Wednesday, September 10, 2008

Dad's Legal Matters

Once I'd brought up the idea of talking to a lawyer about a will and power of attorney (as discussed in the last post), it took a little while for things to gain momentum. I tried to be very reassuring with my dad, just saying it was something he should do anyway, so it wouldn't seem like I was pushing the issue because he was lying in a hospital bed with one foot in the grave. I reminded him that there were things that a lawyer could set up, such as some sort of trust which would provide income for him and my mother, with my sister and me as trustees. As much as my dad has been so angry at my mother for moving out and blowing almost $100,000 in two years of trying to live in her own apartment, he does seem to feel he has to provide for her, in a way that won't let her screw up.

So that conversation with him clarified his general intent. I was probably leading him a bit, but I don't think he minded, since I was clear to focus on setting things up in ways that protected him and my mother while they were still living, as opposed to it sounding like my sister and I just wanted an inheritance. But then there was the question of seeing an actual lawyer, which had to happen in a very tight window of time between him getting out of the hospital and having to go back in, with a holiday weekend taking up most of the space in between.

I knew my father had mentioned that a friend of his had once recommended a lawyer, so I tried to nudge him to call the friend, which he did not do. While I had my hands full with Dad, I asked my sister to try to call his friend. It's a small town, and I figured she could just look the guy up in the phone book, but the next day, it turned out she hadn't gotten around to calling. She then told me that her husband has an uncle who does family law, who might be willing to see us over the weekend if necessary. I suggested this to my dad, who at first pooh-poohed the idea. "Is this guy really any good, or is he just someone they all use because he's a relative," he said. He preferred seeing the person that his friend had recommended-- he can be very snobby about only wanting to deal with the best people. But after another day had gone by and he still hadn't made that call, I told my sister to contact the uncle. She called back and said he could see us later that afternoon, so I told my dad we really needed to just do something, anything, right away, and that he could always change it later.

In some ways, wills are very simple, especially for someone like my dad who has no assets other than a house, a 401k and a couple of bank accounts, but you can't count on being able to walk into an office and just get a will done at the drop of a hat! Since the lawyer was related to my sister, (and thereby potentially an interested party in it, if, say, he was the only survivor after someone dropped a bomb on some huge extended family picnic!) he needed to have someone else notarize the will, on top of just drafting the document properly and lining up some witnesses. He was also able to do the power of attorney and the health proxy, but as he kept warning us, this did not constitute a proper estate plan. He talked about some other options that would suit our purposes, including a testamentary agreement, a real estate trust, having my mother deed her share in the house to my father so it would pass through his will to my sister and me, or having both of them deed the house to my sister and me, etc. All this stuff will have to be resolved later, but what we were able to finalize within a couple of days around the holiday weekend was a will in which my father leaves all his personal property to my sister and me, which we then consider ourselves honor-bound, but not legally bound, to use to take care of our mother. As I understood it, since my mother jointly holds the house and bank accounts, she would get those if he died, and my sister and I would then need to get her to agree to some kind of trust for us managing her assets.

It's all quite complicated, and will only get more complicated when we go back to the lawyer later. I think what will end up happening is that my sister and I will become co-owners of my parents' house, while they have a life estate allowing them to live there as long as they want to. And after my dad's death, there will be some kind of trust providing for my mother, which my sister and I will control. I guess depending on how we do this, it will protect their house and assets from needing to be used to pay for a nursing home if they ever need one. There may also be some other transfers of what little cash they have to my sister and me, but as I told my sister, we can't think of this as an inheritance or a gift. We have to think of this as money that is being set aside to take care of our mother later. She's 10 years younger than our dad, so we have to make it last. If all goes well, we'll have the proceeds from selling a house someday, but even that might have to be borrowed against to make ends meet.

Aside from the will, the power of attorney gives my sister the ability to make legal decisions on my dad's behalf if he is unable to. He originally wanted me to have the power of attorney, but I thought it made more sense for it to be my sister, as she lives closer. She'll also be the health proxy. When we left the follow-up appointment with the lawyer, with all of these papers signed and official, I was very relieved. There are still some issues that could get sticky if my dad died anytime soon, but it's better than having nothing. Now we just need to tackle the more elaborate estate planning, which will require my mother's consent and cooperation. Speaking of which, are you wondering how she feels about arriving home in a hurry to take care of her sick husband and discovering that her children are being put in charge of the family finances? I'll get into her side of the story in the next post...

To be continued...


Anonymous said...

