Paul O. Dillon, Attorney at Law

What Is the Difference between Equal and Fair Inheritances

Deciding how to disperse a lifetime of assets among heirs is a common issue seen by estate planning attorneys. The idea of being “fair” to family members generally refers to a wish to divide the estate equitably, according to a recent article from The News-Enterprise, “Fair isn’t same as equal when dividing estate.”

Assets are commonly distributed by giving each person an equal share. If a beneficiary has died, their share passes to their descendants, or the living heirs divide the decedent’s share.

In some cases, gifts already made to heirs need to be taken into consideration. Let’s say one child has received a $18,000 gift to help purchase a house. The parents may deduct this amount from the beneficiary’s overall inheritance to keep asset distribution fair to the other children.

If one of the children has supported a parent, provided housing, or devoted time and effort towards their care, the estate plan may give the caregiving child more to recognize their dedication. Caregiving adults give up a great deal to care for aging parents, sometimes delaying their careers or losing out on career or social opportunities. This seems like a reasonable response. However, it may engender resentment by non-caregiving siblings. An estate plan should be very clear about this distribution method, and a letter of intent may be useful in case of any court challenges.

When the family includes disabled individuals, distribution may be based on their short- and long-term needs. For instance, an adult child who is unable to support themselves may be the recipient of assets through a Special Needs Trust. If they inherit assets directly, they may become ineligible for government benefits. A Special Needs Trust requires the help of an estate planning attorney to ensure that the SNT is created properly.

When adult children have achieved different levels of financial success, parents can also provide more for the children who need more help. A conversation with all the children should occur so they understand why one sibling is receiving more than another.

Blended families face challenges when distributing assets between stepparents and stepsiblings. Assets are usually divided between spouses, and then the spouses distribute their shares of the estate to their children. Marital trusts may be needed to ensure that no child is disinherited, and an experienced estate planning attorney will be able to structure the estate properly to achieve this goal.

Suppose spouses in a blended family have significantly different levels of assets. In that case, the couple may leave additional assets to the spouse's heirs with a higher net worth. How assets are distributed will also depend on whether or not the couple has merged their finances and whether or not each has agreed to waive their spousal claim on each other’s estates.

An estate planning attorney works with families to decide how they wish to distribute their wealth and guides the process to make it as conflict-free as possible. Fair is not always equal. However, planning and full transparency can build bonds between family members.

Reference: The News-Enterprise (Dec. 7, 2024) “Fair isn’t same as equal when dividing estate”

How Do I Create End-of-Life Plan?

Any family facing the end-of-life of a loved one deserves to know what their loved ones want, as observed in an article from The New York Times, “How to Make End-of-Life Planning Less Stressful.” Hosting a family gathering with pizza and chocolate cake made the conversation easier for one family.

The reporter learned things about her family she never knew. Her parents didn’t want a memorial service because, as they told her, they don’t like big gatherings, alive or dead. A sister wants her memorial service held at Starbucks. The discussion included the possibility of having cremated remains pressed into a vinyl record of the person’s choice (her father’s comment). Taking a lighter approach worked for this family.

Here are some suggestions to start this important, albeit difficult, conversation:

First, ask the family members involved if they’d be open to a family meeting and set a date. It could be done via Zoom, although in-person is better if they are far-flung.

You could bring up a news story about dementia and say it got you thinking about how important it is to talk about these issues now. If you are the older family member, tell your loved ones you are putting your affairs in order and want to spare them the added stress of figuring out your healthcare and funeral wishes.

Create a document for the family to review and a checklist of topics and prompts to review. Two key areas to discuss are deciding who will serve as your health care proxy if you cannot make health care decisions and what directives you want in a living will.

Once these are decided, your estate planning attorney can make it enforceable by preparing a Durable Power of Attorney for Health Care. Copies should be given to loved ones and your doctor.

Another topic to cover, often overlooked, is what you or your aging parents want to do with the remaining years. You might ask, “What is undone in your life?” You may learn your parents have always wanted to visit an ancestral village in Italy or travel to see the Northern Lights. How can you help them make this happen? If your aging parent is a widow or widower, could an adult child travel with them?

