Month: August 2017

The Role of the Attorney-in-Fact

When a client becomes incompetent the person named as the “attorney-in-fact” in the Power of Attorney form must step in and assist with all components of the client’s financial life. An attorney-in-fact handles all money matters – paying bills, investing assets, ensuring safekeeping of valuables while maintaining detailed and accurate records of all transactions. The attorney-in-fact is the incompetent person’s fiduciary. What this means is that the attorney in fact owes a higher duty of care to the person that they are now assisting. The fiduciary must act reasonably and carefully. As carefully as if they were handling their own money and affairs, but more so.

I have had the privilege of serving as attorney-in-fact for many of my clients who do not have some else that the they can trust. I have managed the day-to-day issues that normally arise in a person’s life such as cancelling newspaper subscriptions, changing telephone service, purchasing necessary personal items and clothing. I have also overseen the sale of homes and cars, purchased furniture, planned funerals, coordinated investments with financial advisors, reconciled tax issues with the IRS, and assisted police and insurance companies with break-ins and thefts of personal items.

The attorney-in-fact is many things to the person in need – money manager, confidant, and trusted advisor. It can be an overwhelming task particularly if the newly incompetent person did not maintain his or her affairs in an orderly manner. However, with patience and persistence an attorney-in-fact can take charge and maintain the incompetent persons affairs in a satisfactory manner. If there is not a clear plan in place regarding the financial affairs, we look for clues. We check the mail each day and look through the home for important papers. If the person handled their financial affairs exclusively online – this can be a much greater challenge. And always involves several trips to the bank for assistance from the staff to check the automatic payments and deposits.

When selecting an attorney-in-fact not only should you tell the person you have selected, you should also spend an afternoon bringing them up to date on your financial affairs so that you have truly planned for potential but not inevitable incompetency.

Did You Know that “Incompetent” People Cannot Sign Legal Documents?

Under the law, a person must have “capacity” to validly sign legal documents. Before I permit my clients to sign their wills, I must believe that they know what belongs to them and to whom they wish to leave it. For example if a client knows she has four kids and wants her money and personal belongings split evenly among them, she likely has capacity to sign her will. But if she can’t remember each of the kids’ names or doesn’t remember where she regularly banks, then it is probably too late to sign new a new will or “update” an old one.

The standard for signing a power of attorney form, which surrenders control over a person’s property, requires greater cognitive ability than that necessary for signing a will. Not only must the clients know what they have and who will receive it, but they must also understand the purpose and content of the form.

I often receive calls from people asking if I can draft documents for relatives who suffer from Alzheimer’s disease or other forms of dementia. A diagnosis of neurological disease does not, by itself, render a person legally incompetent. However, once the illness has progressed to the point that the person can no longer meet the competence standard, it’s too late to get their affairs in order. Even if an ill person meets the competence standard, records of a dementia diagnosis may later be used to challenge the judgment of the attorney who made the capacity determination and thereby invalidate the documents.

In sum, an attorney can only permit legally competent clients to sign wills and other documents. For clients who lack the capacity, signatures are impermissible, and any resulting documents may later be voided by a court.

You Have Your Way, but Where’s Your Will?

Clients sometimes tell me that their mom or dad died with a will, but it can’t be found. Not finding a loved one’s signed, original will is very frustrating. If the will cannot be found, then it cannot be used. Courts will not probate the idea of a will, so we actually need the signed original. In some circumstances, a copy can be used – but that is a subject for another day.

After you sign the will, you can safely store it in one of three places: at home; in a bank box, or with the Register of Wills. For many people, the best will option is the Register of Wills. Storage there costs a onetime fee of $5 and assures the document will never be lost, damaged or altered. If you want to get your will back from the Register, you or a representative (including your lawyer) need only ask for it in person. After checking your identification, the Register’s staff will cheerfully retrieve the will and return it. For wills stored with the Register, the Personal Representatives can open probate with nothing more than an original death certificate.

Storing signed wills at home is free and allows organized people to retrieve at a moment’s notice. Many of my clients know exactly where they keep their passports, insurance policies, and legal papers. If you are in this group, make sure the important people in your life know where you stash your papers. If I’m your attorney, I’ll ask you tell me so I can provide answers to loved ones making “I can’t find it” calls. Often the best choice is a fireproof box stored above flood water level. I know of three people who have had the horror of losing their possessions to fire. So, I am a strong advocate of small fireproof document storage.