Kudos for stepping up and dealing with these financial/logistical matters. I wish you and your family the best in dealing with these difficult times, and I hope your dad recovers quickly and fully.

I went through life-threatening health crises with both of my parents, and having the paperwork in order definitely helps stave off yet more stress during an already hugely stressful time.

One thing we did with my parents that I have not seen mentioned elsewhere on this blog is that we created multiple signed ORIGINALS of certain important documents, such as Power of Attorney. This way, we could keep an Original safely stored in a safe deposit box at the bank, but also have another Original at home where it could be accessed immediately in an emergency. It only cost us an extra $5 per original in notaries fees (plus a few extra seconds of time for us and our witnesses to sign them).

Also, my mom kept photocopies of her Living Will all over the place. I found about 15 copies of it in various places in her house... She obviously wanted to make sure that it would be easy to find in an emergency.

Note: If you're young and the docs are likely to be revised again later, having multiple originals might be more hassle than they're worth. This kind of precaution is more suited for older folks.

Nothing fancy to think of .. said...

Optioned Unarmed - Agreed. My parents wills (all of them) I have an original signed copy of. They gave it to me with a fireproof safe to keep them in as I am the executor of their wills (4 trusts, 2 wills, 2 living wills, etc.) That is a lot of documentation and about 200+ pages of fun reading sometime :)

Madame X ... I feel for you, but as you said - this is more for a piece of mind. I can give you an example of a friend of mine. His mother-in-law passed without a will, and she owned her home, 3 ways, with her 2 siblings. The other two did not live there, so the MIL lived there with her husband and teenage son. The other two family members kicked out his FIL and his BIL, since they wanted to sell the house since their "sister was dead and they wanted their money out of their inheritance". Nasty situation, so now my friend's BIL (who is a Junior in high school) and FIL who is 65, retired, on a pension, and has a 4th grade reading level live with him, flat broke.

I know that your example is not as extreme, but, it is an example of what happens if you don't plan ahead.

Kudos for taking action, and I know this is a hard time for you, and I hope things work out in the end.

Shawnna said...

Thankfully, since my dad is in the military he has and reviews his documents as frequently as he is deployed.

T'Pol said...

Madame X,

I truly admire your assertive attitude about something so important. It was the responsible thing to do so, kudos for you!

DogAteMyFinances said...

Just based on my family drama, I would think long and hard about owning the house your parents live in.

What's so bad about selling it to get your parents the best care anyway? Do you really want to put them in a welfare nursing home just so you can hold on to the house?

Good for you for getting this together before it's too late.

Madame X said...

@ dogatemyfinances, yes, we would absolutely sell the house if that was what it took to get them better care, but if we could protect it in any way, we'd want to do that first. I'm still not sure exactly how all this Medicare/Medicaid stuff works, so I'll have to post more about that when I figure it out!

and thanks to everyone else, it's great to hear tips from other people's experiences with this!

mOOm said...

Sorry to hear of your Dad's illness, hope he is doing better... The trouble with this plan is that it kind of says your mother is irresponsible, therefore, you and your sister are in charge? Which might make the most sense but could be tricky as I think you hint at the end. Even if she agrees with that on a logical level. All these issues are very difficult to deal with.

Anonymous said...

Madame X, I posted Anonymous earlier about my dad dying without a will - thanks for your kind comment. Be VERY careful about transferring assets into your name(s). This can be seen by the Gubmint as an effort to avoid forced liquidation and thus an attempt to defraud and can be vigorously pursued, to include auditing financial records back multiple years. It doesn't matter what your INTENT is, the IRS has this tendency to take a jaundiced view of asset transfers. Talk to a CPA as well as the lawyer. There are certain assets that are protected from forced liquidation if one spouse goes into long-term care but I'm not clear on widowhood.

Obnoxious Sister insisted she could get her EXTRA share if I simply transferred assets into MY name then liquidated! She was all prepared to sue me for not doing it 'til her lawyer shut her down.

Sorry, Sis, I'm not going to jail for you.

I'm glad you and your sister are working so well together.

Hang in there!

Anonymous said...

You wrote: "I guess depending on how we do this, it will protect their house and assets from needing to be used to pay for a nursing home if they ever need one."

Absent the moral issue of shielding assets so that the rest of society can cover the cost of your parents' nursing home care, I was under the impression the US Government has significantly tightened the ability to shield assets to take advantage of Medicaid. So I would be very careful about the advice you rely upon if this is a major goal of your estate planning.

That having been said, I, too, am currently dealing with many of the issues you are facing with aging parents and it is not an easy task. I wish you well with it.