San Francisco Chronicle - (Sunday)
Estate planners encourage older adults to be proactive
Thanks to the recent approval of Prop. 19, some California attorneys have found themselves busier than normal reviewing estate plans for clients expecting to pass their homes onto their kids. But even for seniors who don’t own property — or who aren’t planning to leave it to their children — ensuring your plans are up to date and consulting with estate planning professionals are good strategies.
In the case of Prop. 19, the portion that went into effect Feb. 16 essentially requires marketvalue reassessments for properties inherited from parents that aren’t used by the child as a principal residence — potentially driving up property taxes the child would have to pay. Inherited properties that the child uses as a principal residence could also see an increase in taxes if the home’s reassessed value is over 1 million dollars.
“This caused a lot of activity of people first trying to figure out whether it applied to them, and then should they make the transfer or not. It’s caused a huge backlog,” said Beth Kramer, who specializes in estate planning trust and probate law as a partner with Freeland Cooper & Foreman in San Francisco.
At least those older adults are being proactive. According to attorney Yulissa Zulaica, an estate planning specialist and partner with San Francisco’s Johnston, Kinney & Zulaica, one of the top stumbling blocks she sees is the failure of people to make updates to their wills and trusts.
“The laws change, the kids get older if you’re providing for kids, the charities you like don’t exist anymore, you don’t have the assets you had anymore,” she said, listing a few of the pitfalls. “It’s always on the todo list, but you just never get to it.”
Some people’s estate planning relies on a trust, a way of holding assets in your lifetime that allows your beneficiaries to inherit them without having to go probate court, which wills require. But even then, Zulaica said there is a need to update and review plans for some common mistakes.
“I do a lot of litigation and deal a lot with trusts printed from online sources or attorneys who were trying to do larger estates that don’t have that expertise,” she said. “I see trusts that don’t have trustees named or have conflicting provisions . ... People set a trust up, might transfer some bank accounts and real estate into the trust and 10 years go by. If they’re not consistently checking in every few years, if they don’t fund their trust, then we still end up in probate court trying to get those assets into the trust, which defeats the investment we made on the front end.”
Kramer has also seen legal issues arise from inexpertly drawn wills and trusts.
“People try to do the estate plan themselves and then leave it on the computer. That’s not effective — you actually have to have the will witnessed, and live witnessed, or it has to be 100 percent in your own handwriting,” she explained. “Or they’ll print it out and notarize it, but notarizing is not witnessing a will. That doesn’t count. There are formalities in how you have to sign these things.”
An estate planning professional can help you navigate another potential minefield: who should hold power of attorney over any nontrust assets if you become incapacitated before you die, who should serve as the executor of your will and, if you have a trust, your successor trustee — the person who will have charge of the assets in your trust if you become incapacitated or die.
“For substantial or complicated estates, you want someone who does this for a living and can appreciate the finer points,” said Zulaica, adding that these “corporate fiduciaries” can come from a bank’s trust department or a company that only services trusts. “For an individual plan, it always makes sense to keep it person
Part of estate planning is deciding which assets you need during your lifetime, not just which ones you want to bequeath to others.
While many homeowners plan to stay in their residence until they die, often they don’t realize a reverse mortgage could allow them to enjoy better cash flow now. And those who have heard of reverse mortgages often don’t understand how they work, according to David Chee, a certified public accountant in Oakland who al: Who knows you, who’s going to do the right thing? I always say that our default is our spouses, or kids or families, but pick someone who will respect your wishes, even if they’re going to disagree with them”
For Kramer, being “trustworthy and a good communicahas specialized in such loans for the last 15 years.
“There’s a misconception that you lose your home,” Chee said. “A reverse mortgage is just a loan that you do not have to make payments with, and which provides a significant amount of your home equity — typically in the 60 percent range — based on your age . ... People can live in the home as long as they want, as long as they maintain the home and pay their property taxes and insurance.” tor” are important qualities for trustees, executors and agents under powers of attorney.
