Tips for taking over finances for someone in cognative decline

[K Frame]

Simple stuff in this article, but it would have helped had I read it before I was forced to take over my Mom's accounts for her.

https://www.nbcnews.com/paid-content/paid-content/five-tips-handling-financial-matters-loved-one-incognitive-decline-n1282004?mvt=i&mvn=18393b89deeb4af78be7a1cc5ae28c2a&mvp=NA-CNBC-11239420&mvl=CNBC%20ROS_Polar%20-%20Polar%20Engine%20Backfill

[Ben]

Having been made a co-trustee on my parent's trust, along with getting power of attorney, was extremely helpful after their deaths. After my mom died, my dad was already 87, and simply not familiar with everything that needed to be done, especially on the computer and online side, where you have to spend a lot of time these days. Even me guiding him through it would have been a lot more work than me just doing it as a surviving co-trustee. Letting me handle everything let him rest and recover.

After my dad died is when I really saw how important this was. Things like the bank accounts were a breeze. In and out of the bank in less than an hour making simple paperwork changes regarding names on the accounts. Had there not been a trust, I'd still be dealing with account holds, transfer of funds, closing accounts, etc. Real property was also (mostly) a breeze, with simple transfers of title. File a couple of forms, and a month later new title was in and I was able to handle selling assets and distributing inheritance for his will.

I put in the "mostly" above because stinking California has new rules that make people jump through a few more hoops, and I'll have some CA tax crap to handle with my CPA for this tax year. Otherwise it would have all been even easier for a trust filed somewhere in America. My personal trust is still filed in CA, but I have an appointment with my attorney here in JAN to refile the trust in Idaho.

[MillCreek]

When I had the estate planning attorney re-do our estate plan earlier this year, I specifically asked her about a trust, and she said for a simple estate like ours, she did not recommend it.  I took her word for it, but I should have asked why or why not. I don't know enough about the subject to have an opinion on it.

[MillCreek]

In regards to the NBC article cited above, I heartily endorse the first recommendation: start early.  I see this all the time in the hospital, where the patient has already lost capacity and is legally incompetent to sign the powers of attorney and the like.

My wife and I have joint powers of attorney for healthcare and finances and at the recommendation of the attorney, made them effective immediately.  I see a lot of situations in the hospital where people present powers of attorney that become effective only when the person is certified incompetent by two physicians, for example, and that adds additional time and complications to the process.

[Ben]

When I had the estate planning attorney re-do our estate plan earlier this year, I specifically asked her about a trust, and she said for a simple estate like ours, she did not recommend it.  I took her word for it, but I should have asked why or why not. I don't know enough about the subject to have an opinion on it.

Our family attorney in CA, the last time we updated things, said that because of current rules regarding death taxes, a trust, under (I think currently) $11 million, is not necessary from the tax side, but where it comes into play is dealing with all the other post-death stuff that I mentioned above.

That $11 million is a fed number. Different states handle death taxes differently, so from the state tax perspective, it could still be viable to have a trust in CA, but maybe where you are in WA, the state death tax rules are different.

Anyway, as the guy having to handle everything for my family, I am very grateful to my parents that we set things up the way we did.

[Fly320s]

We are way below the $11 million threshold Ben mentioned, but we have a Trust anyway.

A Trust keeps your estate out of Probate after you die.  It also makes it easier for your spouse to take possession/control of all the assets you might have in your name.  And it gives your kids or other designated trustees a much easier time of cleaning up your assets, as Ben said.

On top of those items, you can help shield yourself from financial liabilities since the Trust "owns" all of the assets, not you personally.  If you ever get sued, your personal assets don't really exist since the Trust owns them all.

Do you have NFA items?  If you put those items in your Trust, or any Trust, you can easily add/remove trustees who can legally possess the item at any time.  I've heard of friends starting a Trust just for NFA toys so that they can share possession of those restricted items without running afoul of the BATFEIO.

[K Frame]

Fortunately my Mom had signed a power of attorney when she and my Dad had their wills done just before my Dad died in 2007.

That made it a LOT easier for me to take over her accounts in 2015 when I needed to.

What I didn't know at that time, however, was that Mom had had another will done a few years later. She never told me about it and it was quite a shock when I found out about it (and some of the provisions in it) after she died.

What I didn't know, and still don't know, and quite frankly don't care about, is whether that new will that she had had done in 2009 or so negated the power of attorney papers that she signed in 2007 and whether that meant I ended up taking over her accounts illegally. The new will didn't have a POA stipulation with it so I can only think that the original 2007 POA was still in force.

Again, though, I didn't find out about the new will until after she died in 2017. By that time I had been in control of her affairs for almost 2 years, and my brother was the medical POA.

So, even if it did mean that I took over her accounts "illegally," it became a moot point when she died and I became executor.

[Ben]

All very good points made by Fly320s.

I currently have a separate trust for my NFA stuff, but I'm lucky in that my new attorney is both an estate attorney and a nationally renowned 2nd amendment attorney, so I'll be asking her if there are benefits to putting everything in one trust or keeping the gun stuff separate.

[MillCreek]

So now I am intrigued, so I have been doing some research on living trusts vs wills in Washington state.  I now have a better handle on why the attorney recommended against us having a trust:

1. I have no NFA items
2. Our kids are grown and do not need guardians
3. We executed mutual powers of attorney in case of incapacity
4. Washington probate is generally quicker, easier, and cheaper than most other states so
    avoiding the cost of probate is not much of a factor.
5. We don't own property outside of the state
6. A better process to extinguish any creditor claims against the estate
7. Wills are easier and cheaper to prepare
8. We are leaving all property and assets to each other, and split equally amongst the four
    kids upon death.
9. We are not concerned about the will/probate process being public in the court files.
10. Our estate will not be subject to Federal or state estate taxes.

There are likely other things as well, but I never worked in that area of the law, so all of this is based on quick online research. 

[Bogie]

The "split equally" thing can get problematic if the real estate market is in a trough...