These are significant questions and can’t always be resolved in one meeting. Having “check-in” conversations throughout the year will foster further communication between family members. This may also expand to issues like ensuring that their home is accessible for aging, from a ramp for the front steps to properly installed grab bars in the shower.

The conversation should also address the creation of a last will and testament. If your aging parents don’t have a will and you do, share your estate planning attorney’s contact information. If none of you has an estate plan in place, these conversations could help all the family move this critical task to the forefront.

Reference: The New York Times (March 8, 2024) “How to Make End-of-Life Planning Less Stressful”

What Is Multigenerational Estate Planning?

Multigenerational planning is common today, where grandparents, parents, and children live in the same home. With more than two generations living in one residence, estate planning issues can arise, as explained in the recent article from Kiplinger, “How to Handle Estate Planning for Multigenerational Living Arrangements.”

For instance, if a grandparent pays for a separate apartment on their child’s property, who owns the apartment? What if an adult child living with elderly parents pays for updates on the property or provides caregiving services to the parents? Should these arrangements lead to unequal inheritances? All of these issues can be addressed through estate planning.

The first issue to address is home ownership. Should the title be taken jointly, as tenants in common, with a life estate, in trust, as a family partnership, or in some other manner? Which family members are allowed to live in the home? And again, how will this arrangement impact inheritances?

For many families, using a trust to detail all aspects of use and ownership is the best solution. The trust document can address everything, including the right of first refusal, language governing who has priority to buy the property upon the death of the parents, equalization language between beneficiaries to account for gifts to certain family members during life, and tax provisions to ensure beneficiaries pay applicable taxes, equally or proportionally.

The trust may also be used to address the incapacity or death of a family member and what will happen to the property for future generations. The level of detail can be extremely important when dealing with multigenerational shared real estate purchases and uses.

For some families, an LLC (Limited Liability Corporation) or LLP (Limited Liability Partnership) allows for easier fractional property ownership. LLCs and LLPs also help with asset protection and maintaining privacy.

An LLC operating agreement specifies which members will be in charge of the daily operation of the property, payment of expenses, and how ownership interests are divided. Intrafamily loans can be leveraged to pay for improvements on the property, and the agreement can be used to address many different scenarios for the family.

If one child provides care for an aging parent, or a grandparent provides regular daycare for working parents, should these arrangements be monetized and factored into the estate plan? What about a sibling who does not live in the home and does not provide any care for elderly parents or young children? There is no one answer for these or the many other situations arising from multigenerational living arrangements.

An experienced estate planning attorney can ensure your estate documents align with your wishes and address these issues. Often, having a professional in the room when mapping out a plan can alleviate some family dynamics, making these matters less emotional.

Reference: Kiplinger (June 29, 2023) “How to Handle Estate Planning for Multigenerational Living Arrangements”

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”

Can Elder Financial Abuse Be Stopped?

The numbers are chilling. One in ten Americans age 60+ has experienced elder abuse. One of the most common forms of elder abuse is financial, says a recent article from Forbes titled “What Is Elder Financial Abuse—And How Do We Prevent It?”

Financial elder abuse is defined as when someone illegally or improperly uses an elderly person’s money for their own use. Elderly people are easy victims for obvious reasons. They may be mentally vulnerable, suffering from Alzheimer’s or other form of dementia. They may also be lonely and find the company of a new “friend” is so delightful that it impairs their judgement.

Financial elder abuse occurs most often from adult children, but also in nursing homes and assisted living facilities. Be on the watch for those new friends who enter senior’s lives, especially if they seek to limit contact with family members.

Caregivers or nursing staff have access to resident’s possessions, including checkbooks, ATM cards and credit cards. Monitoring an aging parent’s bank accounts on a regular basis should be part of caregiving by adult children. Unusual transactions, large withdrawals or unlikely purchases by credit card should immediately be reported to their bank or credit card company.

Less obvious and harder to track, is when someone forces a nursing home resident to sign legal documents transferring ownership of homes, cars, bank accounts and even investment accounts. They may also be pressured into creating a new will.

