Protecting our parents

This is what you need to know about caring for aging relatives when they can’t care for themselves.

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When Tzu Li’s father had spent more than a million dollars to help African women who owned gold mines and fat bank accounts—an obvious scam—she knew he needed help.

“He flushed all his money in four months and continued to send more to these scammers,” Li says. In addition to the liquid assets, Mr. Li incurred debts in excess of $200,000, risked real estate holdings by failing to pay mortgages or taxes and allowed his insurance policies to lapse, according to his daughter.

Li filed a petition for guardianship in Virginia in October 2016. What happened in the months between then and now is a long, twisted and painful story.

“I thought we had a good relationship and this still happened,” Li says. “It’s a warning that you can’t say, ‘This would never happen in my family.’ I would not have thought it would be possible that this could happen.”

Indeed, to pursue guardianship of an aging parent or relative is, by nature, an adversarial process, and can be very contentious if the guardianship is challenged. Attorney Jean Galloway Ball, of Hale Ball Carlson Baumgartner Murphy PLC in Fairfax, described it as a “nuclear option.”

“Guardianship is a last resort,” says Evan Farr, of Farr Law Firm. “It’s a complex, time consuming, expensive process that is lifetime probate. A first and much, much, much better course of action is for the parent, before they become incapacitated, to get a strong power of attorney.”

All legal counsel interviewed for this piece strongly stated that advance planning, including setting up power of attorney while still in excellent health, can help to avoid exhausting financial, legal and emotional struggles that can come with waiting for something to go wrong. Separate agents can be selected to handle financial (called a fiduciary) and medical (called a health care proxy) matters.

“Everyone over the age of 18 should have a power of attorney,” says Farr. “Basic incapacity planning is vital. As a practical matter, people don’t start thinking about it until they’re much older, usually when they start families.”

Without these measures in place, life can become complicated. If a person becomes incapacitated and there have been no plans made, discussions had, or papers signed regarding his wishes, it might become necessary for a loved one, for example, an adult child, to file for guardianship. Even after petitioning, a guardianship is only granted if the respondent (person for whom guardianship is being sought) is found by the court to be incapacitated.

The Virginia Legal Aid Society defines incapacity as an individual who is unable to care for his health, care, safety or therapeutic needs without assistance or protection, manage property or financial affairs or provide for his support or for the support of legal dependents.

“It’s difficult for clients emotionally,” says Loretta Williams, an attorney with Hale Ball. “When someone is declared incapacitated by a court, their rights are taken away from them. It’s not tangible, but it’s something you feel. It adds another layer of responsibility to the caregiver and another acknowledgment of the incapacity.”

When it does become necessary to seek guardianship, 90 percent of cases are uncontested, says Ball. But when there is a fight surrounding the petition, things can get ugly.

After Li petitioned for guardianship of her father, “he tried to convince me what he was doing was reasonable,” she says. “When they lose the ability to differentiate between scam and reality, they just open up their wallets.”

It took months to get a reliable assessment of his mental health and capacity. According to his daughter, the wealthy Mr. Li’s lawyers were more concerned with getting the client what he wanted (and paid for a job well done) than they were with getting her father the care she believed he needed.

“When you’re up against someone who still retains enough capacity to fight like hell, they and their lawyers will fight dirty,” she says. “Downright dirty and nasty.”

But the dirty, nasty fights don’t only come from a respondent objecting to the idea of guardianship, or conservatorship—meaning guardian of the finances. Family members can have bitter battles over who is going to be responsible for an aging relative.

RELATED: What to consider before taking on guardianship of your parents

The most common battles occur between the person’s spouse and his children from previous marriages. Valerie Geiger, of Cucinelli Geiger, calls it a “horrible, horrible dynamic.”

“When dad goes down, the wolves come out.”

Geiger’s partner, Cary Cucinelli, recalls a situation where a man had given power of attorney to his second wife, yet his daughter countersued, believing her stepmother’s care of her father to be “inept.”

Even after the man died, the two women couldn’t agree on how to handle his remains. His body lay in bed long after he’d passed. “The hospice had to turn the air down (to preserve the cadaver),” Cucinelli says.

Besides being nasty, with families’ dirty laundry aired in public courtrooms, contested guardianships are also expensive and time-consuming. Farr estimates a challenged guardianship can easily cost $60,000 on each side. A conservator, he says, is also subject to a 60-100 hour annual audit process by the court.

It all circles back to the notion that guardianship is, and should be, looked at as a last resort that is only done if no less restrictive option is available.

“Nobody wants to have their legal rights stripped away from them, and that’s what a guardianship does,” Farr says. “You can’t do anything for yourself.” Indeed, a guardian can determine where the ward lives, whether he or she can legally drive or vote and can have marriages dissolved.

Planning for one’s dotage is hardly an appealing prospect to most— “We all think we’re immortal,” says Ball—but doing so can help avoid a lot of pain and suffering for all parties concerned down the line.

As of February 2018, Li’s father is under the guardianship of one of her sisters in Utah and conservatorship by another sister in Florida. He’s been out west since he drove to Arizona in May 2017, searching for one of the women who allegedly contacted him. He was found driving erratically and placed under emergency guardianship after which the family had the case transferred to Utah. An evidentiary hearing took place in November 2017, where, Li says, her father’s lawyers “basically tried to argue that he didn’t need help,” and a neuropsychologist who had completed a lengthy assessment testified that Mr. Li did not have the capacity to understand that he had been repeatedly scammed.

