By Loren Acuña

Written or edited by Loren Acuña. Please feel free to add to the thoughts presented here by posting a comment or question.

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Friday, December 30, 2011

Reimbursable Expenses for Estate Representatives in 2012

2012 Reimbursable Mileage & New Postage Rates below!

Did you know that not only do attorneys and fiduciaries need to stay on top of changes in the State of California Probate Code; but they also must monitor the California Rules of Court; the Business & Professions Code; and, the state, federal and local tax rules?  In addition, each court publishes local rules to clarify how they interpret codes or rules. These codes and rules can change each year. 

To help the attorneys and fiduciaries we serve, we have put together a “cheat sheet” for selected counties in Northern California.  Take a look at our website page Tidbits & Morsels to get a quick look at how each court views fees, costs, and reimbursable expenses, such as mileage, copies, postage, telephone, internet, etc.  Each local court views fees and costs differently.

Most expenses incurred by an Executor, Estate Administrator, Conservator, or Guardian must be approved by the court before reimbursement to the personal representative.   Some courts allow reimbursement for some of these miscellaneous expenses and others do not.  It pays to keep track of your expenses, but remember that your attorney may choose not to submit all expenses you incur in handling a loved one’s estate. Check with your attorney.

Actually, fiduciaries must be aware of a wide variety of areas that touch on the different types of cases they handle.  This means they need to know how to evaluate and hire the additional professional expertise required for each situation they encounter.  Enter your email address to the left to receive regular emails from The ACE Fiduciary Group Blog - The 5th Chapter.  This way, you’ll receive our posts on topics and resources that can help personal representatives and professional fiduciaries.

Remember to note business related mileage in a small pocket calendar or other manner that can be to used as back-up for your tax return or for your attorney, if requested.                    
2012 IRS business mileage reimbursement rate is 55.5 cents per mile, 23 cents medical mileage, and 14 cents for charitable mileage. 
US Postage rates will increase to 45 cents for a first-class single letter on January 22, 2012.

Stay warm, healthy, and have a Happy New Year!

Saturday, December 24, 2011

The Big Gift - Do You Have The Financial Management “X-FCTR”?

Let’s start this one with a puzzle.   Here is a new brain teaser. Below is a proverb with all of the vowels removed. Put the vowels back to find the proverb.   (Note: the letters have not been grouped by word, rather by four letters in a line.)
FLND HSMN YRSN PRTD

Congratulations if you got it.  You’ll find the answer on our website.  Congratulations also to Melanie Amaro, with the angel voice, winner of the X-Factor.  Read on to find out how to solve some puzzles about windfall earnings, like those Melanie Amaro will receive.

A $5 million dollar contract and the opportunity to launch a recording career.  What a gift!  She earned her top spot and it is a very large amount of overnight wealth for anyone to receive.  A recent article by Robert Frank, “The Truth About Wealth” in the Wall Street Journal, December 17, 2011 refers to a Federal Reserve study on the top 1% of income earners (those earning over $343,000 in 2009).  The study revealed that 60% of the super wealthy did not remain in the top 1% of income after a couple of years.  Wealth is hard to hold onto. 

You may not have just won the X-Factor, but you might receive a large settlement, inheritance, lottery, bonus or stock option. Just in case, pay attention before you take any action to maximize the wealth available to you over your lifetime.

Scenario #1 - No Plan

If the winner of a $5,000,000 lottery or game show or bonus or stock option lived in California (Melanie is lucky since Florida has no income tax), without planning, the winnings would be taxed at the highest combined rate.  California tacks on 10.5% plus the 35% federal rate, makes a top 45.5% income tax rate.  This would reduce the amount available to the winner to $2,725,000.   If the winner wanted to be conservative and only use the income from this remaining amount to live on, they might be able to invest to earn $136,250 annually, which is then taxed a bit over 30%. 

Many people do not have competent legal or investment advice, but instead use the winnings to fund the family gifts, toys and fun that we all love to imagine.  In that case, most of it the windfall is gone within approximately 5 years.  Remember, income from inheritance or legal settlements is income taxable, but the principal is not.  Windfall earnings or lottery winnings are taxed at the highest possible income tax rate in the year they are paid.

