Jarvis Law Office

Ohio Elder Law Attorney: 5 Ways the Elderly Can Avoid Financial Abuse

It’s no secret that the elderly are a favorite target of scam artists. Criminals will troll the internet and phone lists looking for seniors that are easy to prey upon due to an illness, disability, or cognitive impairment. Another reason scam artists love to attack seniors is the expectation that they have accumulated wealth over the course of their lifetime.  They anticipate a huge pay day whenever a senior is involved.

Whether it is an overseas predator thousands of miles away, or an unscrupulous home care provider, there are a number of steps you can take to protect yourself and those you love from financial scams.  When potential predators know that there are people watching out for the elderly person, they are much less likely to act due to fear of criminal prosecution. Here are some steps seniors and their family members can take to prevent financial abuse.

1.  Arrange for account oversight

Select someone that will help the senior manage their accounts and watch out for unusual activity, like large checks or large ATM withdraws. Having extra eyes on the senior’s bank statements or other transactions can help heed off fraudulent activity.

Sometimes it can help to add an adult child as a co-owner of certain accounts, so that they have the joint ability to write checks, make investment decisions, and take action to protect funds in those accounts. It also means the funds in those accounts can bypass probate. Trust is obviously a huge factor here, considering the co-owner will have full access to the senior’s money.  And, there are other risks involved with joint ownership that should prompt you to speak with an elder law attorney before going down this road.

2.  Create a living trust

It’s often a wise choice for a senior to move their assets into a living trust.  This legal tool protects the senior’s money and property, and allows someone that the senior trusts (the trustee) to manage the assets on the senior’s behalf whenever necessary.  However, unlike joint accounts, it does NOT give the trustee co-ownership of the senior’s funds or assets. And, it allows greater control in passing down the assets in the trust that the senior would not be afforded with under joint tenancy.  For example, if the senior has four children but only one is named as co-owner the senior’s accounts, at the time of their death, the co-owner becomes the sole owner of those funds and they are not required to share the inheritance with the other kids.  However, if the senior creates a trust, he or she retains oversight while alive, but also gets to choose how to distribute the funds after death however he or she wishes.  

3.  Get help paying bills

It is always helpful to have a second set of eyes on things, by recruiting someone else to help the senior pay bills, your family has a better chance of catching anything out of the ordinary. 

4.  Use a limited credit card

Utilize any credit monitoring services offered by the senior’s credit card companies, and where possible, limit the amount the senior can spend by using pre-paid cards or spending caps.

5.   Consult with an elder law attorney

An elder law attorney can help you create a plan to legally establish who can help you with financial management.

Unfortunately, there is no way to completely stop financial abuse. But, by doing a few of these things, you can definitely make yourself less of a target. If you are ready to build this wall of protection around your finances, contact our office at 1-877-653-3450 to set up a free consultation.

Be Organized and Ready When Meeting With Your Ohio Trust and Estate Attorney

To better streamline the estate planning process, it can be incredibly helpful to do a bit of organizing before meeting with your attorney. 

This allows you to feel confident in what you’re doing, as well as minimize the time spent on the task at hand.  Both you and your lawyer will benefit from clear and concise communication.  If anything is missing, it will be considerably easier to discover and remedy the situation up front.  A trust and estate lawyer would advise you to consider these things in preparation for your meeting.

First, compile a list of your assets and liabilities.  Doing this in advance, rather than waiting to be directed by your estate planning lawyer can save a fair amount of time.  Again, if you’ve overlooked something, the attorney will likely be able to point it out, but you won’t have to go through the basics in your meeting time.  Some of the assets and liabilities you’ll want to include are:

• Any bank accounts.  Having recent statements is a wonderful way to go.
• Investment accounts
• Stocks and bonds
• Life insurance and Annuity policies
• Deeds for properties you own
• Retirement plans
• Business partnerships or LLC interests
• Money owed to you
• Personal effects
• Loans and credit

It is also helpful to determine in advance who will inherit your estate.  While an estate planning lawyer can help you determine candidates, this is a very personal choice. Along similar lines, it makes sense to determine who you would like to take on specific roles in managing your estate.  For example, who will you name as guardian for minor children, who do you entrust as the executor of your estate, and who will have your medical power of attorney?