“His ability to understand what happened isn’t there anymore,” Li says.

RELATED: Step by Step: Becoming the guardian of an elderly parent in Virginia

The expression “follow the money” can be applied to elder care.

Sometimes, one of the first signs an aging parent needs help is the misuse of finances, either by the person in question or by someone taking advantage.

“I had a client who was taking money out of her account in sporadic amounts and we didn’t know why,” says Kelly Campbell of Campbell Wealth Management. “It turns out she was being swindled by a roofer.”

Ball says to look for telltale signs, including unopened bills and bank statements, overdrafts, notices that power will be cut off and the writing of large checks.

If a financial power of attorney has not been established, legal proceedings may be necessary to establish a conservator. Similar to a guardianship, a person has to be found legally incapacitated before a conservatorship can be awarded.

The responsibilities are stringent. Under Virginia Codes §§ 64.2-1206, 64.2-1305 and 64.2-1308, conservators must file a detailed account within six months of conservatorship being instated, and then annually thereafter, according to a 2013 document, “Instructions to Conservators of Incapacitated Persons” from the Office of the Executive Secretary, Supreme Court of Virginia.

Taking on a conservatorship means taking on a fiduciary liability and there are inherent risks, points out Angela Bender of AMJ Financial.

“There is a lot of fiduciary risk. If some party said, ‘We don’t feel like you managed this situation well,’ or ‘How did you decide how to invest,’ it’s the liability of the person who’s taken the role. A lot of people’s only exposure might be managing their 401(k), but they don’t really understand the cash flow and pitfalls, they don’t understand the risks,” explains Bender.

RELATED: Checking the guardianship process

As with guardianship, a more preferable option is to plan ahead. “If a family member has power of attorney,” says Daniel Lash of VLP Financial Advisors, “they have the ability to pay all bills, to access accounts as needed, acting as the parent was acting on their behalf, making sure everything is going as it should.”

“It’s a difficult conversation,” Lash acknowledges. “But if you have it before anything has happened, it’s a little easier. If you wait, it can feel like the person is losing control. Someone is telling them ‘you’re not in control.’ When they plan, they’re in control. What elderly people dislike the most about getting old is the feeling of the loss of control.”

“When the time comes, we know where assets are, where the life insurance policies are, who the doctors are,” says Jessica Wunder of McLean Asset Management. “It’s ideal if your child knows everything or if it’s listed somewhere. It’s advisable for any aging parent in good health to say, ‘This is all the information, and this is where it is’ for when it’s needed.”

Planning ahead can also help avoid some, though certainly not all, of the emotional challenges that can come when the decision needs to be taken out of someone’s hands, due to diminished capacity. Advisors told of elderly clients who believed their children were trying to steal from them, trying to imprison them. Li’s father told her, “You’re only doing this to try to get my money.”

There is much to be considered, both by the parent and the child.

When choosing a person to have power of attorney over one’s finances, first, “name someone whom you trust completely,” says Farr. “It is a very powerful document. If you name the wrong person, they could rob you blind and get away with it. Ideally, you want someone financially well-off in their own right who is not tempted to steal your money or is in trouble with the law. No drug problems.”

Williams adds that an agent should have strong credit, keep good records, be good at managing money and have the organizational skills to keep things separate.

“If you commingle funds and then you have a lawsuit/tax lien/etc., you can mess things up,” Bender says. “People don’t understand titling issues. Commingling money can cause unexpected problems that become bigger issues than you thought or intended. People make inadvertent errors because they make mistakes regarding the intricacies of the law when it comes to managing someone else’s assets.”

Williams also emphasizes that while the decision of who should take on care can vary from family to family, each family should examine its communication and ability to work together before deciding to apply a divide and conquer tactic, such as one child taking care of financial decisions and another acting as health care proxy.

“You need to make sure one person isn’t going to authorize care the other won’t pay for,” she points out.

On the other side of the coin, the person who is agreeing to take on the responsibility of power of attorney needs to take several matters under consideration as well, including the financial impact, particularly if the parent resides with the child. “If a parent lives with you, there’s food, shelter, et cetera,” says Campbell. “If mom doesn’t have the money, you might have to pay for help and care. Look at how a week in the life of mom as the dependent.”

RELATED: The cost of care for an elder adult

Federal options are available to assist with elder care, including Medicare, Social Security, the Administration on Aging, Program of All-Inclusive Care for the Elderly (PACE) for Medicare and Medicaid enrollees who need a nursing care level home but wish to age in place and SNAP (food stamp).

According to a 2011 study from the Metlife Mature Market Institute, nearly 10 million adult children over the age of 50 are caring or providing financial assistance for aging parents, a number that has tripled since the late 1990s.

At the time, the total estimated lost wages, pensions and Social Security benefits of the caregivers were nearly $3 trillion, often due to lost wages from leaving the workforce early. Overall, the study states, women are more likely to provide basic care and sons financial assistance.

An Indiana University report referred to by Campbell states that: “Informal caregivers provide service that would otherwise cost the Medicare system $375 billion a year.”

And, Campbell notes, with people “living longer but not necessarily healthier, elder care has become such a big deal.”

Jacqueline Ratner’s mother ran out of money four months before she died, and Ratner covered her expenses.

“I can’t say we did any planning,” she admits. “I’m a lousy planner. I just deal with the situation as it occurs. There are probably people who would not be in a position to do what I did. There are plenty of adult children who are not in the position to do what I did.”

(July 2018)

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