Here are some red flags to watch for:

• New names being added to bank accounts or on credit cards.
• Finding unpaid bills, letters from collection agencies or past due notices from creditors, especially when the person has sufficient funds.
• Relatives who suddenly show up and want to be involved with an aging senior, including estranged children.
• The unexpected transfer of any kind of asset to someone who is not a family member.
• Any change in habits concerning money, including someone who was never worried about money suddenly being concerned about paying bills.

The elderly are often scared to report being victimized. They may fear further loss of control over their lives or be embarrassed to have been scammed. If a caregiver is stealing, they may also be physically threatened, or frightened of losing their familiar care provider.

Talk to your estate planning attorney, speak with the local Adult Protective Services office, or contact the National Elder Fraud Hotline, if you are concerned about a loved one being financially exploited.  If you believe a loved one is in physical danger, contact the local police. Don’t hesitate to ask for help.

Reference: Forbes (Nov. 9, 2021) “What Is Elder Financial Abuse—And How Do We Prevent It?”

Choose Wisely and Protect Yourself When Naming a Power of Attorney

Deciding who to name as your power of attorney, or “agent” is not an easy decision. However, it is a necessary appointment, says this article “Ways to protect yourself when appointing a power of attorney” from The Mercury. Disaster and disability strike without advance notice, so it’s important to make this decision while you are well and can think it through.

If you don’t have a power of attorney in place and the unexpected occurs, the only way for your family to obtain legal authority to act on your behalf is through a guardianship procedure. Even when not contested, guardianship is expensive, time consuming and can limit personal freedom. Not every court will award guardianship to a family member, so the end result could be a stranger taking control of your decisions and property.

Having a power of attorney is a far better alternative, but there are seniors who are concerned about the power of a POA and how it might be abused. Here are some tips to keep you in control of your life even with a POA:

Choose wisely when you are well. Choose your agent when you are of sound mind and body. A common “test” is the checkbook test: could you, right now, hand this person your checkbook without a second thought? Do you believe this person would act responsibly, in your own best interest, follow through in paying bills, ask for help in areas they may not understand, record transactions and be scrupulously honest? If you hesitate to give them your checkbook today, you aren’t likely to trust them to run your life in the future.

Many people choose an agent based on whether the person is the oldest child or if there would be hurt feelings if the person was named. These are not good reasons. A person who has problems managing money, for whatever reason, is not a good candidate. Their own stress might make access to your funds too great to resist.

Name a secondary Power of Attorney. There should always be a back-up person named, if the person you name is not able to serve. The same goes for trustees and beneficiaries. Discuss these alternatives with your estate planning attorney to ensure the attorney knows the identities of the primary and secondary choices.

Have a Power of Attorney customized to your personal needs. Not all Powers of Attorney are the same, and one that is great for a friend may be a disaster for you. Limited powers, unlimited powers, powers to gift or powers only for a specific task or period of time are all options when creating a Power of Attorney. You may have a business to run or a partnership to dissolve. Gifting might be permitted to limit estate taxes, if that is your wish. Limited gifting generally means $15,000 a year, although your estate planning attorney can provide guidance on how to best structure gifting for you. If you own life insurance policies, you may want to permit your agent to cash in insurance policies but not allow the agent to change the named beneficiaries.

Two agents or one agent? Not all banks or investment companies will accept two agents. If they do, will the two people you select be able to work together? If not, naming two could create a financial and legal firestorm.

Financial Power of Attorney and Health Care Power of Attorney can be two separate roles. One person might be terrific with managing money, while another could be better at understanding and managing healthcare providers. Naming different people for each task will allow both to participate in caring for you and draw on their unique skillsets.

Fire when necessary. You always have the right to remove someone from their role as your agent. Your attorney will know how to do this properly to protect you and other agents.

Reference: The Mercury (Aug. 3, 2021) “Ways to protect yourself when appointing a power of attorney”

Aging Parents and Blended Families Create Estate Planning Challenges

Law school teaches about estate planning and inheritance, but experience teaches about family dynamics, especially when it comes to blended families with aging parents and step siblings. Not recognizing the realities of stepsibling relationships can put an estate plan at risk, advises the article “Could Your Aging Parents’ Estate Plan Create A Nightmare For Step-Siblings?” from Forbes. The estate plan has to be designed with realistic family dynamics in mind.