As people age, they sometimes lose their mental wherewithal and tend to scatter important papers from thoughtful storage places to random piles. If you are a paper shuffler at any age (and you must be honest with yourself), do not store your will at home. If organization is not your strength but you feel uncomfortable storing your will with the Register, renting a bank safe deposit box can work well. The fee is typically quite reasonable – under $100 each year and sometimes free. If you have a safe deposit box, be sure to add a trusted friend or relative to the account. The best choice is your Personal Representative, who will need to find your original will to initiate the probate process. If the key is lost or you are the only one on the box, the Personal Representative must obtain a court to drill the box after your death, which typically costs $250-400.

How and When to Enroll in Medicare

Eligibility for Medicare begins on your 65th birthday. You can sign up for the program then, or delay doing so if you are still working. Failure to timely enroll will result in late-enrollment penalties – usually a substantial increase in your monthly Medicare premium price. You will be automatically enrolled on your 65th birthday if you have chosen to receive your Social Security benefit at age 62.

If you are not receiving Social Security early, then you have a seven-month window of opportunity to enroll in Medicare. This window opens three months before you turn 65 and closes four months afterward.

Enrollment in Medicare takes place through the Social Security Administration, and you can complete the necessary forms online, in person, or through the mail. But, you must take the initiative. To sign up in person, you can visit your local Social Security office with or without an appointment. I have, on several occasions, visited Social Security for clients. Each time, I arrived about 45 minutes before the office opened, stood in line, then waited 1-2 hours to be seen by an employee. It was a great opportunity to catch up on reading, knitting, and people watching.

Here’s a link to help find your local Social Security office.

Disposing of Unwanted Medicine

When my clients move from their homes, they frequently leave unused medicines.  Of course, my assistants and I often find partially full prescription bottles when we help families clean out homes after a loved one dies.When my clients move from their homes, they frequently leave unused medicines.  Of course, my assistants and I often find partially full prescription bottles when we help families clean out homes after a loved one dies.

For most people, the first impulse is to throw unwanted drugs down the drain or flush them down the toilet.  But please don’t do this!  This practice pollutes our water supply, and nobody wants to drink Viagra water.  In theory, “Medicine Take-Back” programs will safely dispose of pharmaceuticals, and the FDA’s website refers quite extensively to them.

But, I have never encountered such a program, and none of our local pharmacies offer a collection option. But there remains a safe, simple and effective solution:

  1. Place clean kitty litter, unused coffee grounds, or dirt in a ziploc type bag.
  2. Add the medicine to the bag (but don’t crush or pulverize the pills).
  3. Add water to the bag and mix well.
  4. Seal the bag and throw it in the household trash.
  5. Scratch out the personal information on the empty pill bottles and dispose of the container.

If you want more information on this or other drug-related topics, click on the FDA link above.

Grandma Needs Groceries

Some of my clients live at home but can no longer physically manage a trip to the grocery store.  As a result, they often entrust an aide or a friend with money or access to credit.  Sadly, those arrangements have frequently led to betrayal, and my clients have had money stolen and their credit cards used for unauthorized purchases.Some of my clients live at home but can no longer physically manage a trip to the grocery store.  As a result, they often entrust an aide or a friend with money or access to credit.  Sadly, those arrangements have frequently led to betrayal, and my clients have had money stolen and their credit cards used for unauthorized purchases.

I recommend that my housebound clients make most purchases, even groceries, using the internet, to avoid unnecessarily relying on the good faith of others.
In our part of Maryland, Giant provides grocery delivery through an online site called Peapod.  (  Peapod offers most of the same choices as a trip to Giant, and the staff pays close attention to quality: often the fresh fruit and vegetables are of higher quality than the produce found at the local store.  Peapod orders are paid using a credit card stored on the website.  Peapod charges for delivery and requires a minimum order, but the service significantly reduces fraud and ensures a consistently stocked kitchen with minimal planning.

Harris Teeter also provides delivery through its Instacart service, but on a more limited geographic basis than Peapod.  Additionally, Harris Teeter widely offers online ordering and grocery pickup for people who can drive but may have difficulty navigating a store on foot.  The store staff shops for the order from the stock on hand, and the customer picks it up without exiting the car.  Orders can be pre-paid on the website, so an aide or friend can get the groceries without requiring access to money.

Finally, Amazon stocks toiletries and household goods.  It offers next-day and two-day delivery, often at no charge.  And, of course, Amazon provides enormous flexibility in payment, as it gladly accepts credit and debit cards as well as direct payment via checking accounts.

