there are some legal limitations on what you can do with an incentive trust. Incentive trusts that encourage a beneficiary to join or leave a particular religion or seek a divorce may be challenged in court and possibly revoked.

Creating an incentive trust that will accomplish your goals for your beneficiary requires a thoughtful approach to be effective. Discuss what you want to achieve with your estate planning attorney. Include language that will grant the appointed trustees the right to use their discretion, and more specifically, that those decisions are final and binding. Circumstances change, and you want your trustees to have the right to make common sense decisions. Equally important, this language will be helpful in preventing beneficiaries from successfully challenging the trust or the trustee in court. Once a trust gives final decision making authority to a trustee, it becomes extremely difficult for beneficiaries to argue that the trustee is not correctly implementing the terms of the trust. Just be sure to select a trustee who understands your intention and is strong enough to hold their own if challenged by your beneficiaries.

Reference: Norman Transcript (November 1, 2016) “Incentive trusts can motivate your heirs to better themselves”

To learn more about creating a trust that suits your concerns, please visit our website.

 

Encouraging Parents Who Resist Having a Will

Seniors who do not have wills or other estate documents in place may not fully understand that if they die without having a will, their family will face burdensome expenses and possibly loss of control of their estate.

Having “the talk” with parents about their will or their wishes if they should become incapacitated is never easy. When they don’t have a will because they don’t want to provide information about their assets, or because they don’t feel that they need one, adult children can face a tough challenge.

Education is key, says NJ 101.5 in “Talking to your parents about a will.” Some parents fail to realize the consequences of not having a will—like if you don’t have a will, you lose the right to choose who will serve as executor (the person in charge of the estate).

In the absence of a will, the “administrator” appointed by the court needs to be bonded, which can cost hundreds or even thousands of dollars. With a will, you can have a clause that waives the bond requirement. One great reason for Mom and Dad to have a will right there!

A place for information on this topic is your area’s probate court, typically located in the county seat. Plus, many good introductory brochures can be found online on their website. This information might be enough to convince your parents how important it is to have wills.

Another possible concern with some parents is that of keeping their personal and financial matters private. If so, they can create trusts to dispose of their assets. Remember that a will is a public document. While most wills don’t have specific asset information, the will itself is open to the public, and anyone can obtain a copy. A trust is always private unless there is a court action involving the trust. The trust agreement isn’t automatically a public record, even in that case.

If your parents create a trust with the help of a qualified trust attorney, and they transfer their assets to a trust during their lifetime, the trust controls what happens to those assets upon their incapacity and death.

Your best bet is to start by discussing their objections to having a will. Next, speak with an estate planning attorney about these objections and how they can be addressed. Not doing anything will lead to financial and emotional stresses on the family. Once parents can be made to understand the impact of their decision, and that their concerns are being respected and solved they may be more open to getting this done.

Reference: NJ 101.5 (November 1, 2016) “Talking to your parents about a will”

To learn more about the importance of establishing an estate plan to include a will, please visit our website.

Sumner Redstone Files Lawsuit Against Former Companions

In a high-stakes saga that continues to unfold, media mogul Redstone has now filed a lawsuit against the two women who at one time shared his home and allegedly committed financial and emotional elder abuse against the 93 year old. The women have been charged with conspiring to keep Redstone away from his family and friends so that they could gain control of his assets.

A lawsuit filed in Los Angeles Superior Court charges former girlfriends Manuela Herzer and Sydney Holland with emotionally abusing and controlling Sumner Redstone for their own personal gains. The women, who at one time lived in his home, are accused of taking $150 million in cash, expensive jewelry, clothing and real estate. They are also accused of isolating Redstone from family members and friends when they tried to intervene on Redstone’s behalf.

Variety’s article, “Sumner Redstone Sues Two Ex-Companions for $150 Million,” reports that the two allegedly took so much from Redstone, such as matching $45 million checks in a single day in 2014 that he was pushed into debt by the gifts and the enormous taxes that went with them. The lawsuit accuses the two of elder abuse, fraud, breach of fiduciary duty, and infliction of emotional distress.

Holland issued a statement saying Redstone’s attorneys and doctors vetted and approved all payments to her. Herzer’s attorney, Ronald Richards, said the suit “has no merit whatsoever” and turned blame for the dispute on Redstone’s daughter, Shari. He argues that Redstone is trying to detract from Herzer’s legitimate claims that she was improperly disinherited by the billionaire.