Trouble often begins when one parent loses the ability to make decisions. That’s when trusts are reviewed for language addressing what should happen, if one of the trustees becomes incapacitated. This also occurs in powers of attorney, health care directives and wills. If the elderly person has been married more than once and there are step siblings, it’s important to have candid discussions. Putting all of the adult children into the mix because the parents want them to have equal involvement could be a recipe for disaster.

Here's an example: a father develops dementia at age 86 and can no longer care for himself. His younger wife has become abusive and neglectful, so much so that she has to be removed from the home. The father has two children from a prior marriage and the wife has one from a first marriage. The step siblings have only met a few times, and do not know each other. The father’s trust listed all three children as successors, and the same for the healthcare directive. When the wife is removed from the home, the battle begins.

The same thing can occur with a nuclear family but is more likely to occur with blended families. Here are some steps adult children can take to protect the whole family:

While parents are still competent, ask who they would want to take over, if they became disabled and cannot manage their finances. If it’s multiple children and they don’t get along, address the issue and create the necessary documents with an estate planning attorney.

Plan for the possibility that one or both parents may lose the ability to make decisions about money and health in the future.

If possible, review all the legal documents, so you have a complete understanding of what is going to happen in the case of incapacity or death. What are the directions in the trust, and who are the successor trustees? Who will have to take on these tasks, and how will they be accomplished?

If there are any questions, a family meeting with the estate planning attorney is in order. Most experienced estate planning attorneys have seen just about every situation you can imagine and many that you can’t. They should be able to give your family guidance, even connecting you with a social worker who has experience in blended families, if the problems seem unresolvable.

Reference: Forbes (June 28, 2021) “Could Your Aging Parents’ Estate Plan Create A Nightmare For Step-Siblings?”

What is Seattle Doing to Combat Elder Abuse?

Research from the New England Center for Investigative Reporting shows that adult protective services throughout the country conducted more than 713,000 elder-abuse investigations in fiscal year 2017. Almost a third of the cases identified the victims of abuse or self-neglect. In Washington State, reported elder-abuse cases increased from 19,000 in 2012 to 49,000 in 2017, according to Seattle Weekly’s recent article, “Seattle Takes on Elder Abuse as Reported Cases Rise.”

Mary Lynn Pannen, the founder and CEO of Washington-based geriatric care management firm Sound Options, remarks that the increased reporting is a result of better data collection. She has seen progress in the state’s response to elder abuse, since she worked as the head of a Tacoma-Pierce County Health Department counsel that focused on the issue 35 years ago. Over the past 30 years, she and her staffers have consulted with families throughout the region on caring for older adults. Employees help caretakers create and execute care plans, work with elder law attorneys and advocate on behalf of people in care facilities. Staffers are trained to be keenly aware of elder-abuse cases, which typically show up as financial exploitation. They’ll look for signals like bruises on the senior’s body or a refusal by family members or caretakers to allow the senior to respond to the staffers’ inquiries. Once they’ve gathered enough information to suspect abuse, staffers then report it to Adult Protective Services.

“One of the things to prevent abuse, is to make sure that we can help de-stress the whole family unit, because caregiving is really hard,” Pannen said. “This is a serious issue and we need to have the public understand that.”

Abuse often goes unreported because older adults feel shame or are unaware about the neglect or abuse they’ve received from their own family members or caregivers. Local agencies have strengthened protections for seniors in recent years.

The Seattle Human Services Department’s Aging and Disability Services Division (HSD/ADS) seeks to address the widespread issue, by working with the Office of the King County Prosecuting Attorney and Adult Protective Services to provide older adults with financial, health, legal services and safe housing in the face of abuse.

According to Adult Protective Services’ (APS) data, King County’s work is helping to increase elder-abuse reporting. They reported a nearly 50% increase over the previous five years in reported allegations of elder abuse in 2014. In 2017, more than 11,000 allegations were reported to APS in the region that includes King County, with nearly 30% of the cases concerning financial exploitation.

Reference: Seattle Weekly (December 12, 2018) “Seattle Takes on Elder Abuse as Reported Cases Rise”