“If they’re going to be handling money for other people, they need to reassure the other people that they know what’s going on,” she said. “People feel guilty if they don’t pick all their kids, but if not all their kids get along, that wouldn’t be a good choice.”
Taking similar care in choosing an estate planning professional is also key to avoiding mishaps, according to Kramer.
“It’s OK to interview more than one attorney. It’s OK to get a recommendation from someone you trust,” she said.
And despite the recent flurry caused by Prop. 19, estate planning “is not always about how to pay less taxes,” Zulaica noted. “There’s very often a bigger picture and every person is different. I have clients with large estates who don’t care if they pay taxes, and others who are very charitably inclined and others who just want to make sure their kids get through school and buy a house and that’s it. … I think spending the time to understand who your client is and where they’re coming from is important.”
Reverse mortgage could be key to aging at home
Interest rates are also based on the age of the homeowners, who can choose to receive the loan as a lump sum, as monthly payments, “or what a lot of people do, as a line of credit,” Chee said.
The reverse mortgage is paid off when the residence is sold, and homeowners can leave their heirs any remaining proceeds.
The application process is similar to a regular mortgage, Chee noted, with one exception: Prospective borrowers must first speak with a certified independent counselor.
“It’s there to help protect the borrower and make sure that it’s a good fit for their situation,” Chee said.
Marcia Weaver, left, has lived with her daughter, Lisa Weaver, for more than a decade.
said there are two main ways families can find caregivers. One is through such channels as Craigslist.com, where many caregivers advertise for jobs, or family friends. The others are through licensed agencies like his.
“The advantages of going through a nonlicensed caregiver are the rates are generally lower,” he said. “But that puts the onus on the family to assume insurance costs, etc. If something happens to the caregiver in their home, the family is responsible. Plus, you may not know the level of care they can offer.”
Licensed caregivers, such as through an agency, charge on average between $3540 per hour with about a fourhour minimum, Shahpuri said. Besides cost, there are other things to consider, and the main one is compassion.
“First of all, the caregiver has to be compassionate,” he said. “They have to understand the reason the family is in the situation and why they need help. The family may feel guilty about this situation, but realize it’s ultimately better for their senior.”
Then, the other most important thing is that it is a good match between the caregiver and the older adult.
“If the senior loves to talk, the caregiver might need to be a good listener,” Shahpuri said.
There are different levels of caregiver services, such as just doing light housekeeping, helping with meals, driving the older adult to appointments or activities and playing board games or cards.
“They need companionship more than anything,” he said.
Then there is personal care, such as help bathing and dressing and taking medication.
The final stage is dementia care, in which a specialized nurse such as a licensed vocational nurse is needed. These tend to be more expensive but can be covered by Medicare, Medicaid or longterm care insurance most of the time.
Christina Irving, a licensed clinical social worker with the
Marcia Weaver creates jewelry for her Etsy store in her daughter’s garage. The 84year old has lived with her daughter for over a decade.
San Franciscobased Family Caregiver Alliance, agrees with Shahpuri’s suggestions, but offers this advice:
“Find out what level of risk you, as the main family caregiver, are comfortable with,” she said. Also, the older adult has to be comfortable with someone else in their house. “It’s better to introduce the situation sooner
than the senior may actually need it, to help them get used to the idea.”
Irving also advises to not be afraid to try out more than one person to get a good match.
So when is it time to seek out a caregiver? Irving said a family may start noticing that their loved one is getting confused, forgetting to take medication or
accidentally leaving a burner on the stove on or water running from a faucet. In fact, she said, that might be a little late in the game. “Safety should be the first priority.”
The other thing is when family caregiver stress gets too high.
“It’s real, and no good for anyone ... Forget guilt. You’re doing the right thing for your
family,” Irving said.
Finding the right caregiver — whether through an agency or personal connections — is vital.
“Sometimes it’s hard to build a relationship with a client,” Irving said. “That may be because the senior is confused. That’s why it’s better to start early ... “It’s more an art than a science.”