When Elderly Parents Move In

It is becoming an increasing trend for elderly parents with health issues to move in with their adult children. Often, the adult children are motivated to keep their parents out of a nursing home as long as possible. While motivated by laudable goals, adult children should keep the legal ramifications in mind to avoid unintended consequences.

First of all, the adult children should be prepared to deal with their parents’ declining health. Very often, one of the main reasons elderly parents move in with their adult children is because of health concerns. The fact is that our time on this planet is limited. When a person’s health declines, it can occur very quickly. It is best to plan for this contingency.

Next, everyone involved should consider how medical bills are going to be paid in the future. Perhaps the elderly parents have Medicare coverage now. But, if their health declines to the stage where nursing home care becomes inevitable, they may need to rely on Medicaid to pay for the bills. Knowing something about Medicaid eligibility rules may help ensure that the elderly parents qualify when the need arises.

Third, the adult children should be aware of the available resources to help them take care of their parents.

Finally, the adult children can take steps now that will help avoid messy legal disputes among family members later.

With these principles in mind, here are eight tips adult children should follow when elderly parents move in.

First, the children should have a serious heart-to-heart conversation with their parents. This is a conversation that should be based on a relationship of equals. The adult children may need to overcome the adult-child roles that have developed over time. The children should also avoid taking on the role of talking down to their parents.

The point of the conversation is to gather information to prepare for future contingencies. The conversation should address the parents’ health issues, their medications, and their doctors. It should also address the parents’ values, and the qualities of life they most cherish. Finally, the conversation should address whom the parents trust to make decisions if they were unable to make decisions for themselves.

This conversation will be the building block for such tools as an advance medical directive, a power of attorney or a living trust. The conversation ensures that there is a clear choice of who will be able to make decisions, and that there is some guidance for those decisions.

Second, the parents and adult children should avoid commingling assets. The main concern here is future qualification for Medicaid. Medicaid is a means-tested program, which means that a person must have less than a certain amount of assets, or countable resources, in order to qualify. However, a person cannot give money away to qualify for Medicaid. Commingling assets can be seen as a gift that could cause a period of ineligibility for Medicaid.

Third, the parents and children should avoid opening “convenience accounts.” These are accounts that list both the parent and child as the joint owners. While well-intentioned to permit the adult children to be able to pay the parents’ bills, such accounts open the money up to unnecessary risk. If the child were in a car accident and sued, for example, the money in the bank account could be used to satisfy a court judgment.

Fourth, the adult children should have an inventory made of their parents’ assets when they move in. If the parents do apply for Medicaid in the future, they will need to provide detailed financial information to the Government. An inventory now can save some effort later. The inventory can also serve as evidence of what is in the house if there should be a disaster, such as a fire, and an insurance claim made. Finally, the inventory can help avoid future disputes over what happened to the parents’ property.

Fifth, if the adult children have any siblings, the children should make sure they communicate with their siblings about their parents. Too often, wills contests are not so much about greed, so much as hurt feelings. Litigation can be motivated by the siblings who feel unappreciated or left-out. A little communication between siblings now can avoid costly and messy litigation later.

Sixth, the adult children should research what resources are available to help them care for their parents. Often, when adult parents move in, it is stressful and difficult for the caregiver child. Pressure can be eased by hiring companionship care and in-home nursing care. Also, the caregiver child should not feel guilty about the need to take a break. Respite care is available for this very reason.

Seventh, when the adult parents move in, this may be the time to have them update their legal documents. Wills, advance medical directives, trusts, and powers of attorney should be reviewed to make sure they achieve the desired goals.

Finally, the adult children should make a contingency plan. What would happen to the elderly parents if an accident or sudden illness were to befall the adult children? Who would take care of the elderly parents then?

A little thinking and planning now can ease future burdens as new needs arise.

Blended Families Require Special Estate Planning

If you are part of a blended family, then you may need to do some special estate planning to ensure that your personal goals are met.

A blended family is one where either spouse has children from a prior marriage or relationship. Blended families raise estate planning issues because of the need to balance responsibilities to the current spouse, as well as to the children from the prior relationship.

Without special planning, you may find that you goals are not being met.
For example, in Virginia, where a person is married, but has children from a prior relationship, and that person dies without a will, then one-third of the estate passes to the current spouse, and two-thirds are split among all of the decedent’s children. Notice, by the way, that I specifically said “prior relationship,” and not “prior marriage.” That is in recognition that the law protects illegitimate children as much as legitimate children.

This default estate plan, which is called the law of intestacy, may cause some problems for your surviving loved ones. For example, if you have children from a prior marriage, but they are adults, and your current spouse depends on your income and property, the law of intestacy works against your current spouse.

The solution is to carefully think about your family responsibilities and your estate plan goals, talk about them with your spouse, and work with an estate planning attorney to make your goals happen. Here are some tips on how you may be able to achieve your estate planning goals.

Communicate with Your Spouse

The first step is to make sure that you and your spouse are on the same page. Talk openly about your responsibilities to your children from your prior relationship. Talk about your expectations for any children you may have in your current marriage. Talk about what property rights you have, and how you expect to dispose of those rights on your death.

