By Beth A. McDaniel

 

 

One of the most stressful, if not the most stressful, life altering events an individual can experience is the death of a spouse. Aside from obvious impacts, there can be some not so obvious impacts:

• I think of the woman who was frustrated as Comcast would not allow her to put the ownership of the account I her sole name as she did not know answer to a ‘secret question,’ the name of her husband’s childhood best friend.
• The shock of a client when her bank abruptly cancelled her only credit card, which had initially been established under her late husband’s social security number.
• The insensitivity encountered by a client when she informed her property casualty carrier of her husband’s death to be chirpily told the company’s representative, ‘there goes your married couple’s discount.’

One stress a survivor spouse may encounter is post-death estate tax planning. If the couple had a wellthought-out estate plan, their documents were likely structured to grant each spouse an opportunity for a $2.193 million exemption. How this occurs will depend upon how the documents were drafted. Typically, the estate planning document will state everything goes to the survivor spouse who then has a nine-month window in which to disclaim or relinquish their interest in certain assets. Following this, the assets are retitled into a trust (often referred to as a ‘credit trust’ or ‘bypass trust’) established for the survivor spouse’s benefit.

 

To fund such a trust, it’s essential to determine the value of the assets as of the date of the first spouse’s passing. This involves obtaining appraisals for real estate and ascertaining the account balances or financial asset values of the first spouse’s date of death. Using these valuations, the survivor spouse collaborates with their attorney, CPA, and often their financial advisor to best decide what should be disclaimed into the credit trust. Typically, the survivor spouse serves as the Trustee of the credit trust, which has its own tax identification number. The survivor spouse typically receives all income generated by the credit trust and, if needed, principal to maintain their lifestyle. Upon the survivor spouse’s passing, the assets of the credit trust are not included in their taxable estate.

 

Another method to structure a credit trust is through specific language in the deceased spouse’s Will or a revocable living trust, This language dictates that states upon the first spouse’s passing, one-half of the community property and all the deceased spouse’s separate property will be used to fund the credit trust. Here, it is still important to determine the value of the assets as of the first death as this determines the new cost basis. If the deceased spouse’s assets are greater than $2.193 million, the credit trust will be limited to that amount, or the survivor spouse may opt to pay taxes on it to keep it out of their taxable estate.

 

An important note is that although the assets of the credit trust will not be included in the survivor spouse’s taxable estate, the tax basis for the assets in the credit trust will be what the assets were worth upon the deceased spouse’s date of death. 

 

If you would like resources regarding what steps to take when a death occurs, or if you have questions regarding a special needs trusts or any other estate planning related topics, please contact our client care specialist, Margo Passeau, directly at (425) 296-3121 or by e-mail at margo@bethmcdaniel.com.

 

First Published: November 2023

By Beth A. McDaniel

 

On January 1, 2022, the adult guardianship laws changed in our state, bringing with it new document and notice requirements. An adult guardianship occurs when an adult needs assistance with housing and medical decisions and there is no suitable less restrictive alternative like a Durable Power of Attorney for Healthcare Decisions. An adult conservatorship occurs when an adult needs assistance with finances and there is no suitable less restrictive alternative like a Durable Power of Attorney.

It is common for parents of a developmentally disabled child to petition for guardianship/conservatorship when the child turns 18. Other situations in which an adult guardianship/conservatorship may be required include: 

• When an adult becomes incapacitated prior to executing a Durable Power of Attorney.
• When the adult has a Durable Power of Attorney, but the agent refuses to act, acts inappropriately, or dies and there is no alternate agent named.
• Where there are ‘dueling Durable Powers of Attorney’ in which, for example, a parent has named different children who do not get along or have different ideas regarding what is in the parent’s best interest.
• To protect an individual from reoccurring financial exploitation or the individual’s lack of judgment due to neurological impairment like dementia

 

Due to our needing to keep our over 90 current guardian and conservator clients up to date with the requirements of the new guardianship laws, our office is currently not taking new guardianship/conservatorship cases. If you or someone you know is contemplating guardianship or conservatorship, please contact our office for an attorney referral list.

