Mary Owens: What happens when you don’t have anything in place to plan your estate?
October 7, 2018
Last month I went over the consequences of the unexpected "telephone call" from a hospital or loved one about a sudden negative medical event involving a member of your family.
We discussed the consequences of stress and concerns regarding how the family members and friends were going to coordinate care for a loved one, particularly the aspects of managing the assets and the cash flow needs for delivering that critical care.
We talked about the need for having a Health Care Directive, a Durable Power of Attorney, and a living trust.
This month we are going to cover what happens if none of those documents exist. It's not a pretty picture. I hope this article will be enough to spur you in to action if you have failed to carefully plan your estate.
Young moms and dads listen up, you are not an exception. If you fail to plan for your children's care, the situation only becomes more difficult.
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Let's set the stage for a real-life example. Your father (step-father) has passed away just recently. Your mom has been struggling with loneliness and depression.
The transition from being married to your dad (or step-dad) for so long and now being alone has been rough on her. Her emotional spark has disappeared.
You notice on her kitchen counter late payment notices from various utility companies. Her house is not as clean as it once was, and the yard needs some attention. When you mention these things to her she gets defensive and angry.
"I thought you were here to help me, not criticize me!"
You struggle with how to talk to her to suggest she needs help.
Maybe more help from family members, maybe she can afford a yard person and a house keeper. It's not known what she can afford. And she won't talk about it. But the bill paying — who should look over that aspect?
You feel lost and frustrated on how to help your mom. You feel guilty that you are not able to provide more solid solutions and emotional support while still trying to safe guard her.
Even with all the perfect documents in place, this is a very difficult transitional period for all families. It takes love and patience to work through it.
Most of us will face this challenge at some point. The best advice I can give is to treat your loved one with the love, respect and patience you would hope to receive someday. It's not an easy road, but with proper legal documents it can be handled. Without them, it turns nightmarish.
No documents can be troublesome
What happens without the necessary legal documents already in place?
Let's explore what could happen if your mom suddenly got very ill and did not have a Health Care Directive, Durable Power of Attorney or a trust. Your emotional stress has only just begun. It's a situation that I pray all families can avoid.
Your mom has had a serious stroke. She is going to live, but will need in-home care for dressing, bathing, cooking and housekeeping. Yard work will also be needed if she continues to stay in her house.
The hospital has discharged your mom to a Skilled Nursing facility. The Skilled Nursing facility indicates they will probably be discharging her in about 20 days. Medicare will pay this medical bill, but nothing for her in-home long term care.
Her care at home is considered "custodial care" and is not covered by Medicare. How in the world are you going to care for your mom?
You are not on the checking account, you do not have any authority to direct her medical care, and you can't speak with creditors to find out if her bills have been paid because you do not have a durable power of attorney.
True panic sets in. In 20 days, the situation will get worse. Your mom will be discharged from the nursing family and will be going to the only place she can … her home. Your house is multi-level and not suitable for a walker or wheel chair. And your mom wants to live in her own home.
Without the ability to become a successor trustee or act with a Durable Power of Attorney, how in the world are you going to manage her financial affairs. Even the Skilled Nursing facility is not helping you much with information on future care needs because you do not have a Health Care Directive. Your office is calling wondering when you are going to be going back to work.
Becoming a legal guardian
I believe your next step should be to call a trusted estate planning attorney and explain your crisis, so they can get you in as soon as possible. Time is wasting away until you get appointed as the legal guardian for your mother via the local court system.
What is the definition of a legal guardian of another person?
The duties of a legal guardian are to oversee the welfare and safety of the person under guardianship and to attend to the financial affairs of the individual, using his or her assets wisely.
A guardian has a "fiduciary duty" to act in the best interest of the individual. This sounds logical and reasonable. You would have the same standard if you were appointed on the Durable Power of Attorney or as the successor trustee. But there is a huge difference.
As a legal guardian, you will be under court supervision. You will be required to provide a court accounting of all financial transactions and potentially be questioned by a judge for your decisions. And contentious siblings can attend these hearings as parties in interest.
First, you will be challenged with the cost of all the court processes, then you will be required to provide comprehensive accounting. If you have dysfunctional family members, the stage is set for drama in a court room setting!
You love your mom to pieces, but you are scared and overwhelmed on how you are going to handle all these new responsibilities and time demanding tasks. All you wanted to do was care for your mom and love her in the best way possible.
Next month we will be exploring the challenges of parents with young children that become unable to care for their children.
If you think the challenges are tough with your mom, they can be far tougher with minor children if you don't have a proper estate plan.
Mary Owens, Principal/Branch Manager, RJFS, 426 Sutton Way, Suite 110, Grass Valley, CA 95945, 530-272-7500. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Owens Estate and Wealth Strategies Group is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax, legal or mortgage issues, these matters should be discussed with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Mary Owens and not necessarily those of Raymond James. Scenarios described above are hypothetical and are provided to illustrate the potential benefits of financial and estate planning.