Fortunately, we live in the Information Age, which means that whether you live in Ohio or New York City, you have access to the same information that can help you prepare in advance for a meeting with your estate planning lawyer, rather than having to wait around (and pay for) directions on how to get started.  The result is a more streamlined process and a stronger sense of control over the planning of your estate.

Hernandez’s Estate Not Worth Much

It has been determined that after criminal cases filed against former NFL player Aaron Hernandez played out in court, there is little left in the estate, according to the New York Daily News in "Aaron Hernandez's estate is worth nothing: court records."

Aaron Hernandez’s suicide ended the criminal cases against him, but also launched battles over his estate. Those involved in the estate battles would be his four-year-old daughter, her mother and the families of his victims who expect to receive a share of the estate to compensate them for their losses.

What was not initially known, was how much money Hernandez had left after all of his legal troubles.

Hernandez's girlfriend, the mother of his child, filed papers with the probate court overseeing the case. These papers document that Hernandez passed away with virtually no money or valuable personal property to speak of.

The only thing left is his home and the court granted the girlfriend permission to sell the home to an undisclosed interested buyer for $1.3 million. The mother of one of Hernandez's victims has stated that she wants a portion of proceeds from the sale.

This is a case that is tragic all around.

Reference: New York Daily News (April 27, 2017) "Aaron Hernandez's estate is worth nothing: court records

Sotheby’s Appraisal Draws Fire from Judge

A recent court case involving the IRS and art work appraised by Sotheby’s, drew the ire of the judge, according to The New York Times in "Don't Blame the Russians, Tax Judge Tells Sotheby's Expert."

The value of artwork in an estate has to be determined for wealthy estates for estate tax purposes.  Therefore, estates employ expert appraisers who give their estimates for what the art would likely fetch at auction. This can create problems, if the art later sells for much more than the appraised value.

In a recent case, it seems a painting was valued by Sotheby's at $500,000 and that was the value given to the IRS. However, four years later, the same painting sold at auction by Sotheby’s for $2.1 million.

The appraiser explained that the primary reason for the discrepancy was that Russian collectors bid the piece up, since they are attempting to get their hands on artwork.

The judge did not believe that and instead determined that Sotheby's had intentionally low-balled the appraisal value to curry favor with the estate, so the auction house would be used when the painting was later sold.

Reference: New York Times (April 23, 2017) "Don't Blame the Russians, Tax Judge Tells Sotheby's Expert

Do Wealthy Benefit the Most from Social Programs?

White Americans who are the least well-off financially are on average beginning to live shorter lives, while wealthier Americans are now seeing an increase in their lifespans, according to Financial Advisor in "The Rich Are Living Longer And Taking More From Taxpayers."

The result of this trend is that wealthy Americans are receiving a disproportionate amount from the Social Security and Medicare system. However, when all government benefit programs are considered, the lowest income levels and the wealthiest receive about the same overall.

The problem is that the Social Security system needs to be fixed, to make sure it remains solvent.

One way to fix it is to increase the retirement age, but that will make the problem worse. Wealthier Americans will not be affected as much as many poorer Americans who will not live to see any benefits. This will effectively make their payments into the system, a tax on them for the benefit of the wealthy.

Another solution is through means-testing Social Security, but the program was designed without means-testing to make it more difficult to cut later on.

Reference: Financial Advisor (April 24, 2017) "The Rich Are Living Longer And Taking More From Taxpayers."

Protecting Assets from All Sorts of Creditors

A wealthy person has often thought they were protected from their spouse by a prenuptial agreement, only to learn the situation was not as safe as they thought. But there are other ways to be protected, according to Private Wealth in "Cracks In Your Assets?"

Another possible way of protecting assets, such as an individual business, is to turn that business into a partnership or LLC. However, that is not a perfect solution since the creditor can still intercept any payments from the entity to the wealthy debtor.

A newer solution is to create a self-settled asset protection trust. After a short period of time, assets in these trusts are untouchable by creditors.

Seventeen states now allow these trusts.                                                                                                      

Another possibility is to use an offshore trust, since U.S. courts do not have jurisdiction over them in most cases.

