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Friday, January 21, 2011

Should Mom's estate be distributed early, since she is wealthy and has Alzheimers'?

The heading I used for this post is word-for-word from a question I recently received, but I've heard variations of it many times. The thinking behind it is apparently that since Mom has lots of money she doesn't need, and the kids would like to have it, they should just take it "early".

The word "early" is interesting, since it allows the children to think that Mom is planning to give it to them anyway so they aren't really taking anything from her. It absolves them of the guilt they might otherwise feel about taking money away from a vulnerable older person. They believe it's going to be theirs one day so they convince themselves that's the same as it being theirs now so doesn't that mean that Mom should just hand over "their" money?

Think about it. How would you feel if someone just decided for you that you don't really need or want your money and they knew you were too weak to stop them, so they just took it themselves? And how much worse would it feel if this were being done by the people you trust most?

Obviously I think taking an elderly parent's money - "early" or otherwise - is morally wrong. But you don't read this column because you want to know about my moral principles. Let's look at the legalities surrounding this situation.

First, let's examine the feeling of entitlement that the children frequently have in this situation. And trust me, they do. It's usually based on the fact that Mom has a will leaving her estate equally among her children. Given that Mom has Alzheimer's disease, the children believe that Mom will not ever make a new will changing the distribution. They might be right about that last point; perhaps Mom won't ever be able to change her will. But maybe she will. Are the children geriatricians who have made a professional examination of Mom? Do they have the expertise to make that kind of judgment? I have made wills for individuals with Alzheimer's disease, depending on the depth of the progression of the disease.

Another fact being conveniently overlooked here is that the will doesn't come into effect until Mom has passed away. She said that you can have her money WHEN SHE IS GONE and not before then. In fact, most wills say that a beneficiary must survive the deceased by 30 days (or some other length of time) before becoming entitled to inherit from the estate. So the children are not as entitled as they would like to believe.

There's also the fact that Mom just might need that money if she becomes physically handicapped or has a medical emergency or her cost of care rises dramatically. I have noticed a tendency among children to be significantly less eager to give back Mom's money when Mom needs it than they are to accept it in the first place.

Then let's look at how the children would get their hands on Mom's money for the purpose of making this early distribution. The will doesn't help; it has no effect while Mom is alive.

Does one of the children have Power of Attorney or court-ordered trusteeship for Mom? That would allow access to the money but it in no way whatsoever allows the child to take the money personally or to give it away to his or her siblings! The part about looking after Mom's money that is pushed aside by so many greedy children is that they're supposed to be managing it for Mom's benefit, not anyone else's. Not theirs or their siblings. And there is simply no way you can spin taking Mom's money into something that is good for Mom.

I once represented a person who, acting under a court-appointed trusteeship for  his mother, distributed the bulk of his mother's estate to himself and his siblings. As soon as I heard about it, I dragged this client down to the courthouse to confess the situation to the judge, who was going to find out anyway when this trustee passed his accounts. We backed up our application with thorough accounting documents and a sworn affidavit. The judge was appalled by the trustee taking the money. Based on the documentation we'd provided, the fact that the trustee came forward to the court as soon as he found out he was in the wrong, and a few other relevant facts, the judge accepted that it was an honest mistake and wouldn't happen again. Let me tell you, it took some begging and explaining on our part. As well it should.

Perhaps one of the children has a joint account with Mom and the funds are in this account. That too would allow access to the funds, and as I've already mentioned many times in this blog, too many seniors are of the mistaken belief that this is a good move. Again, the children might be acting unlawfully. When funds are held in an inter-generational joint account and the money was contributed by the parent, the law says that the child with the joint account is holding the money in trust for the parent or her estate in the absence of evidence of the parent's contrary intention. So taking the money for oneself and siblings is still not allowed unless Mom has said so. But she hasn't, has she? The whole point of taking it "early" is that Mom has Alzheimer's disease and can't handle money.

I also know, from the calls I frequently receive from bank personnel in the 70 branches that I work with, that bankers are alert for senior financial abuse. A child coming in to drain a significant account owned jointly with a parent would definitely generate some attention and some questions.

So, should Mom's estate be distributed "early'? No.

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