Christopher B. Kroll & Associates – Elder Law Solutions

The Michigan Office of Financial and Insurance Services (OFIS) today urged seniors to carefully check the credentials of individuals holding themselves out as “senior specialists.”"Individuals may call themselves a ’senior specialist’ to create a false level of comfort among seniors by implying a certain level of training on issues important to the elderly. But the training they receive is often nothing more than marketing and selling techniques targeting the elderly,” said Linda A. Watters, OFIS Commissioner.”These sales people and the alphabet soup of letters after their names can be confusing, and in some cases, may even be deceptive to seniors,” Watters said.

Bogus senior specialists commonly target senior investors through seminars where the specialist reviews seniors’ assets, including securities portfolios and typically recommends liquidating securities positions and using the proceeds to purchase indexed or variable annuities products or other investments the specialist offers.

In many jurisdictions, including Michigan, these recommendations may be viewed as providing investment advice for compensation. In Michigan, Investment Advisors are registered by OFIS, as are Insurance Counselors. Michigan also allows certified financial planners who can make recommendations about taxes and wills and other financial documents, but cannot make recommendations or give advice about investments or insurance without being licensed or registered by OFIS.

Before doing business with any investment professional, all investors, especially senior investors, should contact OFIS by email or toll-free at 1-877-999-6442 to determine whether the individual is properly licensed and if there have been any complaints or disciplinary problems involving the individual or his or her firm

     Having power of attorney over a family member is a big responsibility and sometimes it makes sense to share that responsibility with someone else. But when two people are named co-agents under a power of attorney, conflicts can arise. Unfortunately, if the conflict can’t be resolved, it may be necessary to get a court involved.  If you are acting as a co-agent under a power of attorney, but you and your fellow agent disagree on a course of action or one party has stopped participating in decision making, what can you do? The first thing is to check the wording of the power of attorney document to see if it sets up a procedure for resolving disputes. If the power of attorney itself doesn’t help, you should contact an elder law attorney. The attorney can tell you if your state’s power of attorney laws offer any guidance. There may be a state statute that deals with disputes. If the dispute still cannot be resolved, the final step may be to file a petition in probate court to let the court decide it. Or if the court finds that one of the agents is not acting according to the incapacitated person’s best interests, it can revoke the agent’s authority. Unfortunately, taking the matter to court takes time and money.

   If you have been appointed the trustee of a trust, this is a strong vote of confidence in your judgment and integrity. Unfortunately, it is also a major responsibility. Following is a brief overview of your duties:

1. Fiduciary Responsibility. As a trustee, you stand in a “fiduciary” role with respect to the beneficiaries of the trust.  As a fiduciary, you will be held to a very high standard, meaning that you must pay even more attention to the trust investments and disbursements than you would for your own accounts.
2. The Trust’s Terms. Read the trust itself carefully, both now and when any questions arise. The trust is your road map and you must follow its directions, whether about when and how to distribute income and principal or what reports you need to make to beneficiaries.
3. Investment Standards. Your investments must be prudent, meaning that you cannot place money in speculative or risky investments. In addition, your investments must take into account the interests of both current and future beneficiaries.
4. Distributions. Where you have discretion on whether or not to make distributions to a beneficiary you need to evaluate his current needs, his future needs, his other sources of income, and your responsibilities to other beneficiaries before making a decision. Often the most important role of a trustee is the ability to say “no” and set limits on the use of the trust assets. 
5. Accounting. One of your jobs as trustee is to keep track of all income to, distributions from, and expenditures by the trust. Generally, you must give an account of this information to the beneficiaries on an annual basis, though you need to check the terms of the trust to be sure.
6. Taxes. Depending on how the trust was established, the trustee will have to file an annual tax return and may have to pay taxes.  You will need to keep good records and turn this over to an accountant to prepare.
7. Delegation. While you cannot delegate your responsibility as trustee, you can delegate all of the functions described above. You can hire financial advisors to make investments, accountants to handle taxes and bookkeeping for the trust, and lawyers to advise you on questions of interpretation.
8. Fees. Trustees are entitled to reasonable fees for their services. Determining what is reasonable can be difficult.   It would make sense to consult with a professional experienced with trust work to determine what would be normal fees.

In short, acting as trustee gives you an opportunity to provide a great service to the trust’s beneficiaries. Just keep an eye on the responsibilities described above to make sure everything is in order so no one has grounds to question your actions at a later date.

      Individuals engaged in estate planning often get panicky when they hear the word “probate.”  When the term hasn’t been fully explained by a probate lawyer (and sometimes even when it has), it conjures visions of long waits, loss of inheritance, and many other hassles for heirs of an estate.

     To calm these fears (and to avoid working with an attorney), many people consider the idea of adding one or more of their children to their bank accounts.  Generally speaking, each “joint tenant” of an account has complete access to the money, but when one dies, the entire amount becomes the property of the other joint tenant(s).

There are potential pitfalls to adding children to assets:

• As it has already been mentioned, all joint tenants have access to the funds in the account.  This means that either party can withdraw money at any time.  If the child added to the account is not entirely trustworthy, this can be a devastating reality when the money is used inappropriately.

