Why is an Advance Directive so Important with Dementia?

The Roanoke Times advises in the recent article “What to do in absence of advance directive” to talk to an experienced elder care attorney to coordinate the necessary legal issues, when dementia may be at issue with a parent or other loved one. Next, ask your physician for a geriatric evaluation consultation for your loved one with a board-certified geriatrician and a referral to a social worker to assist in navigating the medical system.

It’s wise for anyone older than 55 to have advance directives in place, should they become incapacitated, so a trusted agent can fulfill the patient’s wishes in a dignified manner. Think ahead and plan ahead.

As a family’s planning starts, the issue of competence must be defined. A diagnosis of Alzheimer’s disease doesn’t necessarily indicate incompetence or a lack of capacity. At this point, a patient still has the right to make a decision—despite family members disagreeing with it. A patient’s competency should be evaluated after a number of poor choices or an especially serious choice that puts a patient or others at risk.

An evaluation will determine the patient’s factual understanding of concepts, decision-making and cogent expression of choices, the possible consequences of their choices and reasoning of the decision’s pros and cons. Healthcare professionals make the final determination, and these results are provided to the court.

If a patient passes the evaluation, she is deemed to have the mental capacity to make choices on her own. If she cannot demonstrate competency, an attorney can petition the court for a competency hearing, after which a trustee may be appointed to oversee her affairs.

The time to address these types of issues is before the patient becomes incapacitated. The family should clearly define and explore the topics of living wills, health care proxies, estate planning and powers of attorney now with an experienced elder law attorney.

Taking these proactive actions can be one of the greatest gifts a person can bestow upon herself and her loved ones. It can give a family peace of mind. If you put an advance directive in place, it can provide that gift when it’s needed the most.

Reference: Roanoke Times (June 17, 2019) “What to do in absence of advance directive”

Suggested Key Terms: Probate Court, Elder Law Attorney, Long-Term Care Planning, Elder Care, Dementia, Capacity, Guardianship, Conservatorship

Continue Reading

What is Considered “Community Property?

Marital property in community property states is owned by both spouses equally, according to nj.com’s recent article, “Does this house really become community property after marriage?”

Let’s imagine you own a home before your second marriage and created a will leaving the condo to a child. However, you sold the home and purchased another house in your name using funds from the sale and your own funds.

Does your new spouse own half the house, even though it’s in your name because it’s a “community property” state?

Marital property includes earnings, all property bought with those earnings, along with any debts accrued during the marriage. Community property begins at the marriage and ends when the couple physically separates with the intention of not being married. Thus, any earnings or debts originating after this would be separate property. Any assets acquired prior to the marriage are considered separate property and are owned only by that original owner.

However, a spouse is permitted to transfer the title of any of their separate property to the other spouse as a gift. He or she can also make it community property, by making a spouse an account holder of a bank account. This is called “comingling,” and spouses can also comingle their separate property with community property, by adding funds from before the marriage to the community property funds.

However, a spouse can’t transfer, alter, or eliminate any whole piece of community property, without the other spouse’s permission. They can only manage their own half. The whole property includes the other spouse’s one-half interest. In other words, that spouse can’t be alienated from the one-half that belongs to him or her. A spouse, however, can direct that your child receives her half.

Several community property states offer an advantageous way of holding title to community property that avoids probate at the death of the first spouse known as “community property with right of survivorship.”

If a couple holds title to property like this, when one spouse dies, the property will automatically belong to the surviving spouse with no probate court proceedings. Spouses can create a will instructing who will get the asset, upon both of their deaths.

Work with an experienced estate planning attorney who can examine the specifics of your circumstances and create proper planning based on your goals.

Reference: nj.com (August 5, 2019) “Does this house really become community property after marriage?”

Suggested Key Terms: Estate Planning Lawyer, Wills, Asset Protection, Probate Court, Inheritance, Community Property

Continue Reading

The Decedent’s Debts: Who’s on First?

Estate planning attorneys are used to family members who, for some reason, determine that credit card bills need to be paid off first, when a loved one dies. It’s not the first thing to pay, advises The Mercury its article “There is a priority of debts when you die.”

In fact, credit card debt is unsecured debt. It is, therefore, on the bottom of a list of priorities in many states. Paying debts is an important part of executor responsibilities, but there is an order to what debts must be paid first. If there are cash flow issues for the estate, this is critical information.

First, the funeral home, nursing home and unreimbursed medical bills should be paid within six months of the death, as well as administrative expenses. Administrative expenses include the cost of probate, which is filing the will and professional fees, including the attorney’s fees, executor’s fees, account fees for final tax returns, etc. Don’t ignore the funeral bill.

Nursing home and medical bills incurred within six months of death are also important to pay. If the executor believes the medical bill is to be paid by health insurance, Medicare or Medicaid, get this in writing. If Medicaid paid for care, there may be a claim under Estate Recovery. In Pennsylvania, the Department of Human Services; Third Party Recovery, could become a creditor of the estate, when a large asset like the home is sold.

This is a time when an attorney experienced in elder law and trusts and estates can help sort through what needs to be paid and when and where the money should come from.

There are times when an executor pays for administrative expenses or the cost of the funeral from their own pocket. Anyone who does this must maintain careful records and be sure to be repaid by the estate, after an estate account is established. That also applies for any expenses paid from a joint account with the decedent.

The responsibility of the executor is to pull together the assets that will pass through the will and the bills or debts that need to be paid, then to pay the debts, including taxes and expenses of probate, then distribute the remaining funds to beneficiaries, as directed by the will.

Some assets do not pass through the will, like joint bank accounts, payable on death and transfer on death accounts, life insurance and retirement funds. With the exception of life insurance, they may be subject to inheritance taxes, if the decedent’s state of residence has such a tax.

If there are not enough assets to pay the bills, states have lists of the order of distribution. At the top of the list: costs of the administration of the estate and funeral expenses. Medical bills from the most recent six months are given higher priority than older medical bills. Credit card bills are at the bottom of the list.

Secured debt, like the mortgage on the house or a loan on a car need to be addressed. These may be sold to pay off the debt.

Executors or family members who are contacted by creditors demanding payment need to know whether they are responsible or not. An experienced estate planning attorney will be able to help you work your way through the debts and financial responsibilities of the decedent.

Reference: The Mercury (June 18, 2019) “There is a priority of debts when you die”

Suggested Key Terms: Decedent, Estate Planning, Creditors, Debts, Executor, Medicaid, Medicare, Funeral Expenses

Continue Reading