It is important to know that an adult guardianship/conservatorship matter is subject to ongoing court review, typically annual or triennial, for the duration of the incapacity, the individual’s lifetime, or the individual’s execution of a Durable Power of Attorney (if possible), whichever is the shortest. If the individual’s only source of income is needs-based Social Security Income (SSI), we ask the Court to waive the requirement of providing to the court accountings for this income and to instead direct the conservator to attach representative payee reports to the conservator’s reports which coincide with the same reporting period.

 

Also, whenever possible, we ask the Court for a triennial review versus annual review to save the legal fees associated with annual reporting. The downside to a threeyear review, however, is they require our guardianship/conservatorship clients to be disciplined with keeping good records. To help our clients with the task, we will implement annual check-in calls with our conservatorship clients to review that year’s financial statements and get questions answered regarding any unusual deposits or disbursements.

 

Here are additional tips to save legal fees in a guardianship/conservatorship: 

• Notify the attorney immediately if you or the individual subject to a guardianship/conservatorship relocates as a Notice of Change of Circumstances needs to be filed within 30 days of such a move.
• Likewise, notify the attorney immediately if the individual subject to a guardianship/conservatorship dies as, per state law, a guardianship/conservatorship final report needs to be filed with the court and submitted for approval within 90 days of the death.
• If the individual receives SSI, arrange for those funds to be deposited to a separate representative payee account. Any other income received should be deposited to a separate account from the SSI.
• Save in a file each financial statement as soon as it becomes available or is received; immediately review the statement and make note of any unusual expenditures or deposits.
• Avoid electronic transfers between the individual subject to a conservatorship’s account and your own account. Without fail, the purposes of transfers become forgotten and impossible to account for. An exception would be a monthly transfer from the individual’s account to the conservator’s account for rent.
• Provide information needed to prepare accountings and reports when requested by the law office, as delays often require requesting orders to give additional time to file the report. Presenting such an order incurs more fees and costs.
• Guardianship and Conservatorship clients should do their best to respond to e-mails and calls in a timely manner; otherwise, more legal fees will be incurred when follow-up emails and calls are required.
• If you do not live with the individual and you are their guardian, know that the Court requires you to keep a log of all your visits with the individual. Thus, please keep such a log if you have not been doing so already

 

Also consider that, under the new statute, the individual subject to the guardianship/conservatorship now needs to be given notice of the filing of the report. This requires a mailing to the individual and giving the individual two weeks to object before the guardianship/conservatorship report can be submitted to the Court for approval. As letters of guardianship/conservatorship now expire in 120 days versus 150 days, there is a shorter window in which the report can be presented for approval prior to the letters expiring.

 

In short, adult guardianship/conservatorship can be costly and complicated. It is best to do everything to avoid it or mitigate it by having a proper Durable Power of Attorney or Trust when possible. If a guardianship/conservatorship is necessary, the guardian-conservator and attorney need to work as a team so that the filings are timely, and the costs are minimized. 

 

If you have questions about leaving property to a relative, guardianship/conservatorship, or would you like to discuss your estate plan, please contact our client care specialist, Margo Passeau, directly at (425) 296-3121 or by email at margo@bethmcdaniel.com

 

First Published: June 2023

By Beth A. McDaniel, JD, CELA

 

In 2021, according to the U.S. Census, there were 37 million one-person households in the United States, representing 28 percent of all households, and 15 percent of the overall U.S. population.

 

Although there are many upsides to living alone, one significant downside – regardless of whether you are 24 or 94 — is that others may not know about a health emergency until it is too late. 

 

For example, U.S. clinical trials suggest that drugs which dissolves clots and restores blood flow (tissue plasminogen activator or ‘tpa’) should not be used more than three hours after the onset of a stroke. Further, a Cornell physician responsible for training medical professionals estimates 60 percent of non-fatal falls occur inside the home. In short, precious time can be lost if others don’t know that you are hurt or in a health crisis. This lost time may cause permanent health issues or in extreme cases the required disposal of your entire house’s contents (except for possibly glass) due to your body’s being undiscovered for a significant period.

