Can We Prevent the Elderly from Being Scammed?

Just as parents guide their children through adulthood and teach them about finances and how to manage their money, adult children of aging parents need to be alert for their parents before they fall victim to those preying on the elderly. It’s become all too common, according to the article “The Best Way to Protect a Parent from Scammers” from Kiplinger.

There are a few common scams seen across the country. One is to call an elderly person and tell them their beloved grandchild has been arrested and cash needs to be sent immediately to get them out of jail. The grandparents are told the child has told the police not to call the parents, so the call is secret. No police department calls grandparents with a demand for cash, but in the stress of the moment, flustered people often comply.

Another is a thief posing as an IRS agent and telling a surviving spouse that their deceased spouse owed thousands in back taxes and penalties. The senior is told to make a payment or risk being arrested. There is also the scammer claiming to be from the DEA and warning the person their Social Security number and credit card were used to rent a car found abandoned near the Mexican border with suitcases stuffed with drugs. The person is told they need to verify their information to clear their record, or they’ll be arrested for drug trafficking. The voice is always very convincing.

Elderly victims are vulnerable for several reasons. One, the generation preceding the boomers was taught to trust others, especially people in positions of authority. As people age, their ability to think clearly when a dramatic and unexpected piece of bad news is easily shaken. Someone who would otherwise never have given out their personal information or sent cash or purchased gift cards becomes overwhelmed and complies with the scammer.

Taking control of a parent’s financial life is a hard step for both the aging parents and the adult children. No one wants to lose their independence and freedom, nor do adult children want to see their parents becoming vulnerable to thieves. However, at a certain point, adult children need to become involved to protect their parents.

A General Durable Power of Attorney (POA) is a legal document giving another person, typically an adult child, the power to act on behalf of another person immediately, once the document has been signed. It may not be effective in stopping a parent from giving money to a scammer, since the parents still have control of their money. fI transactions are done online, the bank may not have an alert set up for questionable transactions.

That said, having a POA in place and alerting the bank to its use will give the financial institution more freedom to be in touch with an adult child about their parent’s accounts, if fraud is suspected.

Guardianship or conservator is another way to address this issue, although it is far more invasive and brings the court system into the life of the person who becomes a “ward” and requires regular reporting. Guardianship is usually sought when the aging parent is incapacitated.

While we often think of trusts as a means of passing wealth to the next generation, they are also useful for protecting people in general and seniors in particular from scammers. When an adult child or other trusted person becomes the trustee, they gain complete control of the assets in the trust. If the aging parent is a trustee, they have control but someone else can step in if necessary. The co-trustee can see any changes in spending habits or unusual activity and take immediate action, without the delay that applying for guardianship would create.

Speak with your estate planning attorney about your unique situation to learn which of these solutions would be appropriate for your loved ones.

Reference: Kiplinger (July 25, 2022) “The Best Way to Protect a Parent from Scammers”

Pay Attention to Income Tax when Creating Estate Plans

While estate taxes may only be of concern for mega-rich Americans now, in a relatively short time, the federal exemption rate is scheduled to drop precipitously. Estate planning underway now should include consideration of income tax issues, especially basis, according to a recent article titled “Be Mindful of Income Tax in Estate Planning, Particularly Basis” from National Law Journal.

Because of these upcoming changes, plans and trusts put into effect under current law may no longer efficiently work for income tax and tax basis issues.

Planning to avoid taxes has become less critical in recent years, when the federal estate tax exemption is $10 million per taxpayer indexed to inflation. However, the new tax laws have changed the focus from estate tax planning to coming tax planning and more specifically, to “basis” planning. Ignore this at your peril—or your heirs may inherit a tax disaster.

“Basis” is an oft-misunderstood concept used to determine the amount of taxable income resulting when an asset is sold. The amount of taxable income realized is equal to the difference between the value you received at the sale of the asset minus your basis in the asset.

There are three key rules for how basis is determined:

Purchased assets: the buyer’s basis is the investment in the asset—the amount paid at the time of purchase. Here’s where the term “cost basis” comes from

Gifts: The recipient’s basis in the gift property is generally equal to the donor’s basis in the property. The giver’s basis is viewed as carrying over to the recipient. This is where the term “carry over basis” comes from, when referring to the basis of an asset received by gift.