Scenario #2 - Structured Payments

If Melanie is lucky, her winning contract will pay her a set monthly amount at a level that will keep her tax rate below 30%.  Given a 5% annual investment rate, she could see approximately $144,0000 per year for 20 years, which is approximately a $5,000,000 present value contract.  With no tax deductions, this would leave her with $103,680 in annual income over twenty years.  While not the millions it seems at first, this type of settlement effectively guarantees income for life at a lower tax rate than taking the entire amount immediately.  Also, this type of structure offers a base “safety net” of income should Melanie’s singing career not provide her with a steady income. Structured settlements are often used in personal injury settlements.  Often a neutral 3rd party trustee is named to handle a litigation special needs trust for the benefit of the injured party.  In the case of windfall earnings or winnings, if the payment can be taken over time, the temptation to spend it all is reduced and the tax rate can be reduced.

Scenario #3 - Give It Away

While the winner of $5,000,000 does not save in income taxes by creating a charitable trust with the winnings, if a large lump sum is received from inheritance, winnings, or un-exercised stock options, charitable trusts can be used to save the estate from paying estate taxes.  This is especially useful when low basis assets are re-valued upon the death of a parent.  This scenario can also save the estate from losing value by avoiding capital gains taxes if properly handled.

If someone receives a large inheritance, many estate planning attorneys will recommend placing some or all assets into a charitable trust.  If an employee receives stock options and the value of the stock dramatically increases, a great strategy can include a charitable trust to obtain income and lock in values. The charitable trust can be set-up to give assets to a church or other charity near to your heart.  The trust manages the money and passes on the income to you until death, when the charity receives the assets.

Word to the wise: if you anticipate or receive a windfall payment or have stock options you want to exercise, it pays to see a qualified, competent estate planning attorney who can help you coordinate with other professionals to lower taxes and help you maximize your windfall.  Otherwise, you might be the subject of the above proverb.


Merry Christmas to all and to all a good night!!

Thursday, December 1, 2011

Simple Gifts

    Our family continues a tradition during Thanksgiving weekend that was started when our kids were young.  We all write Santa “wishlists”.  We told the girls that they could put whatever they wanted on the list and Santa might choose one thing on the list to bring as a present on Christmas Eve. In our family Santa was dwarfed by the other “visitors” of the season during the 12 days of Christmas....angels, shepherds, wise men and others.  Our kids had simple wishes on their Santa lists - cute fuzzy socks, books, new art pens and other small toys.  We didn’t watch television so the kids did not have constant ads to “help” them want lots of stuff.

    These days, our adult family lists can include a lot crazy things. One year someone wrote down World Peace, and he got a bowl of Whirled Peas. Another year someone wrote down "help in the garden" and she got a bag full of dirt (and some help).  Sometimes we all have trouble thinking of things to put on our list because, well, we already have enough.

    The fun of Christmas is the magic of finding just the right gift for someone and seeing their face light up.  Or seeing surprises lurking inside beautiful packages. It is a real talent to find just the right gift for someone. It also takes gracious acceptance of gifts we did not expect or particularly want.  Every so often, we hit the sweet spot and remember the giving moment or person for years to come, even if the item becomes tarnished with age.  The best gifts include three elements: involvement; shared memories; and, attention to what is important to the receiver.

    Since this is the giving season, we've started December with some ideas to help spur your thinking about giving with Legacy Planning in mind.  Some are simple treasures passed on with a flair; others are designed to build into your children the joy of giving to others; and some are just practical tips on gifting that can help your estate grow or further a beloved cause.

    1)    Alternative gift giving is a great way to involve the whole family. Many churches and synagogues sponsor gift events.  Here is a simple way to have fun, teach kids about responsible giving and build in some magic into giving. Each person in the family researches a charity. They can wrap a “gift”, make a power point presentation, make a small ornament, draw a picture, or sing a song to explain why they want to help this organization.  Then the family chooses a charity from those presented.  Based upon their budgeted amount of giving for the year, they might decide to give some to each charity or only one.  The rule is both time and money needs to be devoted to the charity.  Next year, the member who suggested the charity can give a short report on it and whether they think it is worth supporting again  This one little addition to holiday giving can teach your children a lot about giving.  A good resource to use in researching charities is  http://www.charitynavigator.org/  This site evaluates charities' stewardship of  their resources.  It does not evaluate  religious organizations that are exempt from filing the Form 990 (like the Salvation Army or your local church), but there is a wealth of information on many good causes. 

