Finances

My Grandfather was a WWII Vet although he didn’t talk much about his war experience. In his last years of life, he suffered from the crippling effects of a stroke. For almost three years he struggled to speak, move around on his own, and provide for his normal activities of daily living. As far as I know, none of his family members had any idea that his service in the military made available to him nearly two thousand dollars per month of reimbursements for his medical expenditures including in-home health care, assisted living and other health care costs.

It is not uncommon for my office to receive a call from a panicked family member of an elderly individual. The call may go something like this:

Caller: Hi, I'm calling to see how much it costs to get some estate planning done for my mom.

Paralegal: We'd be happy to help you if we can. Why don't you first tell me a little bit about your mom.

Caller: Okay. Well, mom's not doing too well these days. She's in an assisted living facility and mostly doesn't recognize us anymore. Although she sometimes has good days, most of the time she's confused and is asking for her husband who died three years ago.

Paralegal: Okay. What kind of property does your mom have?

Caller: Well, she has a home that's paid for. She has a brokerage account, a checking and savings account, some farm land in Tooele and I think she has some municipal bonds that she invested in once. But I'm not really sure.

Paralegal: Does your mom know what property she owns and does she understand its value?

Caller: Oh heavens no! She put me on her checking account years ago because she was so overwhelmed with trying to manage her finances. I don't think she has a clue how much she owns, nor could she keep it straight even if we told her.

Paralegal: I think we can help you, but you'll need to meet with an attorney to discuss some of the legal implications of your mother's situation.

Although this above excerpted conversation is a fictitious example, and a very abbreviated one at that, it illustrates a trap that many people fall into with regard to estate planning.

I’ve had a number of clients ask me if it is possible for them to “hide” their money legally. The answer is, of course, not a simple one. It really depends upon who you’re trying to hide it from and how you define the word “hide” in this context.

Can you conceal how much wealth you have from those whom you casually associate with on a regular basis? Sure. Why not? Don’t dress expensively, drive a Maserati, vacation in the French Rivera, or live in a palace on the mountain benches and you’ll probably be able to fly underneath the radar of most people.

I’ve briefly discussed the case of the late Amy Winehouse before. She was young, very talented, and had found financial success and notoriety as an R&B singer. Here’s a great video of one of her performances in case you’re not familiar with her.

In the past, I’ve pointed out times when celebrities have really dropped the ball when it came to estate planning. And more often than not, when an estate plan fails big, it’s not that an estate plan was never done, it’s that an estate plan WAS done, but it was out of date or did not reflect the current wishes of the deceased individual.

Last week I had a client contact us in a panic because her daughters had told her "Mom, if you die, the government is going to tax you 50% of everything that is in your bank account!" They further explained that she should probably start giving away her money to children and grandchildren now while she was still alive in order to avoid this tax.

Now I know this family well enough to feel comfortable that these daughters were not trying to exploit their aged mother. However, this experience highlighted to me a problem that I see very often in my practice. The federal and state laws that govern taxation are extremely complex and are in a constant state of evolution. Just when we start to get a handle on how our families or our businesses are going to be taxed, we find out that the rules have changed.