Inherited Assets: The basis in inherited property is usually set to the fair market value of the asset on the date of the decedent’s death. Any gains or losses after this date are not realized. The heir could conceivably sell the asset immediately and not pay income taxes on the sale.

The adjustment to basis for inherited assets is usually called “stepped up basis.”

Basis planning requires you to review each asset on its own, to consider the expected future appreciation of the asset and anticipated timeline for disposing the asset. Tax rates imposed on income realized when an asset is sold vary based on the type of asset. There is an easy one-size-fits-all rule when it comes to basis planning.

Estate planning requires adjustments over time, especially in light of tax law changes. Speak with your estate planning attorney, if your estate plan was created more than five years ago. Many of those strategies and tools may or may not work in light of the current and near-future tax environment.

Reference: National Law Review (July 22, 2022) “Be Mindful of Income Tax in Estate Planning, Particularly Basis”

Do Young Adults Need a Will?

Everyone, age 18 and older, needs at least some basic estate planning documents. That’s true even if you own very little. You still need an advance health care directive and a power of attorney. These documents designate agents to make decisions for you, in the event you become incapacitated.

The Los Angeles Daily News’ recent article entitled “Estate planning, often overwhelming, starts with the basics” reminds us that incapacity doesn’t just happen to the elderly. It can happen from an accident, a health crisis, or an injury. To have these documents in place, you just need to state the person you want to make decisions for you and generally what those decisions should be.

An experienced estate planning attorney will help you draft your will by using a questionnaire you complete before your initial meeting. This helps you to organize and list the information required. It also helps the attorney spot issues, such as taxes, blended families and special needs. You will list your assets — real property, business entities, bank accounts, investment accounts, retirement accounts, stocks, bonds, cars, life insurance and anything else you may own. The estimated or actual value of each item should also be included. If you have life insurance or retirement plans, attach a copy of the beneficiary designation form.

An experienced estate planning attorney will discuss your financial and family situation and offer options for a plan that will fit your needs.

The attorney may have many different solutions for the issues that concern you and those you may not have considered. These might include a child with poor money habits, a blended family where you need to balance the needs of a surviving spouse with the expectations of the children from a prior marriage, a pet needing ongoing care, or your thoughts about who to choose as your trustee or power of attorney.

There are many possible solutions, and you aren’t required to know them before you move ahead with your estate planning.

If you are an adult, you know generally what you own, your name and address and the names of your spouse and children or any other beneficiaries you’d like to include in your plan. So, you’re ready to move ahead with your estate planning.

The key is to do this now and not procrastinate.

Reference: Los Angeles Daily News (July 24, 2022) “Estate planning, often overwhelming, starts with the basics”

Did COVID Spark More Estate Planning?

Those who have had a serious bout with the coronavirus (COVID-19) are 66% more likely to have created a will than those who did not get as sick, according to Caring.com’s 2022 Wills and Estate Planning Study.

COVID has accounted for more than one million deaths in the United States thus far.

MSN’s recent article entitled “More Young Adults Are Making This Surprising and Smart Money Move” says that it may be even more surprising that the number of adults in the 18-to-34 age range who now have estate planning documents has jumped 50% in the pandemic era.

Nonetheless, many people of all ages continue to put off the process of creating this key estate planning document.

Two-thirds of Americans still don’t have a will.

Caring.com found that among those who don’t have a will, a third say they think they don’t have enough wealth to warrant one.

However, even if you don’t have an expensive home, a large IRA and other valuable assets to pass on, you can still benefit from creating a will.

There’s no minimum level of wealth needed to have an estate plan, and every adult should have a basic plan in place to care for their own needs and the needs of their family.

The Caring.com survey of more than 2,600 adults found that—you guessed it—good old-fashioned procrastination is the primary reason people don’t create a will. About 40% admit to this factor.

Not surprisingly, the survey also found that those with higher incomes are more likely to put off getting a will due to procrastination.

Those people with lower incomes don’t prioritize a will because they don’t feel they have the assets to justify this important legal document.

Reference: MSN (July 24, 2022) “More Young Adults Are Making This Surprising and Smart Money Move”

What’s the Latest in Legislation for Vets?

The leaders in the U.S. House and Senate had hoped to send the Promise to Address Comprehensive Toxics Act (or PACT Act) to President Joe Biden’s desk for final signature by the Fourth of July, after the Senate advanced the measure by a bipartisan 84-14. The measure would cost almost $280 billion over the next 10 years and provide new medical and disability benefits for as many as one in every five veterans living in America today.