Conclude a Prenuptial or Marital Agreement

Once you and your current spouse (or, ideally your future spouse) have discussed your respective responsibilities, you should come to an understanding concerning your property. Formalize that understanding with a prenuptial agreement (before the wedding) or marital agreement (after the wedding). In Virginia, a marital agreement is just as valid as a prenuptial agreement.

Many people will resist prenuptial agreements with their future spouses. Some view them as merely planning for an eventual divorce. Some of your friends, or even misinformed attorneys may echo that thought.

A prenuptial or marital agreement, however, is not simply planning for an eventual divorce. Rather, it can be a tool to start the conversation about property and expectations. It can be an opportunity to clarify estate planning goals. Formalizing the expectations in a written agreement can avoid confusion and misunderstandings later in the marriage.

For example, if both spouses are coming into a marriage with their own property, it could be that neither spouse would be dependent on the property of the other after one passes away. In such a situation, the spouses may agree to waive any interest in each other’s estate plan, in order to permit the other spouse to address other family responsibilities.

Or, it could be that your spouse is dependent on your income and property. But, to fulfill family obligations, you may want to take care of your spouse for life, and have your property pass to your family upon her death. This can be addressed in a prenuptial or marital agreement.

Put Your Plan into Action

Finally, you need to develop the tools to put your plan into action. The tools could involve a trust to benefit your spouse during her life, but then pass the property to your children on her death. The tools could involve life insurance, and properly structuring the life insurance. These are all issues you should address with your estate planning attorney and other professionals, such as an accountant and financial advisor.

With proper communication and planning, you can balance your family obligations, and manage the expectations of your loved ones.

Taking on a Guardianship or Conservatorship

Becoming a guardian or conservator is not something a person should take lightly. These are fiduciary positions, and as such require great consideration before assuming them.

A person may need to have a guardian or conservator appointed if that person has become incapacitated, and can no longer take care of his or her own affairs. The incapacitated person is called the ward. A guardian is the person appointed by a court to make decisions of a personal nature for the ward, such as health care decisions. A conservator manages the ward’s money, enters into contracts, and handles the financial affairs.

In Virginia, guardians and conservators are bound to act in the best interest of the ward. They are required first to qualify for their positions, and then to make regular reports. Persons with criminal backgrounds, or who have bad credit histories will have great difficulty qualifying.

A guardian must make annual reports to the Department of Social Services. The guardian should check in with the ward regularly, and see to it that the ward’s personal needs are being met. Generally, in Virginia, when a person is appointed as a guardian, that person will be required to sign a bond, or a pledge to follow the law and act in the ward’s best interests. However, surety may not be required. Surety essentially means that the person signing the bond would have to find an insurance company or surety company to cover any wrong doing.

A conservator will also need to sign a bond. However, because the conservator manages money, surety will almost certainly be required. The amount of the surety bond will normally be 130% of the sum of the amount of annual income of the ward plus the ward’s assets. That does not mean that the conservator will have to post that amount of money. Rather, the surety will promise to pay that amount of money for any wrong-doing of the conservator. In return, the surety will require the conservator to pay annual premiums.

The conservator will also be required to make regular reports. The first of these reports is the inventory. That means that the conservator will be required to report all of the ward’s assets, and their value. After the inventory, the conservator will be required to make annual accountings, detailing the income received and the expenses paid. All reports are made to the Commissioner of Accounts of the court having jurisdiction over the ward.

A conservator must be meticulous in his or her bookkeeping. Every penny must be accounted for. This means that the conservator must keep receipts. This also means that the conservator must be careful in making disbursement to himself or herself. Such transactions will be highly scrutinized by the Commission of Accounts, and as such the reason for such transactions should be documented completely. A conservator should keep in mind that malfeasance can result in criminal liability.

A guardian and conservator must also be mindful of the possible need to seek court approval before acting. Such approval is necessary, for example, if the guardian wants to move the ward out of Virginia. In fact, even if the ward is moved out of Virginia, the Virginia courts will not relinquish jurisdiction. Annual reporting must continue.

A conservator should be careful about gifting, and spending the ward’s money for anyone other than the ward. Gifting is limited to $500 per year, and only $100 of that can go to any one person. If the ward is wealthy, and would made gifts of higher amounts, that must be shown to the court for prior approval before any such gifts can be made. Indeed, gift giving may very well be a valid plan to reduce the estate tax. But, such a plan must be presented to the court before it can be implemented.

Likewise, if the ward is married, and the ward would normally take care of his or her spouse, this is an issue that should be brought to the court’s attention. The court would have to approve the use of the ward’s money for any purpose other than the benefit of the ward.

A person assuming the role of guardian or conservator, therefore, should enter into the office with seriousness and wise counsel. The rule of thumb should be, when in doubt, seek court approval. By keeping meticulous records, and being mindful of the fact that the guardian or conservator is acting in the best interests of someone else, the guardian or conservator should be able to avoid any serious legal trouble for improper action.■