• In a case where the parent passes away, any money received by the child can be considered a gift, which means that it is subject to a variety of laws and may be taxed.  

• Creditors for both parties can have access to this account.  That means that if one joint tenant dies (even the one who is not in debt), the other’s creditors can go after the money they jointly held. 

• Money left in the event of the parent’s death will only be accessible to the other named tenant(s).  If one child has been responsible for the majority of a parent’s elder care and therefore is on the account, he or she will likely have no legal responsibility to share those funds with other siblings.  Again, trustworthiness is an important issue.

If you are considering adding a loved one to a bank account as a means to avoid probate, it’s important to at least talk to an  attorney about your options. 

When is someone considered incapable of making their own decisions?  Old age or physical disabilities are not sufficient reasons to appoint a guardian or conservator; there must be evidence that the individual is unable to make informed decisions or to manage his or her affairs effectively.  Often, a physician is asked to give an opinion or a clinical judgment on a person’s capacity.  The assumption is that the physician will make a thorough evaluation of the individual’s physical, cognitive, and psychological levels of functioning.  Ultimately, it is the probate court that considers the medical evidence and makes a determination of capacity or incapacity and whether or not someone needs a guardian or conservator.  The court evaluates the individual’s ability to handle day to day activities,  what level of daily assistance is required, and the individual’s decision-making process.  There is no single legal standard that can be applied when legal capacity is at issue.
The probate court follows a two step process in evaluating an individual.  First, a determination is made as to the individual’s ability to make informed personal or financial decisions. There must be clear and convincing evidence that the individual is impaired.  Second, the court makes a determination if the appointment of a guardian or conservator is necessary to protect the individual.

     For many clients, the revocable living trust can be used to avoid probate, provide lifetime management in the event of disability, and to save taxes. The trust is established during the client’s lifetime.  The trust can be amended and revoked at any time.  The client usually serves as the initial trustee and has complete control over the trust property.

     Should the client become incapacitated and not able to handle trustee responsibilities, a successor trustee is named.  Property held by the trust is distributed by the successor trustee upon the client’s death according to the terms of the trust agreement.

     When someone dies, everything that he/she owns will go to someone else.  How the assets are owned will affect the disposition of the assets at the person’s death. Only assets held in the individual’s name will pass to heir or beneficiaries.  Joint assets and life insurance policies that have beneficiary designations will be distributed at death without regard to any provisions in a will or trust.

     The individual may want to have specific assets or specific amounts of money be distributed as a gift.  The specific gift must be described accurately to avoid confusion.  Transfer of specific items can be done easily by listing the asset in the will or trust.

     A minor is a person under the age of eighteen years.  A guardian of a minor is an individual appointed by the court who has legal custody of the person or property or both of an individual under the age of eighteen.  A guardian of a minor child has the powers and responsibilities of a parent regarding the child’s support, care, education and welfare.  A guardian shall act at all times in the child’s best interest and exercise reasonable care, diligence and prudence.

     Some guidelines when choosing a guardian for your minor child are:

• Do your children know this person and are they comfortable around him or her? The potential guardian may be suitable in terms of finances and experiences, but would your kids be OK living with that person?

• Is this person fit to raise a child? Sure, your kids may love this person now, and the person may seem great around kids at parties or family gatherings, but would he or she be able to handle raising them on their own?

• Would the person be able to handle the huge task of dealing with your children’s grief?

• Does your potential guardian share the same values as you?  How closely aligned are they with your beliefs about things such as money, education, religion, discipline, love, etc.?

• Who lives close enough and is accessible to serve as your child’s short-term guardian?  Choosing this person is critical in case your chosen guardian is temporarily unavailable or lives out of state at the time of your passing.

     Making sure that you have the right professional for the job at hand is the first and one of the most important tasks that you have in getting any job done right.  When it comes to the legal profession, there’s no difference.  Finding the right attorney may take some time, but in the end, it’s always better to have done your due diligence.

     In order to pick the right attorney and save yourself time and money, you need to know all of your own issues.  If you aren’t familiar with your own situation, it can be difficult to explain it to someone else.  Likewise, there’s no point in engaging an attorney to perform tasks that are useless to you.

     Know your own financial limitations and the financial benefits of engaging the services of a specific attorney.  In other words, only buy what you need and what you can afford.  If you only want a will that names your spouse as your sole beneficiary and there are no other needs, you probably don’t need an $1800 will package. 

     Factors to consider when choosing an attorney:

•  Is the attorney a good listener?  Does he/she seem to fully understand your case?  Not all people are great listeners and someone that already has preconceived ideas as to what your case is all about will likely make mistakes.  A good attorney listens to your circumstances and understands that it is different from any previous case. 

•  Any good attorney will ask questions about your case.  Unless you are both a great lawyer and orator yourself, it is doubtful that you will fully explain your case in the detail and to the extent that no questions need to be asked.  An attorney that asks pertinent questions is seeking to understand your circumstances and develop the proper mental picture. 

• Is this an attorney that you can and want to work with?  All things considered, personality plays an important role in any relationship and it is important that both of you are on the same side.  If you don’t like or trust the attorney, you may be better off going somewhere else.  You will both be better off and your case will be better served.