    2)    Begin to gather some special mementos; small knick knacks; jewelry or small items you no longer need, but that hold a special memory to you and possibly others.  Think of who in your family or circle of friends might like the item to remember you with. Write a short story, note or other simple memory to explain the item.  Wrap it up; tie it with a bow; label the item and then put it in a special memory box.  Be sure to put your memory box somewhere that can be found later and write it down in your estate planning documents. You can either give these as a birthday gift or just keep adding gifts to the box as you think of it.  This could be your final surprise gift to others.

    3)    Gifts can help you avoid paying some types of taxes.  Gifts to charities are income tax deductions in the year you make the gift.  This is established social policy to insure that our society continues to retain the social benefits of services provided by non-profit organizations. Gifts to friends or family members in 2011 and 2012 can be up to $13,000 per person ($26,000 if you are married) or unlimited if for education, without incurring a gift tax.  Gifts to family and friends do not reduce your taxes, but exceeding the annual gift limits will reduce your total excludable amount which could lead to your estate paying more in taxes. This year the total lifetime gift amount was raised by congress to $5,000,000.

    4)    Non-cash gifts to charities are also a good way to promote re-use and provide a way to move personal assets on to organizations that can use the resources which you can no longer use.  If this amounts to more than $500 in any year, your tax professional will want to see a completed IRS form 8853 which lists items, values and has the signature from the charitable organization.

    5)    Larger gifts can be used as part of an overall estate planning strategy to lower estate taxes and increase the size of the estate you leave behind.  Ask your attorney whether you might benefit from a Crummy Trust, a Charitable Lead or Charitable Remainder Trust.  These can be useful tools to insure income for yourself while providing a gift to a worthy cause after you pass away. Your attorney can help you determine if these types of techniques would help your estate pay less in estate taxes and leave a legacy to a beloved cause.  Hint: remember to consider naming a professional fiduciary for complex trust arrangements to reduce the risk of IRS reclaiming gifted assets into your carefully constructed charitable trust and gift trusts.

Enjoy the season!!

Sunday, November 20, 2011

My Future Garden

    The garden called out today. It is unborn, unformed, but still it called. So I answered by starting on the garden wall.  Stone by stone; digging, leveling, and laying out a pattern for my future garden.  While I work, I think about legacies and a vineyard we visited just as the harvest came nipping in.
                   
    The rush to gather all the grapes into bins had just ended. The glee at getting it all in before the rains came was like fireflies in June. I think of the physical labor of a vineyard as my back is aching, my arms are weak and, I sweat over a few stones laid.  I also think about Isabelle Simi, whose legacy as one of California's first women vitners, is celebrated in a recent article by Jessica Yadegaran published by the Bay Area News Group: Sometimes the ordinary becomes extraordinary with the mystical mix of time, light, and good old fashioned sweat.

     Kevin, the vintner at Proulx vineyards, sparkles and resonates with a comment he made over dinner.  He said, “I’m in this for the long haul. Fifty years is not too long of a time horizon for me.  I build slowly and carefully.”

    The family is already building a legacy at Proulx vineyards where four generations work, live and play.  Each contributes what they have to the business.  The artist builds in beauty. The great-grand parents gather everyone in.  Another family member renovates the old 1887 farmhouse to give it honor. All offer gracious hospitality to wine tasters and vineyard visitors wandering into the valley.  This valley is not East of Eden. Rather, it is East of Camelot (or Hearst Castle) in the Central Coast vineyard area of California.  Each family member has a part of their own dream wrapped inside this bigger legacy.

    Now the dilapidated farm they bought before El Niño years is strikingly wonderful.  It’s not just the wines they make, although the Zinfandel and Merveille are beautiful.  It’s something intangible, but crucial.  They have woven camaraderie into their family business.  You can almost taste it in the wine they sell and feel it in the family style bunkhouse bed & breakfast they run.  It’s a great place to see a legacy being built, slowly and carefully. Take a walk in the clouds, gaze at the rust and orange vineyard hills, sip the harvest delivered from old and new vines and ponder the cooperation it takes to build this legacy.

    I have no illusions that my garden wall will still be around in 50 years.  I do have a hope though that in 50 years more people will grow their own vegetables or buy from local farms.  I hope that in 50 years we will have figured out how to re-cycle, re-use, or renovate everything instead of sending our leftovers to muck up the oceans. 