 

Thankfully, there is technology which can alert emergency contacts if something is amiss. Here are just a few of the options:

 

Snug App. With this app, available for apple and android phones, you check in every day by pressing a button (as a bonus, pressing the button is followed by the receipt of a daily inspirational quote). If you do not check in within ten minutes, your emergency contacts will receive a text (with the free version), or, with the paid version, a dispatcher will call and reach out to your contacts if you do not answer your phone. If the dispatcher does not receive confirmation that an emergency contact has checked in on you, the dispatcher will call 911 to request a welfare check at your cell phone’s last known location. For more information, go to www.snugsafe.com.

 

Medical Alert Systems. These systems include a base unit and wearable accessories like pendants or wristbands. Pendants usually are used as fall detectors; whereas wristbands contain GPS tags which allow caregivers, through a phone app, to track your activities and respond to emergencies.

 

Apple Watch. An Apple Watch SE or Apple Watch Series 4 can be set up to detect a hard fall while wearing the watch. If the watch detects you are moving following a fall, it waits for you to respond before calling emergency services. After you are immobile for more than a minute, the watch will send a message to an emergency contact in your Medical ID.

 

In short, individuals living alone, regardless of age, should take steps to assure someone will be notified upon a medical emergency. Otherwise, you may need to wait until a co-worker requests a welfare check (if you are still employed) or hope that a neighbor happens to notice a change in your routine. For example, one of our client’s neighbors knew something was amiss when he didn’t open his front drapes one morning. Using simple technology, emergency contacts or first responders can be notified before it may be too late.

 

If have questions or wish to make an appointment, please contact our client care coordinator, Margo Passeau, at (425) 296-3121.

 

First Published: January 2023

By Beth A. McDaniel, JD, CELA

 

For political reasons, on January 1, 2021, the minor guardianship laws in Washington state significantly changed and on January 1, 2022, the adult guardianship laws in Washington state significantly changed, as Washington adopted the Uniform Law Commission’s Guardianship, Conservatorship, and Other Protective Arrangements Act. To date, only Maine and Washington have adopted this act.

 

Although we are approaching the end of 2022, I can safely say that the judiciary and lawyers are still learning what this new set of laws entails. Under the new laws, there are more notice requirements, a new vocabulary, new record keeping requirements, and increased requirements to demonstrate that other alternatives to guardianship (for medical decision making) and conservatorship (for financial decision making) have first been considered.

 

One thing that is apparent is that this new law has made Washington counties less uniform than ever in their interpretations of the new laws. As a result, guardianship lawyers are now choosing to concentrate their practices in only one or two counties. 

 

Another result of the new law is that family guardians who have never used an attorney are now seeking legal representation as the new laws too confusing for family guardians to navigate on their own.

 

I recently decided that, for now, my office is not going to accept any new guardianship/conservatorship cases (aside from minor conservatorships), except for those already on the calendar, so that we can focus on our existing case load. We can, however, provide a Snohomish, King, Pierce, or Skagit County referral list and are always happy to be a resource.

 

As always, the key is to avoid guardianship/ conservatorship whenever possible. The best way is to have a Durable Power of Attorney that is regularly updated (at least every four to five years) by a lawyer familiar with elder law issues. Generally speaking, the cases that are most likely to end up in a guardianship/conservatorship proceeding are those in which there was never a Durable Power of Attorney; there was a Durable Power of Attorney where the only agent named can no longer serve; or there is a Durable Power of Attorney that was executed when the individual (“principal”) was already starting to lose their faculties. When this happens, the wrong agent, or combination of co-agents, may get appointed, an inadequate power of attorney may be executed, or an adequate power of attorney may be improperly executed.

