How Marriage and Caregiving Look Alike

My friend and colleague, Richard Courtney, a Certified Elder Law Attorney, writes a monthly article he calls “Monthly Musings.” His December post is a poignant and humorous comparison of marriage and caregiving. As we enter a new year, many of my generation will begin and end their caregiving obligations to an aging parent or loved one. Rick’s commentary reminds us that caregiving – like marriage – asks us to not sweat the small stuff and to maintain a sense of humor. I am happy to share this with Rick’s permission.

On the last day of November, I went to a wedding. It was a beautiful day by a lake. White chairs were set up in rows, with a center aisle, facing two pedestal columns topped with cascading white flowers and the lake beyond. The lovely young music/education major met her bright young law school graduate to join hands and hearts before God and these witnesses. This was a coming-together of complementary elements – the analytical and the creative, the thesis and the antithesis – to form a synthesis, a whole greater than its parts. A magical experience indeed. Continue reading

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Financial Advisor Steals from Own Parents

The story below from Financial Advisor Magazine sent chills down my spine. Since I too am a financial advisor to my own parents (now to my widowed 84 year old mother), it is a reminder of how a good thing – trust – can become a powerful temptation to exploit. It would be arrogant of me or anyone who is in a position of trust with a vulnerable human being to presume that we are above falling into the same trap. None of us is above doing bad things. If you are in a position of trust with your parents, create an environment of safety for you and them by including others on your team. These others can be siblings or outside advisors; the important thing is that you operate with transparency and accountability.

August 7, 2013 • FA Staff

A former New Jersey financial advisor has pleaded guilty to defrauding his parents out of more than $1.3 million while serving as their financial advisor, New Jersey Acting Attorney General John J. Hoffman announced today.

Hugh R. Hunsinger Jr., 49, of Pine Brook, N.J., pleaded guilty Tuesday to second-degree theft in a plea bargain. As part of the deal, the attorney general will recommend that Hunsinger be sentenced to three to five years in state prison and that his insurance producer license be suspended for five years. In addition, Hunsinger has agreed to pay his parents $1.3 million. “For years, the victims in this case believed that their son was investing money on their behalf,” Hoffman said. “Instead, he was siphoning their money for his own benefit.”

Hunsinger admitted that between 2005 and 2011 he secretly transferred $1.3 million from accounts he was managing for his parents to his personal accounts and used the money for his living expenses. Hunsinger worked as a financial advisor for Lincoln Financial Advisors Corporation at the time.

Hunsinger left his parents with only a nominal amount of money in their accounts, Hoffman said.

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Downsizing, Organizing, Handicap Remodeling or Relocating

When Robert and Anne bought their family home thirty years ago, their plan was to live through retirement in this home. They had furnished their home with refurbished antiques acquired from their many trips together. It was one of their cherished antique coffee tables that Robert tripped over, breaking his hip. Now with his return from the hospital in a wheelchair, the overwhelming task of making their home accessible for Robert’s wheelchair and safe for both of them faced Anne.

Remodeling for wheelchair access, organizing home furnishings and daily living items or downsizing and relocating to a smaller living area are monumental tasks that are many times thrust on senior home owners. Sometimes the need to do this is brought on by injury or age related illness. Home and yard maintenance can become a daunting chore for even the healthiest of seniors, requiring them to make a downsizing decision.

There is a large and growing industry of specialists who understand these challenges of elderly homeowners and are ready and willing to help with remodeling, organizing or the sale of the home and with the move to a new location.

A professional organizer provides skills in making the home safe and manageable. Relocating furniture, removing hazards such as electrical cords, throw rugs, heavy objects on shelves that might fall are some of the ways they make a home more senior friendly. They specialize in helping seniors part with items that clutter or have no valued use, so to make rooms less crowded or to make ready for a move to a smaller living space.

Handicap remodeling services and senior safety services offer help in adding wheelchair ramps and widening doorways. Bathrooms are made more accessible and safe, with hand rails, walk-in bath facilities and easier access to toilets.

If moving to a smaller retirement home or care facility is the best solution there is another senior specialty provider to call on called a Seniors Real Estate Specialist.

The Senior Real Estate Specialist concentrates more on a complete service package for the sale of the property and/or the purchase of a new living arrangement. The specialist also arranges for the services of a relocation specialist or Senior Move Manager to provide a complete, stress-free package for the elderly homeowner.

A move often requires downsizing and getting rid of a tremendous number of acquired possessions. The relocation specialist or Senior Move Manager, as they are often called, will typically provide a turnkey operation that includes assessing and identifying items to keep, arranging for auction or other disposal, cleaning the home, moving the belongings and setting up the new residence. The manager may also work closely with a real estate agent to arrange for the sale of the home and may also be involved in the financial transactions necessary to move into a new living arrangement.