    So, I work on my future garden like a legacy, stone by stone, and think how to move my vision of the future closer to reality.  Is this how Nehemiah felt?  In the meantime, the last bit of sun on a tawny fall afternoon is enough blessing for today.  For tomorrow, which Proulx wine goes with Thanksgiving dinner?.

Monday, November 14, 2011

Running With Sisters-Teamwork With A Smile

    Kitty is the one in Zumba class who always knows the moves. You know the one.  I follow her lead because I never know the moves.  And she is always smiling.  Even when she pulled a tendon, she kept on smiling, really!  We chatted recently over a glass of wine and she enthusiastically told me about the business she and her sister have built together.  Her description of their working relationship prompted me to ask if they would share about building their business together.  Kitty and her sister Jennifer jointly write books and articles for major magazines describing fun and easy craft projects for the whole family, using found “treasures”.

    In the spirit of using our own “treasures” to design a legacy or create a memory, they offered some ideas for family time during Thanksgiving weekend.  You’ll find their story and a couple of their suggestions below. You can also find out more about their fun ideas at the blog www.RunningWithSisters.com  It should keep you smiling during the family gatherings ahead.


Loren: I love the name of your business - Running With Sisters. How did you decide to start a business together?


Kitty: We didn't really plan on starting a business together. But we had an idea for a book. It was when Feng Shui was really popular and we are both big time collectors.  People would joke that our Chi was going to get lost in our houses because we have too much stuff. We thought of a book that celebrates your stuff instead of trying to get rid of it. Funky Shui! We met an agent, sent her the proposal, and she got us a book deal! We had so much fun writing the book together, we decided to keep it going!
 
Loren: Describe how you work together on a regular basis. Some families might like to pick up a few pointers on how to work with each other and avoid pulling out the sharp instruments.


Jennifer: We work every day, Monday through Friday 9am to 5pm. When you are self-employed, time can get away from you so the schedule helps to make it concrete. Also, when you depend on someone else to work with, you need to have a fixed and reliable schedule. We take our business very seriously and this schedule sets that tone for both of us. We either write and do tasks over the phone or get together to do photoshoots and crafts. We have a "to do" list we work from, so we know each day what's on the agenda.

Kitty: As for getting along, we are both pretty equally matched in how serious we want to take our business, how many hours we want to work, and where we want to take the business from here. Having that shared vision is critical.

Jennifer: Day to day, we are kind to each other, give each other the benefit of the doubt, and do whatever we each need to do to keep from ruffling the other's feathers. We love each other, so we err on the side of being extra nice. Plus it's more fun to work together when you're nice to each other!

Loren: Do you have other siblings and what did your family do when you were younger to foster such great camaraderie and cooperation?


Jennifer & Kitty: We always got along well. When Kitty got her own room after our older brothers moved out, Jennifer came over and spent the night almost every night.
 
Loren:  O.k., here’s my curve ball question. If you could see the world a better place in 50 years, what would you like to pass on to your family and friends that would keep that vision alive?


Kitty: We laughed when we read this question. We feel lucky to work in an arena of pure leisure and enjoyment like crafts. We want our articles to make the world a little bit nicer and a little more fun place. If everyone had the goal to make what they touch a little better, a little nicer, a little more wonderful…wouldn't that add up? 
 
Loren:  Definitely! In retrospect, what would you have done a bit differently in starting or growing your business together?


Jennifer: We both agree we are terrible risk takers. We should have taken bigger risks sooner and we still are not big risk takers! It's hard!
 
Loren: Thank-you for taking a risk and sharing your thoughts with us. Thanksgiving seems like great opportunity to create some fun family memories. Do you have a simple and fun project our family could do over Thanksgiving weekend?


Kitty: The Thankstionary and the Thank You Cards would be super fun for parents and kids to do together.
http://www.oneilsisters.com/kidcrafts/Thankstionary.html
http://www.oneilsisters.com/Thanksgiving/ThankYouCards.html

Post a comment on how the project worked or ideas for other family businesses.

Thursday, November 10, 2011

What Is A Legacy Anyway?

Legacy: “An inheritance or a heritage.  Synonyms include a bequest, birthright, devise, endowment, estate, gift, heirloom, throwback, tradition”.