A wills and trusts attorney can advise you on protecting your assets with a plan that fits your unique circumstances

Reference: Private Wealth (April 21, 2017) "Cracks In Your Assets?"

Scholars May Learn about Baldwin's Personal Life

The lack of information about James Baldwin’s private life is about to change, according to The New York Times in "James Baldwin's Archive, Long Hidden, Comes (Mostly) Into View."

Scholars interested in James Baldwin have always had a difficult time learning the details of his life. This is because his estate has kept Baldwin's archives, including the notes and letters that he wrote, from the public. 

Thus, the man behind the published works has remained elusive.

The estate has reached an agreement with the Schomburg Center for Research in Black Culture, a division of the New York Public Library, to house Baldwin's archives and to make them available to scholars for research.

However, the estate is still seeking to preserve some of its privacy.

Letters between Baldwin and four correspondents will be kept off limits for 20 years.

Reference: New York Times (April 12, 2017) "James Baldwin's Archive, Long Hidden, Comes (Mostly) Into View."

Community Property Can Be Beneficial

Despite the bad reputation of community property, based on television and movies, the facts are that there are capital gains tax advantages to community property. Everyone can take advantage of them by creating a community property trust, according to Wealth Management in "What Is Community Property and What Are Community Property Trusts?"

The fact is that only nine states have community property laws, which is a special way that married spouses hold title to property they received through joint effort.

The big advantage of a community property trust is that assets held in such a trust, can receive a double step-up in basis for capital gains tax purposes. When one spouse passes away and the other inherits the assets, all of the assets receive a full step-up in basis. This often results in little or no capital gains tax, when such assets are later sold.

Only two states, Alaska and Tennessee, allow community property trusts, but you are not required to live in those states to create trusts there.

An estate planning attorney can guide you in creating an estate plan that meets your unique circumstances which may include a community property trust.

Reference: Wealth Management (April 18, 2017) "What Is Community Property and What Are Community Property Trusts?"

State of Residence Is Important in Estate Planning

If estate planning is important to you and your family, then it makes a big difference where you live when you pass away, according to the Wills, Trusts & Estates Prof Blog in "Why You Should Be Careful Where You Die."

Only a very small percentage of estates actually end up paying even a single penny in estate taxes.

Nevertheless, the federal estate tax is debated almost every year.

 That is the case this year, since many believe the Trump administration and Republicans in Congress will seek to eliminate the tax entirely. If they do, it will not end all estate taxes in the country.

Fourteen states have their own version of the estate tax and they vary both in rates and in how much an estate can be worth before the tax kicks in.

Six states have an inheritance tax, which is similar.  However, instead of taxing the estate, inheritance taxes are based on the amount the heirs receive and usually their degree of relationship to the decedent.

The heirs pay the inheritance tax, not the estate.

New Jersey and Maryland have both an estate tax and an inheritance tax.

It is important to understand state estate taxes, so you can ask your estate planning attorney what the rules are in your state and in any state you might consider moving to in your retirement years.

An estate planning attorney can guide you in creating an estate plan that meets your unique circumstances.

Reference: Wills, Trusts & Estates Prof Blog (April 22, 2017) "Why You Should Be Careful Where You Die."

What Is the Future of the Gift Tax?

The estate tax may be repealed by Congress, but little has been discussed about the gift tax.  However, its future should also be taken into consideration, according to Bloomberg in "Gift Tax Tweaks Could Lead to Unsavory Avoidance Tactics."

The gift tax is considered as a way to block people from avoiding the estate tax.  However, that is only one of the purposes. The gift tax also prevents people from avoiding income taxes.

With no gift tax, property could be gifted tax-free to a child to lower tax burdens. It could then be gifted back when needed. This would suggest that the gift tax should remain, even if the estate tax is eliminated.

However, it is not that simple.

If there is no estate tax, then instead of gifting property to a family member, money could be loaned at very generous terms. The amount of the loan could then be given to the family member in an estate plan, effectively allowing the gift to be tax-free.

It is not clear what Congress will do with the gift tax at this point.

The initial plan for tax reform included repeal of the estate tax, but the gift tax drew silence.

Reference: Bloomberg (April 10, 2017) "Gift Tax Tweaks Could Lead to Unsavory Avoidance Tactics"