Military Times’ recent article entitled “Major veterans toxic exposure legislation delayed again, but lawmakers insist it’s not defeat” explains that vets who served in Afghanistan, the first Gulf War, Vietnam and numerous other overseas locations could see new benefits under the plan. The bill would help many vets who are victims of on-duty toxic exposure injuries — in particular, smoke from burn pits used to dispose of waste in Iraq and Afghanistan.

The House passed the bill in March, but Senate leaders amended the bill to add phased-in implementation rules and more staff to help process claims in response to Republican concerns. However, the changes ran into trouble with rules that require new revenue requirements to start in the House, not in the Senate. A planned House vote to finalize the measure was postponed, and chamber leaders scrambled to make corrections to the measure before lawmakers began their two-week recess.

Senate Veterans’ Affairs Committee Chairman Jon Tester (D-MT) tried to push through a fix on the Senate floor late Thursday night, but the bid was blocked by Senator Pat Toomey (R-PA), one of the 14 senators to oppose the measure last week. Tester called that a disappointment.

“There is a [technical] issue and we have to fix it,” he said. “But in the process of our debates, we shouldn’t be denying health care to veterans, which is exactly what [Toomey] is doing today.”

However, the procedural issues aren’t fatal for the future of the PACT Act, but instead represent a temporary delay.

House Veterans’ Affairs Committee Chairman Rep. Mark Takano, D-Calif., said he still wants to get a House vote on the measure “once the Senate resolves this procedural speedbump.”

“House and Senate leadership are not shying away from passing the PACT Act,” he said in a statement. “This comprehensive package addressing toxic exposed veterans has been my number one legislative priority and I will continue to be unrelenting in getting it to President Biden’s desk.”

President Biden has already indicated he will sign the measure into law when it is finalized by Congress.

Reference: Military Times (June 24, 2022) “Major veterans toxic exposure legislation delayed again, but lawmakers insist it’s not defeat”

What are Mistakes to Avoid with Beneficiary Designations?

Many people don’t know that their will doesn’t control who inherits all of their assets when they die. Some assets pass by beneficiary designation. Assets like life insurance, annuities and retirement accounts all pass by beneficiary designation.

Kiplinger’s recent article entitled “Beneficiary Designations: 5 Critical Mistakes to Avoid” lists five critical mistakes to avoid when dealing with your beneficiary designations:

Failing to designate any beneficiary at all. Many people forget to name a beneficiary for retirement accounts or life insurance. They may forget, didn’t know they had to, or just never got around to filling out the forms. If you don’t name a beneficiary for life insurance or retirement accounts, the company will apply its rules about where the assets will go after you die. For life insurance, the proceeds will typically be paid to your probate estate. For retirement benefits, if you’re married, your spouse will most likely receive the assets. However, if you’re unmarried, the retirement account will likely be paid to your probate estate, which has negative income tax ramifications.
Failing to consider special circumstances. Not every family member should get an asset directly. This includes minor children, those with specials needs and people who can’t manage assets or with creditor issues.
Misspelling a beneficiary’s name. Beneficiary designation forms can be filled out incorrectly and the beneficiary designation form may not be specific. People also change their names through marriage or divorce, or assumptions can be made about a person’s legal name that later prove incorrect. Failing to have names match exactly can cause delays in payouts, and in a worst-case scenario of two people with similar names, it can result in a court case.
Forgetting to update your beneficiaries. Your choice of beneficiary may likely change over time as circumstances change. Naming a beneficiary is part of an overall estate plan, and just as life changes, so should your estate plan. Beneficiary designations are an important part of that plan—make certain that they’re updated regularly.
Failing to review beneficiary choices with legal and financial advisers. How beneficiary designations should be completed is a component of an overall financial and estate plan. Involve your legal and financial advisers to determine what’s best for your circumstances. Note that beneficiary designations are designed to guarantee that you have the ultimate say over who will get your assets when you pass away. Taking the time to carefully (and correctly) choose your beneficiaries and then periodically reviewing those choices and making any necessary updates will allow you to remain in control of your money.

Reference: Kiplinger (June 6, 2022) “Beneficiary Designations: 5 Critical Mistakes to Avoid”

Why Do I Need a Will?