    A legacy is more than money; more than memories; and, more than good DNA or a few good deeds. It takes some forethought, or at least a passion applied, to leave a good legacy for the next generation. For those of us who are not wealthy, a legacy might not be something we think about.  Or if we do think about it, we don’t really like to talk about it. Isn’t it the thing Presidents start talking about the day they enter office.  That’s what the very wealthy talk to their attorneys about, right?

    Actually, it’s something even those of us who just want to pay our bills and stay in our homes might find ourselves thinking about.  As we hear of a friend’s illness or we deal with a loved one’s passing, we might find ourselves thinking about it more than ever.  At some point, there’s a pull to consider how we might impact, plan or even “design” a legacy:
    Now ... while we can set in motion something that will touch lives beyond our own.
    Now ... before we are immersed in the 5th Chapter of our life.
    Now ... while we have resources, energy, talents and time to make a difference.
    Now ... because the dollar amount of our resources are less important than our reach and vision.

    A legacy reaches farther when we share with a team.  The team can be other professionals, charities, like-minded people, employees, or a family business.  Inside each of us is a desire to feel that our life has mattered to others. While we consider what it means to develop a vision that extends beyond our own lives, you’ll find occasional posts here about charities, foundations, people and family businesses who offer small examples of building a legacy of value for the next generation.

    For some people a family business is the ideal way to build a legacy because by it’s very nature, a business requires us to pay attention to others’ needs and values.  A family business often has built into it the value of helping family members or designing work around raising children.  Sometimes, we build a business to pass on to the next generation.

    Often, passing the torch to the next generation is not easy. There are tools to help.  We’ll touch on some of the tools in this blog occasionally.  For now, here is a teaser statistic: 70% of estate wealth transfers fail. Or, another way to view this statistic is the Chinese saying, “Wealth never survives three generations.”  

    The steps wealthy families take to successfully transfer wealth to the next generation goes way beyond hiring an attorney. They begin with thinking about ways to build and pass on a legacy of values.  They think about how to share value; show value; build in value; and, encourage value.  They also take a realistic look at family dynamics - the abilities, shared values, interests, communication, trust level and willingness to deal fairly within the family.

    Designing a legacy is not just for the wealthy.  It is for anyone that wants to touch the future.  Find a vision you can embrace.  Share your time, talent, and treasures in a focused area that offers the real currency of hope, even if you won’t be here in fifty years to see it.

Saturday, October 29, 2011

What Is Your Legacy?

I have finished my Saturday chores.  A practice that still evokes my mother busily catching up on cleaning after a week of full time work, and prodding me to do the same.  She always told me her mother said, “Do your duties before you play” so I could not go out and play until we were finished! So, I learned to get the chores out of the way.

I can’t say it is a pleasant Saturday memory, but I passed it on to my children as well.  Of course I tried to make it more fun. We had a “chore” box.  Whoever got started first could chose their job.  Also, the chores helped them fill up a bead jar to earn beads for movies.  They learned how to get through the fewest chores for the most movie time.  For a while, I wasn’t sure they had learned to clean up after themselves, much less clean a house. Then came college and roommates and “Oh, wow, I can’t believe how sloppy other people live.”  Voila, they now have cleaning days, or so I hear.

If I were to think about the legacy my mother will leave, the Saturday cleaning day will be an aspect of her legacy.  If she had been thinking about legacy planning, I  wonder if that would have made her list.  I know it would not make mine; but it has already been passed on.  And, really what’s not to like about a clean house once in a while?

With the passing of Steve Jobs and Al Davis recently, the type of legacy a person leaves behind rolls around in my mind.  I look at the stuff I clean and organize and try to use or give away.  None of it says “legacy” to me.  Still, I am convinced that even people who are not famous or wealthy can leave a legacy.  I know my grandmother did.

Some, like Bernie Madoff will leave a bitter legacy behind.  Others, like Steve Jobs, leave a bright and shining world of promise in their legacy.  I heard that Steve Jobs chose to fight his pancreatic cancer with holistic methods rather than traditional cancer treatment.   While he might have regretted that decision, given the odds of surviving this type of cancer, maybe he chose the option to give him the fewest sick days so he could  influence the legacy he would leave behind.