All the help available to seniors may in itself be overwhelming. How do seniors choose the right service provider for their needs? How do they know they will hire someone qualified, responsible and honest? Area Agencies on Aging and State Better Business Bureaus are good resources to check out available service providers.

Family, friends and religious leaders can be valuable resources to seniors in referring service providers and helping to manage the hiring and supervision.

Pinnacle Trust works with several vendors in these specialized areas of senior care that can help relieve much of the overwhelming burden that accompanies these changes in a senior’s life.

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Understanding Medigap Policies

Medigap policies are supplemental health insurance policies sold by private insurers, designed to fill some of the “gaps” in health coverage provided by Medicare. Medigap policies are not technically government programs, but because they are so tied to Medicare and have been standardized by federal regulations, they are included here. Although Medicare covers many health care costs, you still have to pay certain coinsurance and deductible amounts, as well as paying for services that Medicare does not cover.

Who Can Buy a Medigap Policy?

Generally, you must be enrolled in the original Medicare Parts A and B before you need to purchase a Medigap insurance policy. Other types of health insurance coverage, such as Medicare Advantage, other Medicare health plans, Medicaid, or employer-provided health insurance, do not work with Medigap policies.

Standardized Policies

Under federal regulations, private insurers can only sell “standardized” Medigap policies. Through May 31, 2010, there were 12 standardized Medigap policies, termed plans A, B, C, D, E, F, G, H, I, J, K, and L. Effective June 1, 2010, plans E, H, I, and J could no longer be sold, and plans M and N were added. Individuals who purchased a plan E, H, I, or J before June 1, 2010 may keep those plans.

The standardized policies allow you to compare “apples with apples.” For example, a plan F policy will provide the same benefits, no matter which insurance company it is purchased from. However, a plan C policy will provide different coverage than a plan D policy. All Medigap policies must provide certain “core” benefits.

These standardized plans are not available to those living in Massachusetts, Minnesota, or Wisconsin; there are separate Medigap policies available for residents of these states.

Choosing a Policy

There are two primary factors to consider when choosing a Medigap policy.

  • Needed benefits: Carefully consider what benefits you are most likely to need; you may not need the most comprehensive plan.
  • Cost: Once you have decided which benefits you will need, shop for the policy that provides those benefits at the lowest cost.
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Problems with Joint Ownership

Joint tenancy is a form of holding equal interests in an asset by two or more persons. If one joint tenant dies, his or her share generally passes automatically to the other joint tenant by right of survivorship. While this is often seen as a convenient way for parents to own property with their children, it may not be the best option.

Advantages of Joint Tenancy

  • Probate avoidance: Title to assets held in joint tenancy passes automatically at the death of one joint tenant to the others. There is no need for a formal probate (unless all the joint tenants die).
  • Convenience: Bank accounts held in joint tenancy can be withdrawn by any joint tenant. This may be an advantage if you need to pay bills from one of your parents’ bank accounts.

Potential Disadvantages of Joint Tenancy

  • Loss of control: Your parent’s will (or trust) will have no effect on joint tenancy assets; even if your Mom or Dad changes their mind as to who they would like to receive the property when one of them dies.
  • Exposure to creditors: The entire property may be available to the creditors of either joint tenant. I read of one instance where a mother had named her son as joint owner of her bank account. When her son was later sued for damages, mom’s bank account was considered an available asset for satisfaction of the judgment.
  • Assets may not reach intended heirs: Quite often property passing to a surviving joint tenant spouse end up in joint tenancy with a new spouse. The new spouse may ultimately receive all of the property rather than you or your siblings.

Potential tax problems

  • Gift tax: The creation of a joint tenancy in some assets may be subject to gift taxation if the value exceeds the $13,000 annual gift tax exclusion[1]. Gifts to one’s spouse are generally not taxable.
  • Estate tax: A bypass trust is often used to reduce estate taxes in married couple estate planning. Holding assets in joint tenancy can completely upset this type of estate tax planning, by passing assets outside the trust.
  • Income tax: When appreciated assets are sold, a “capital gains” tax is generally paid on the difference between the cost basis and the appreciated sales price. Inherited property generally receives a new, stepped-up cost basis at the time of death, namely the value at which the property is included in the decedent’s estate. If these assets are then sold at this higher value, there is no gain, and thus no capital gains tax is due. However, property held in joint tenancy title generally receives only a partial step-up in basis, on the decedent’s share.

Dissolving an Unwanted Joint Tenancy

After careful examination, if it is decided to dissolve a joint tenancy in real property, it is generally done by creating a new deed by which the joint tenants transfer their interests to themselves as tenants in common or community property. It may also be possible to change title by a separate written agreement between the parties. Since the transfer of real estate is governed by the law of the state in which it is situated, local legal counsel should be sought prior to any change of title.

The changing of title to assets can have very serious tax consequences and should be undertaken only after competent professional advice.