 

Whenever possible, I try to use the Washington’s Durable Power of Attorney to augment an existing power of attorney (for example, to add another agent) or to validate a Durable Power of Attorney when there was an attempt to invalidate it with an inappropriate Durable Power of Attorney.

 

This process requires a court petition, appointment of a guardian ad litem, and entry of an order giving the requested relief.

 

I am also becoming a bigger proponent of revocable living trusts. If a neighbor, friend, or family member who would have not been the elder’s first choice convinces the principal to appoint them as agent under a power of attorney, that agent would not have access to the trust assets, which can greatly mitigate the possibility of financial exploitation – which is a common reason to instigate guardianship/conservatorship proceedings.

 

If a guardianship/conservatorship were to become necessary due to a medical diagnosis, such as frontal lobe dementia, where the individual can become angry and distrustful, a revocable living trust can limit the scope of the conservatorship. If there is an appropriate trustee, the assets of the revocable living trust would not become part of the court-supervised conservatorship proceedings.

 

I realize that developmentally disabled individuals typically do not have an opportunity to execute a durable power of attorney or trust. For these cases, I recommend a full guardianship and limited conservatorship. Also, I recommend that the conservatorship be limited so that the representative payee of the SSI (who typically is also the conservator) does not have to account for the SSI to the Court. This can significantly reduce legal fees. It is also possible to initially request a triennial reporting period, which will also save the legal fees imposed by annual reporting.

 

Do you have questions about conservatorship or guardianship in Washington? If so, please contact our client care coordinator, Margo Passeau, at (425) 296-3121 or margo@bethmcdaniel.com and she will get you the information you need

 

First Published: November 2022

By Beth A. McDaniel, JD, CELA

 

Aging parents, relatives, friends, and neighbors are all potential victims of financial abuse. Older adults are especially vulnerable due to consequences of the aging process (e.g., cognitive decline, poor physical health, and functional impairment).

Financial abuse of elders is universally recognized as a significant problem that is only going to get worse. Yet, according to the National Adult Protective Services Association, only one in 44 cases of such financial abuse is reported.

 

Here are some ways to help prevent financial abuse of your loved ones:

1. Encourage continuous, close contact with multiple relatives and friends, and being as active as possible in local communities (e.g., religious organizations, civic organizations, clubs, and hobby groups).
2. A durable power of attorney, to appoint an agent to assist with finances, and a health care power of attorney, to appoint an agent to assist with medical decisions, are essential. In addition, a revocable living trust can provide another layer of protection by preventing an abuser from accessing financial assets or selling real property.

These documents should be drafted, and regularly reviewed, by a trusted, competent attorney. These documents should also be discussed with trusted family members and friends.

3. Autopayment of routine bills should be established whenever possible. This helps prevent a caregiver — or anyone else – from writing fraudulent checks and absconding funds. In addition, autopayment helps avoid late payments, late fees, and possible duplicate payments.
4. Teach elders to not answer their phone if they do not recognize the number. Instead instruct them to have the caller leave a voicemail. Similarly, tell them to avoid responding to any email allegedly originating from a government agency or company threatening them with negative consequences if they do not provide their personal information or some type of payment (e.g., for back taxes or unpaid traffic fines). Inform them that these are phishing emails sent by scammers.
5. Urge elders to take inventory of — and photograph — their valuables. Tell them that having a record of all their valuables is helpful if a caregiver, repair person, or other service person comes into their home and steals their property. Inform them that items such as jewelry can be easily taken and pawned or sold, and they might not realize for some time that these items were stolen. Let them know that an inventory is helpful for insurance claims.
6. Encourage elders to develop a buddy system with neighbors who can keep an eye on them and their home. Instruct them to provide their buddies with contact information for their adult children or other responsible adults. This enables the buddies to contact someone if they believe something is amiss.
7. Advise elders to contact the police if they suspect financial abuse, regardless of the perpetrator. Advise them that financial abuse is not just a civil matter, but also a crime.

 

For more information, or to schedule an appointment, please call 425-251-8880 or email info@bethmcdaniel.com

 

First Published: September 2022