Perhaps getting hit by a cement truck is too blunt for some, but unexpected things happen all the time. An estate plan, including a will and other important documents, is good preparation, especially for caregivers of people with special needs. A recent article from Forbes titled “Where There is a Will, There is a Way” explains the steps everyone, especially caregivers, need to follow.

Creating a last will and testament

This is the foundation of an estate plan. Without a will, the court will distribute assets to children equally. If a disabled person receiving government benefits receives an inheritance, they will become ineligible and lose access to services. The court will also assign guardianship to minors or disabled individuals, if there is no will. A will, in tandem with proper estate planning, ensures protection for an individual with special needs, including naming a guardian of your choice.

Having a General Durable Power of Attorney for Finances

A POA allows you to name a person you trust to manage finances, real estate property, investments, or any aspect of your life, if you become incapacitated. A POA should be created for your needs, so you may decide in advance what you do and do not want your agent to be able to do for you.

Creating a Durable Power of Attorney for Healthcare

This important legal document, paired with a HIPAA release form, allows someone of your choice to take charge of your healthcare, talk with healthcare providers and make decisions based on your expressed wishes. You may name more than one person for this role but doing so could make it harder if the two people don’t agree on your care.

Naming a Guardian

This is a critical step if you are a caretaker for a person who will likely be unable to manage their own affairs, even after attaining legal age. By naming a guardian in your will, you can select the people who will be in charge of your special needs family member or minor children. Without a guardian named in your will, the courts will make this decision.

Drafting a “Letter of Intent”

A letter of intent is a guide with important information only you know. It is especially important for caretakers. Explaining in detail your disabled individual’s preferences can make a huge difference in the quality of their lives when you are no longer available. What are their likes and likes, what people do they enjoy spending time with and what foods do they prefer, etc. If your children are minors, this letter is an opportunity to describe your preferences for how they should be raised, including religious preferences, vocational choices and even nighttime rituals.

Providing Financial Security

If your family includes a loved one with Special Needs, you can protect their ability to have funds for things not covered by government benefits through a Special Needs Trust. Your estate planning attorney will create an SNT with a trustee and a secondary trustee to oversee the funds and ensure that they are used for qualified expenses.

Reference: Forbes (July 6, 2022) “Where There is a Will, There is a Way,”

Why You Need a Digital Asset Estate Plan

Ajemian died in a bicycle accident at age 43. With no will, his estate passed to a surviving brother and sister. As the siblings began going through his assets, they realized that having Ajemian’s emails could make it easier to identify assets and accounts. They asked Yahoo for access to the email account and explained why. Yahoo said no, citing the Stored Communications Act, a 1986 federal law governing online privacy. Yahoo claimed sharing the emails would violate the federal law. The siblings sued, and the case went through the courts until arriving at the Massachusetts Supreme Court, which ruled in the Ajemians’ favor in 2017.

This scenario, discussed in the article “Your digital self will outlive you” from Morning Brew, is a perfect example of how difficult managing digital assets can be. It also raises another question: do you want your family members reading every email you’ve ever sent or seeing every post you’ve created?

We live digital lives today: photos are stored in the cloud, social media records our personal history, digital wallets contain cryptocurrency and creative works may be password protected. If there is no digital estate planning, those assets will live forever on the web, could easily be accessed by hackers and thieves, or be erased if platforms detect inactivity for an extended period of time.

Amid the rise of digital estate planning startups are ethical debates about what should happen to digital lives living on the cloud. These private and sometimes intimate exchanges will live on, long after their creators have passed. Do you want your descendants to get to know you through a chatbot created by using social media, messages and voice recordings? The technology exists already, although even Microsoft deemed it too creepy to bring to market. At least, for now.

Digital accounts are vulnerable to hackers, difficult to identify and easy to disappear. Executors trying to settle estates are often locked out of accounts by default. Forty-seven states have adopted some version of the Revised Uniform Fiduciary Access to Digital Assets Act, or RUFADAA, which provides a legal framework to allow people to designate someone to take over their digital assets when they die—but only if a person actively picks someone to do it.

Given how few Americans have an estate plan, the number who have made plans for online assets is even smaller. Some big tech companies have added features to allow a legacy contact to take over accounts when users die, but not many. Facebook allows a person to let a legacy contact see and download posts, but the contact cannot go into Messenger history.

Unless you make plans to address it, your digital life will outlive you. Not making digital assets part of your estate plans could also make your estate more vulnerable to scammers. A better way forward is to place your traditional and digital assets under the protection of a comprehensive estate plan, created by an experienced estate planning attorney.