Without the pressure of an illness, it is difficult to see how our daily choices really affect what legacy we will leave.  But a legacy is built over time; one choice at a time.  If I imagine what kind of world I would like to see in the next 50 years, I begin to touch the heart of legacy planning.  These are where our hopes and dreams take on a life and become something new in the next generation. We choose our own legacy by living an intentional life; doing what we value; following through on our commitments; and, offering something from our “well of riches” to help others. What we do in the next 5 minutes can change the world. Now, where did I put those reusable grocery bags?

What do you imagine for 50 years in the future?  What will you do to influence this vision?

Friday, October 28, 2011

Brain Teasers or The Smell Test?

There is a lot of research about brain function these days.  No cure looming on the horizon, but some interesting possibilities that can either help stave off or detect early signs of Alzheimer's disease.  With our bounding border collies in tow we recently attended the  Walk to End Alzheimer's in Petaluma event.  A beautiful October day provided an opportunity for exercise and gathering information about this progressively debilitating disease.

One recent article in the Alzheimer's Reading Room discussed a new method for early Alzheimer's testing which uses smells.  This one caught my eye, or should I say my nose?  We know that good smells bring back good memories but I didn't realize how olfactory nerve cells might show the beginnings of what researchers believe to be one of the causes of Alzheimer's, the build-up of a type of plaque. The sense of smell is described by the researcher,  Leonardo Belluscio, like a "canary in a coal mine." Click here to read the article.

Now that we are heading close to the Holiday season, I wondered what other connection between smell and memory loss might be hiding right under our noses.  Earlier this year, a number of sources reported Tel Aviv university students finding that cinnamon might help fight Alzheimer's.   You can read the whole article in the English language Haretz.com. This definitely means pumpkin pie is back on my holiday menu.

Over the years there have also been a number of studies and articles about exercise and exercising your brain with mental activity.  The studies seem to indicate that both physical activity and stimulating your brain with new thinking can help keep your mentally sharp longer.  This article in EverdayHealth.com summarizes the ideas of this vein of research.

Since we don't yet have smell mail, and I cannot send you whiffs of cinnamon, I have decided to occasionally post short brain teasers for my readers. You can ponder them while you are exercising your body and get a double benefit.  

So grab your cinnamon sticks and try this one.   
There seems to be only one other word that can be made from the letters in the word IMPORTUNATE. Find it.  If you need help finding it, go to our website at www.ACEfiduciary.com

Have any good brain teasers you would like to share? Send an email and we'll post the tasty ones.

Thursday, October 20, 2011

When A Family Feud Needs An Umpire

    A family in conflict is not a pretty sight. Before you know it, a family can begin litigation over the family jewels; the family dog; or most often control of assets.  It can get ugly very quickly.  Litigation squanders family resources, but sometimes it is inevitable. While it’s not what mom and dad would want or what two people intended as they walked down the aisle, it is sometimes unavoidable.

    The conflict usually boils down to assets: personal; sentimental; collectibles; valuables; a business; or even a sports team, like the L.A. Dodgers.

    When it gets ugly, the courts will often require, or the parties will agree to,  a 3rd party, independent neutral to handle the estate while the conflict is being settled.  This is done to preserve assets for the ultimate beneficiaries.  The courts know that if a party to the litigation  has control over the assets, they may not act for the benefit of all parties.  In fact, they might reduce the value of the assets. This can happen in family or probate court.

    A family owned business is often the center of the conflict.  If one party has access to business assets or resources that are rightfully the property of the business; or the conflict is damaging the value of the business, a court will often name a 3rd party, independent representative to handle the business or estate.

    The recent settlement of the divorce between Frank and Jaime McCourt may help the McCourt’s avoid this type of requirement imposed by the court, but sometimes a 3rd party neutral can help smooth over troubled waters. See the article in CNN by By Alan Duke for more details Husband Gets Dodgers in Divorce Court Deal

    According to Mr. Duke's article, baseball Commissioner, Bud Selig has insisted that the L.A Dodgers have an outside, independent “monitor”.  While not the same as a fiduciary, his goal is similar.  Presumably, he wants to preserve team assets and retain value for the ultimate owner. An estate which is facing conflict or litigation can often benefit from having an independent, licensed, professional, insured fiduciary named as the trustee or executor.  Check our website www.acefiduciary.com for a link to the State of California requirements for a licensed professional fiduciary and hire one with experience to help smooth over some of the issues that can arise in settling an estate.

