Essentials of Elder Law

When it comes to financial security in later life, nothing is more apropos than the Boy Scout's famous motto: Be prepared. Smart, early preparation is critical when it comes to ensuring that aging parents remain independent and secure. It's also vitally important when carrying out a parent's wishes regarding healthcare and end of life decisions.

When caring for your aging parents, it’s essential you understand the basics of the legal issues involved. A host of problems pop up when older people haven’t taken the appropriate steps to plan for old age. A great strategy is to consult an elder law attorney who is experienced in the fields you are most concerned with and who has access to other experts as needed.

The key to caring for your aging parents effectively is to avoid the court deciding their fate. By planning ahead, you can make sure their affairs are taken care of in the manner they would like.  An elder law attorney can help you make the most of this process. They are most concerned with three goals for their clients:

1. Ensuring that there is an orderly distribution of assets after the client’s death with a minimization of taxation.

2. Ensuring that your aging parents have a personal and financial management system in case they are incapacitated and unable to manage their own affairs.

3. Ensuring that your parents have access to adequate health care without depleting all their resources.

The Importance of a Will

A will is the best way to ensure an orderly distribution of assets after death. Most seniors have already executed a legal will. If your parents have not, urge them to do so. A will ensures that your parents’ wishes about their estate are met. The more detail that’s included in their will, the more likely their wishes about who gets what will be realized.

In a will you name one or more beneficiaries who are to receive some of your assets and property. It also names a particular person who will serve as the executor/executrix and who is responsible for making sure that the property goes to the right person and that all bills are paid. Make sure the person whom they designated is still able and willing to function in the role. If anything has changed since your parents drew up their will, they may need to change it or add a codicil (an amendment).

The cost for an attorney to draft a will runs from $50 to  $1,500, depending on the complexity and the size of the estate. Your parents can also draw up their own will using a software program or by using a preprinted form available in many bookstores and office supply stores. But if your parent choose a self-service option, double check to make sure that the will is valid in their state of residence.

Living Will and Medical Power Of Attorney/Healthcare Proxy

While the percentage of U.S. residents possessing a will is low, the number of those with a living will is even lower - fewer than one-third of Americans have one.

Living wills fill an essential function: They allow you to have your healthcare wishes implemented in the event you are incapacitated. If you don't want to be connected to a feeding tube or have your heart restarted after a traumatic injury, for example, a living will ensures those desires will be fulfilled. Common living will specifications include decisions about resuscitation, organ donation, pain management, dialysis, ventilation and body donation.

As parents age, it becomes ever more critical that living will directives are drafted, so their true wishes can be accommodated.

Medical Power Of Attorney and Healthcare Proxy both refer to a document that allows you to make important medical decisions when loved ones are incapable of doing so. Those possessing power of attorney are given the latitude to make all healthcare decisions, and only one person at a time may be designated as a proxy.

Proxies should be intimately familiar with the wishes of their loved ones with regard to crisis medical care and end of life care. It's also important to remember that parents must be mentally competent at the time power of attorney is granted.

Ensuring that there is a system in place if your parents become unable to manage their own affairs is also relatively simple to accomplish. It requires only that your parents complete certain legal documents under the direction of a professional.

Access to Assets

Having easy access to your parent’s assets is essential as you take on more of your parent’s financial caretaking. Power of attorney and joint ownership are two ways to get that access.

Power of Attorney

One of the ways you can get access to your parent’s assets is through a power of attorney. The power of attorney document can limit powers to the attorney in fact, depending on how much responsibility or authority the signer wants to hand over. That is why most attorneys recommend this method of giving children access to parents’ assets rather than simply becoming a co-owner of accounts or other assets.

Joint Ownership

A second way for you have access to your parents’ assets is through joint ownership. This method may not worry your parent as much, although most attorneys feel it is not as good a method as a power of attorney is. Like powers of attorney, your parents must be willing to turn over the responsibility.

Here are some other ways to ensure you have access to your parent’ assets:

• Bank accounts. Open a separate account with you and your parent having signature authority. Your parents can then transfer all or part of their funds as needed, and transactions can be handled through check writing or through telephone or computer transfers. And don’t forget about safe deposit boxes – if your parents’ have one, you should be able to get into it if needed.
• Stocks and bonds. Having easy access to your parents’ stocks and bonds is not quite as simple as just signing a signature card. Instead, consider opening a new account at a brokerage house in both of your names. Your parent can then deposit or transfer the stock or bond into this account, giving you access that can’t be easily revoked.
• Tax returns. In many families the person assuming the financial responsibility is often given the task of making sure tax returns are filed and estimated taxes are paid. You do not need any special authority to prepare a tax return for someone. Furthermore, unless you are a paid preparer, you do not need to sign the return yourself.

Understanding Legal Incompetence

Most people remain competent to make decisions for themselves until the day they die. But when your parents cross over the line and make choices that are harmful to them, you will have to step in. Going to court to get your parent declared incompetent is emotionally painful and it also can be quite expensive. If this step is unavoidable, discuss it with an elder law attorney who will be able to explain what will be involved and what the cost will be.

The Takeaway

Setting up legal documents ensuring the orderly disposition of an estate and providing healthcare guidance is a task that should be treated with urgency and completed under the guidance of a legal professional. By encouraging aging parents to take these steps now, you can make sure their preferences will be respected, while the risk for uncertainty and red tape is significantly lowered.