Winter Home Listings Equal Lower Prices

As a probate attorney for the past decade, I’ve been involved in somewhere between one and three home sales every year. The biggest lesson I’ve learned is not to list a home during snow and ice season! Here in Montgomery County, winter runs from Thanksgiving through the first full week in March.

Few prospective buyers bother shopping during this season. And those who do are looking for deals, so purchase offers are lower and seller concessions are higher. Indeed, offers during these months tend to come with many more restrictions and demands, requiring sellers to agree to more changes than they would have to accept during seasons when demand is greater. Such changes significantly reduce the seller’s profit.

Homes don’t show well in the winter. Snow and ice magnify minor flaws in a property that sellers have no obligation to disclose and buyers might otherwise overlook. For instance, trees and shrubs will likely look bare if not dead, though in a matter of weeks they will turn green and lush. Slow draining sidewalks around a home will be slick with ice and slush, though the homeowner will have no ability to repair the county-owned pavement. Since the homeowner has no legal obligation to alert a buyer to such details, it makes no sense to highlight them unintentionally.

In the worst possible scenario, winter weather will cause a substantial defect that must be disclosed, imperiling a possible sale. Hail, sleet and ice dams damage roofs and cause leaks. When water starts seeping into a house during escrow, sellers must make costly repairs and concessions, or risk the buyer walking away from the sale.

Finally, homes that enter the market in winter tend to attract little interest simply because few people are looking to move. As a result, houses sit and listings become stale. Unfortunately, the few potential buyers suspect that any house that sits on the market must have a flaw: they naturally assume that if nobody else wants a house there must be something wrong with it. Stale listings result in price drops, and while the home will eventually sell, it will command a lower price than it would have if the seller waited to put it on the market in warmer weather.

A Joint Owned Bank Account Is not Yours Alone

Many people add friends or family members to their bank accounts for convenience or to avoid probate.  But, when circumstances change, and the original account holders want to regain sole ownership of their accounts, they are shocked to learn they cannot.Many people add friends or family members to their bank accounts for convenience or to avoid probate.  But, when circumstances change, and the original account holders want to regain sole ownership of their accounts, they are shocked to learn they cannot.

To close an account, banks almost always require the consent and presence of all joint owners.  Problems arise if the new account holder refuses to cooperate or the original owner wishes to act without consent.  The original owner is no longer in complete control of the money and cannot close the account alone.  However, the original account holder can transfer the funds to a new account.  The original owner will first need to open a new account in his or her name alone then transfer the funds from the old account into the new.

Account holders may accomplish transfers by check or a cash withdrawal.  Minimum balance requirements may make complete withdrawals impossible.  However, such requirements are typically small, and the original owner can withdraw everything from the old account, leaving $1, $10, or $100, while transferring the remaining money back into his or her own control.

Helpful Phone Numbers

When an older parent has sold a home or is preparing to move, who do you call to change services in the DC metropolitan area?

Electricity: PEPCO 202-833-7550 or BGE 800-685-0123
Gas: Washington Gas 800-752-7520
Water: WSSC 301-206-4001
Verizon: 301-954-6260
Comcast: 301-424-4400 (Montgomery County) or 301-499-1980 (Prince George’s)
Washington Post: 202-334-6100

When you are making these calls, have a recent bill from the appropriate service in front of you. Even better, have the person named on the bill at your side, or the company may refuse to assist you for “privacy reasons.”

Make these phone calls a few weeks in advance of any move. The water company, for example, will want to read the meter. Other companies may need a few days or weeks to complete the service change. Timely calls help avoid bills for services provided after the move.

Maximizing Your Social Security Payout

You can start drawing Social Security benefits any time between the ages of 62 and 70. The longer you wait to start, the greater your monthly benefit. If you start at age 62, you get about 75% of your retirement benefits; and if you wait until age 66, you get 100%. But if defer for the maximum period, until age 70, you get 132%. Given the chance to collect more benefits later in life, people frequently ask, “When should I start collecting?”

In a recent Washington Post article, Alan Sloan explains that if you wait until age 70, you must live well over a decade to make up the difference having failed to receive benefits earlier. The author provides good support for his thesis that retirees should start drawing as soon as they can collect 100% of their allotted benefits. It takes 12.5 year of a 132% benefit to make up for the four years missed at 100%. In other words, retirees who delay benefits until age 70 and don’t live another 12.5 years will have gambled and lost.