Monday, October 3, 2011

Capacity Under the Law

    I had a recent call from someone whose aging husband had uncharacteristically decided to call their stock broker to place an order to buy stocks during a recent dip in the market.  He had not been involved with the financial management previously.  He exercised control over assets that while technically were also his, were from her previous marriage.  At the same time, he was encouraging her to buy a vacation home in a place that they both liked.  She was concerned that he was losing it as his decisions seemed illogical. 

    Since there is a difference in perception between generations as to what age and what activities constitute an obvious need for intervention, it can be helpful to start with the legal standards in determining capacity.  Even when a person has capacity under the law, there are many who exercise their sound judgement and ask someone trustworthy to step into the role of trustee or power of attorney.  When a person assesses their own lack of capability, they are acting with capacity.

    Lawyers are trained to parse the words of the black letter code; analyze the impact of similar cases; and, make the best argument for their clients based upon the facts of the particular situation.  Here is my disclaimer.  The discussion that follows is not legal advice.  For this a person must seek competent legal counsel for their particular situation.  The discussion on capacity and other topics which touch upon the law is offered to help us think logically about the question of capacity.  Often this subject arouses more emotion than logic.   It is presented to help us understand the intricate and delicate nature of decisions made about another person.

    Capacity means you are able to make decisions that affect you or to engage in acts with knowledge and understanding. Under the law, there is a rebuttable presumption affecting the burden of proof that all adults have the capacity to make decisions and to be responsible for their own acts or decisions. This means that the law assumes you have capacity until someone proves you do not have capacity. Each state defines the type of evidence required to prove incapacity.

    Under California Probate Code, the elements of capacity to make a decision include the ability to communicate verbally or by any other means the decision, and to understand, among other things, the rights and responsibilities created or affected by the decisions, the probability of  consequences, and the significant risks, benefits, and reasonable alternatives involved in the decision.  A determination that a person lacks the capacity to make a decision or to do a certain act must be supported by evidence of a deficit in at least one of the following mental functions:

        a)    alertness and attention;
        b)    information processing;
        c)     thought processes; and,
        d)    the ability to modulate mood and affect.
      
    Additionally, under California Probate Code, a person lacks testamentary capacity (the ability to make a will, trust) if either A or B below is true:
        A)    The individual does not have sufficient mental capacity to:
            i)    Understand the nature of the testamentary act;
            ii)     Understand and remember the nature and situation of his or her property; or,
            iii)     Understand and remember his or her relationships to his or her living descendants, spouse, parents, and others whose interests will be affected by the testamentary document..
        B)    The individual suffers from a mental disorder involving delusions or hallucinations that cause the person to chose a property disposition that he or she would not have chosen but for the delusions or hallucinations.

    Attorneys practicing in the area of estate planning are ever vigilant for signs of incapacity.  It is not always obvious.  When dealing with the practical side of life, even with an aging adult who has capacity, or an adult suffering from a mental disorder, there is still a broad range of ability to handle day to day care independently.

    When these areas begin to surface, there is still time to plan If you are the aging adult, begin to ask those close to you to help you monitor your mental alertness and ability to handle basic care areas.  Do an annual check-in with your  family or those close to you.  If you are the child of someone facing this situation, keep in mind the goal of keeping a healthy adult  functioning independently for as long as practical and reasonable.  Only when necessary, step in to insure comfort and functioning for as long as possible.


How would you view the situation presented at the beginning of this blog?

Friday, September 30, 2011

It Takes a Stage Crew for Our Final Scene

         The saying goes, “It takes a village to raise a child.”  I think we are about to find out it takes a stage crew for our final scene.  There is some kicking and screaming and a lot of help needed at both ends of life.  Before that end point, most of us will enter a time when we are unable to handle care for some aspect of our lives on our own.  In fact, if you think about it, we all need assistance for large aspects of our survival in the modern age - who brings the food to us from the fields?  Not me. I pay someone to do this when I buy my groceries at the store.

       At first glance, the 5th Chapter of Life does not look to be a climatic or heroic ending.  It looks to be more about decline of function; decline of independence; and, increased reliance on others.  To answer my daughter’s unasked question, when do I need to start worrying about you?  To answer my own question about when to have The Talk with my own mom, I began to look for a checklist.  I love checklists.  They make me feel as if I have things figured out.  Someone must have a handy checklist that would make it ever so much easier to know when to step in and begin to take over care for your parent or another older loved one.   Well, there are and then there aren’t checklists.  As Albert Einstein said, "Not everything that can be counted counts and not everything that counts can be counted."
      