[1] The annual gift tax exclusion ($14,000 in 2013) is indexed for inflation in increments of $1,000.

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Guide to Preventing Elder Abuse

Elder abuse is on the increase in all of its terrible forms. Elder abuse can take the form of emotional abuse, physical or sexual abuse, neglect (including self-neglect), and financial abuse. I’ve blogged before about the increased incidence of elder financial abuse. This increase is due to a number of demographic and economic factors, each of which has contributed to this “perfect storm” scenario for abusive conduct.

Last year, the Investor Protection Trust (IPT) released the results of a survey regarding the growing problem of elder financial abuse. Available online at http://www.investorprotection.org, the new IPT survey was conducted during the first 10 days of June 2012. Those surveyed include state securities regulators (76), financial planners (77 ), medical professionals (24), caregiver/social workers (93), APS workers (172), educators (56) and others (264, including other law enforcement officials and legal experts).

The vast majority of these experts (96 percent) say the problem of elderly investment fraud/financial exploitation in the U.S. is “very serious” (70 percent) or “somewhat serious (26 percent).

Other Key Findings

    • According to the experts, the top three reasons why elderly investment frauds go unreported are: “shame on the part of victims” (86 percent); “the ability of con artists to string victims along until it is too late” (80 percent); and “failure of adult children to spot the problem and intervene” (70 percent).

    • 96 percent of respondents say that “potential problems with mental comprehension make seniors more vulnerable” to financial swindles “very often” or “quite often.”

    • 80 percent of respondents say that their experience is “very” or “somewhat” consistent with “a 2008 study (that) found that about 35 percent of the 25 million people over age 71 in the U.S. either have mild cognitive impairment or Alzheimer’s disease, making them especially vulnerable to financial exploitation, including investment fraud.

The Mississippi Attorney General’s office offers a guide* to help caregivers and loved ones identify and prevent frauds and scams perpetrated by criminals and con-artists. Unfortunately it does not address the most prevalent form of elder financial abuse. While elder fraud is terrible in all its forms, the sad fact is that 85-90% of all elder financial abuse is perpetrated by a family member. Family members are already in a trusted position and will sometimes use this position to take advantage of the vulnerability of an elderly relative. Too often family members will blindly trust another family member or friend to take care of a parent’s financial affairs rather than risk offending the family member by asking about for some accountability. If the person is truly acting in the parent’s best interest however, such a request is neither intrusive nor unreasonable.

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Can elderly parents deduct care provided by a child?

This question was recently addressed by Heather Chubb, an attorney in California, and member of the ElderCare Matters Alliance, California chapter.

Question:  “I have elderly parents with multiple health issues, although both are still ambulatory and do not require skilled care or personal care (such as bathing and dressing).  They want to pay me to come over and help them, and I would be willing, but first I need to find out whether they can deduct from their taxable income the amount they pay me for providing this care.  For example, can they itemize these expenses on their tax returns as a medical expense?

Answer:  Caring for aging parents can be challenging and I commend you for being involved and stepping up.  Based on the information you provided it is difficult to determine whether any payment to you by your parents would be tax deductible.  If you provide strictly personal care services such as meal preparation, housekeeping, laundry or gardening, payment would not be deductible.

However, if you assist them with activities of daily living such as bathing, dressing, eating, getting into and out of a bed, chair, etc. (called transferring), getting to and from the bathroom, or managing continence, the cost of those services may be deductible as qualified long-term care services.  In addition, if your parents need assistance due to memory loss or other severe cognitive disability for their health and safety, this is also a deductible medical expense.

Even if the services qualify as medical expenses there is another hurdle to get over before the payments can actually be deducted.  Medical expenses are deducted under your parents’ itemized deductions on their tax return.  However, the full amount will not be deductible, only the amount that is in excess of 7.5% (increasing to 10% in 2017) of adjusted gross income.   In addition, this deduction will only be beneficial if your parents’ total itemized deductions exceed the standard deduction.

IRS Publication 502 http://www.irs.gov/publications/p502/index.html discusses the deductibility of medical and long-term care expenses in more detail.

By hiring you to assist them your parent become employers, therefore employment taxes (social security tax, FUTA, Medicare tax, and state employment taxes ) also need to be considered.  The payments will be earned income to you and therefore taxable income.

Before you begin providing paid assistance to your parents it would be a good idea, for both you and your parents, to create a written contract setting out the terms of your work and payment.  If you don’t feel comfortable creating this document yourself, you may want to seek the assistance of an experienced elder law attorney in your area to help you prepare the contract.

ElderCareMatters.com is an excellent resource to locate elder law attorneys near you who can help you plan for and deal with these types of elder care matters.

Heather R. Chubb, Esq.
The Chubb Law Firm
Premium Member of the national ElderCare Matters Alliance, California chapter

Can elderly parents deduct care provided by a child?.

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