Reference: Morning Brew (July 1, 2022) “Your digital self will outlive you”

When Should I Hire an Estate Planning Attorney?

Kiplinger’s recent article entitled “Should I Hire an Estate Planning Attorney Now That I Am a Widow?” describes some situations where an experienced estate planning attorney is really required:

Estates with many types of complicated assets. Hiring an experienced estate planning attorney is a must for more complicated estates. These are estates with multiple investments, numerous assets, cryptocurrency, hedge funds, private equity, or a business. Some estates also include significant real estate, including vacation homes, commercial properties and timeshares. Managing, appraising and selling a business, real estate and complex investments are all jobs that require some expertise and experience. In addition, valuing private equity investments and certain hedge funds is also not straightforward and can require the services of an expert.

The estate might owe federal or state estate tax. In some estates, there are time-sensitive decisions that require somewhat immediate attention. Even if all assets were held jointly and court involvement is unnecessary, hiring a knowledgeable trust and estate lawyer may have real tax benefits. There are many planning strategies from which testators and their heirs can benefit. For example, the will or an estate tax return may need to be filed to transfer the deceased spouse’s unused Federal Estate Unified Tax Credit to the surviving spouse. The decision whether to transfer to an unused unified tax credit to the surviving spouse is not obvious and requires guidance from an experienced estate planning attorney.

Many states also impose their own estate taxes, and many of these states impose taxes on an estate valued at $1 million or more. Therefore, when you add the value of a home, investments and life insurance proceeds, many Americans will find themselves on the wrong side of the state exemption and owe estate taxes.

The family is fighting. Family disputes often emerge after the death of a parent. It’s stressful, and emotions run high. No one is really operating at their best. If unhappy family members want to contest the will or are threatening a lawsuit, you’ll also need guidance from an experienced estate planning attorney. These fights can result in time-intensive and costly lawsuits. The sooner you get legal advice from a probate attorney, the better chance you have of avoiding this.

Complicated beneficiary plans. Some wills have tricky beneficiary designations that leave assets to one child but nothing to another. Others could include charitable bequests or leave assets to many beneficiaries.

Talk to an experienced attorney, whose primary focus is estate and trust law.

Reference: Kiplinger (July 5, 2022) “Should I Hire an Estate Planning Attorney Now That I Am a Widow?”

Did Former NFL Tackle and Fox Sports Commentator Tony Siragusa have an Estate Plan?

In June 2022, former NFL tackle and Fox Sports commentator Tony “The Goose” Siragusa died at the age of 55. The death of the popular athlete was confirmed to TMZ Sports by Siragusa’s former teammate Jamal Lewis. Lewis also played on the Baltimore Ravens Super Bowl winning team in 2001.

MSN’s recent article entitled “What Was NFL Legend Tony Siragusa’s Net Worth When He Died?” says that no cause of death was included with the announcement of Siragusa’s passing.

Siragusa was first drafted by Indianapolis and played a dozen years in the NFL before working more than 10 years on the sidelines for Fox Sports.

In a 2012 interview with Howard Stern, he revealed that his father died young from a heart attack at the age of 48, and that heart disease runs in the Siragusa family.

As a success both before and after his playing career, Tony left behind a sizable net worth when he died.

At the time that Siragusa died in 2022 his net worth was $6 million, according to Celebrity Net Worth. He also earned a $500,000 annual salary for his on-camera work with “Fox on Sunday.”

In addition to the money Siragusa made through football both in the game and on the sidelines, he was also an actor. Siragusa had a role in the hit HBO TV series “The Sopranos,” as well as other parts. Siragusa also hosted “Man Caves” on the DIY Network, as well as other TV appearances.

As news of Siragusa’s death spread, Indianapolis Colts owner Jim Irsay tweeted that Siragusa was the strongest player he’d ever seen in Irsay’s’ half-century in football. Siragusa was drafted by Indianapolis in 1990.

“I’m heartbroken as is all of Colts Nation,” Irsay also tweeted.

Siragusa is survived by his wife, Kathy Siragusa, and their three children.

Referring to the death of his former teammate, Jamal Lewis said, “It’s a sad day to be a Raven.”

Reference: MSN (June 22, 2022) “What Was NFL Legend Tony Siragusa’s Net Worth When He Died?”

Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

Can We Prevent the Elderly from Being Scammed?