The two women, who lived at the media tycoon’s Beverly Park estate in Los Angeles, were tossed out by the billionaire within six weeks of each other in 2015. Redstone discovered that Holland cheated on him and Herzer had blocked him from contact with family and friends, the complaint says. Herzer’s attempt to force her way back into Redstone’s life last year alerted him to his isolated situation and made him try to regain control of his life and affairs, his lawyers said.

All of this resulted in Redstone removing two of his long-time confidants—Viacom CEO Philippe Dauman and Viacom board member George Abrams—from the trust that will eventually determine control of his valuable shares in Viacom and CBS Corp.

The lawsuit claims that the two ladies “terminated his doctors, nurses, household staff, and longtime advisers and brought in handpicked replacements,” adding: “They decided who came and went from the residence. They spoke for Redstone when he lost his ability to vocalize.” Herzer and Holland abused these positions of trust when the tycoon, who’s 93, was most vulnerable—homebound and forced to eat through a feeding tube with a severe speech impediment.

“Herzer and Holland took far more than Redstone’s money,” the suit charges. “They took five of the last years of his life. They took time away from his children, grandchildren and great-grandchildren. They took his pride and dignity.”

Rather than fighting each other, Herzer and Holland decided to join forces to cut out other rivals, the suit says.

The two schemed to free up large sums that Redstone had tied up in stock options and stock, the suit claims. That plan worked until May 2014, when they persuaded Redstone to sell the stock options and other stock worth about $100 million. “Later that same day, Redstone made two transfers, $45 million each,” the suit says, “to the personal bank accounts of Holland and Herzer.”

The gifts made for a lose-lose situation for Redstone because the gift and generation-skipping taxes triggered from the two transfers had to be paid for with money borrowed from his National Amusements holding company, the suit says.

The women seemed to have the entire estate locked down in June 2014, when an amended and restated estate plan was put into place. That began to change when Redstone resumed contact with his daughter Shari and grandchildren after being hospitalized. One of his nurses provided a detailed look at how the women had set up a system of control over him. The lawsuit includes pages of emails from the nurse that shows a pattern of manipulation and deceit.

Reference: Variety (October 25, 2016) “Sumner Redstone Sues Two Ex-Companions for $150 Million”

To ensure your estate plan is sound and reflects your goals and concerns, please visit our website. 

Younger Billionaires Will Change the Face of Wealth Transfer and Philanthropy

With the advantages of more education, a world that is literally at their fingertips, and a greater sense of purpose, the next generation of billionaires is expected to make very different choices than previous generations when it comes to passing their wealth along.

Expect big departures from tradition when the estate plans of a new generation of billionaires begin to transfer their wealth. Unprecedented wealth creation, much of it digital in nature, means that more than $2 trillion in assets in the next 20 years will be transferred, according to a recent Billionaires Report by UBS and PcW. Perhaps it’s time to change the name of the report to the Trillionaires Report.

Investopedia’s article, “Billionaires to Transfer $2T in Wealth to Heirs,” reports that the data was gathered from the last 20 years, following 1,400 billionaires across the 14 largest markets. It looks at the potential impact this gigantic wealth transfer may have on both the recipients and society at large.

The report goes on to say that as great wealth trickles down the generations, the goals of those transferring that wealth will change. In fact, we’re already seeing the early stages of what we expect to be an upsurge in philanthropy.

The Billionaires Report includes information given by an advisor to several billionaire families.

The report concludes that younger beneficiaries of billionaire wealth are driven by three key goals that make them different from their elders: they typically put business first, place greater emphasis on values instead of valuables, and look to find identity through philanthropy. Young billionaires are apt to be entrepreneurial and feel that growing their businesses is a way to benefit society. They also believe in philanthropy, but have a different approach than their parents and grandparents.

The report presents an optimistic view of what may result from the wealth transfer. It asserts that the heirs will wish to create tangible benefits to more than their businesses and employees, but to the world in which they live. It is likely that they will change the face of philanthropy, as their desire to have a positive impact on their communities will benefit from bringing a strategic, business-like approach to giving.

Reference: Investopedia (October 31, 2016) “Billionaires to Transfer $2T in Wealth to Heirs”

To learn more about planning for your future and that of your heirs, please visit our website.