        First off, there really are no ages to measure these chapters life. The chapter lines I draw are meant to highlight our movement from growth and independence towards decline and dependence.   For some, like my niece who was born with a mental defect, the move into Chapter Five happens when they arrive at adulthood incapacitated.  My niece’s entire life is about Chapter Five.  For others, like my 101 year old great aunt, who is still living independently, there may be only a slow decline of some functions over years. We can make educated guesses, but one never knows until we actually get there.


        During the 5th Chapter, some, but not all functions may decline at various rates.  When physical health declines, doctors provide guidance and the individual chooses for themselves how to obtain the assistance needed. Some are blessed with family and friends who can help, others don’t have living family nearby or do not want to burden others, so they find other ways.  When mental functions begin to decline, it becomes more important for others to step in, for the protection of the aging adult, and in some cases to protect others as well.


       Maybe the "heroic ending" is one of the heart and is started in a story begun long before the final chapter?  This could be a story of the bravery of someone offering gifts that will outlive them.  Or it could be about the courage of someone facing fears and making plans which will make it easier for their family to cope as they age. 

Who will be your stage crew? On whom do expect to rely on to offer care, assistance or even shelter when you reach this critical stage of life?

Monday, August 15, 2011

The Talk, Part II

        Not long after my mother visited us, my daughter said, "so let’s have 'The Talk' tonight".   I laughed because I don’t see the need to talk about my own aging yet.  No siree!   It seems a little premature.  I am still a spring chicken....aren’t I?

        But my daughter likes to have plans in place.  I tried to explain that we really didn’t need to have that talk yet.  Still she persisted.  So, she pushed me to imagine what sort of life I might have when I am in my 70's and beyond.  I also asked her what she imagined for that far distant future time.

        From that conversation, I heard her care and love for me. I also heard myself say some common things we hear older people say.

        “I want to live in my home as long as I can.  I even prefer remodeling my home to accommodate someone living in it so someone can live here and help me care for the home (not me of course).”

        “I want to live near both my children, but I don’t really want to live with either of them. This is both because I don’t want to be dependent on them and because I imagine too many control issues. Plus, I would much rather be helpful than a burden.”
      
        “If I have to have nursing care, or I get too lonely (after my husband passes away) I might consider living in an assisted living facility.  But it can’t smell bad and it needs to be pretty with a view of nature or something.  I like the ones that let you move from no help,  to a little housekeeping, to a bit more help, and eventually into a skilled nursing unit in the same complex, if you need one.”

        “It’s pretty hard to imagine being able to afford any help at all, and it is difficult to imagine living on what we have saved so far.  So, in the long run, I would rather live with one of my kids than on the street.”

        There, I said the unthinkable for our culture and generation. I would rather live with my kids than have a crummy and unsafe old age life.  For some cultures, this is expected.  For others, we abhor the idea of cramming three generations into one suburban house.  Given the statistics on the Baby Boomers savings (or lack of it) and life expectancy (longer than ever), we will be facing some choices that none of like to ponder.  Maybe my daughter was right to talk to me now....where is that long term care insurance plan my agent sent over to me?

Share your thoughts on Long Term Care Insurance or your plans for a joyful wise old season of life.

Thursday, August 4, 2011

Amuse Bouche: Fairy Princess to Wise One

        My group of friends and I find ourselves discussing our fear of entering the 5th Chapter more often than I would like to admit.  We have talked about the various stages while we watch our children grow and our parents age.

         1st Chapter:    Fairy Princess/Super Heros (Birth to Pre-Puberty)
         2nd Chapter:   The Wonder Years (Puberty - Young Adult)
         3rd Chapter:   “Way To Go!!” (Parenting/Career)
         4th Chapter:    Those Awesome Golden Years (Empty Nest - Retirement)
         5th Chapter:    Wise Ones - (Activity Begins to Slow - Second Childhood)

        None of us is looking forward to Old Age. Who really does?  I keep trying to see ahead and imagine the best part of the 5th Chapter, even while being sure it has a good amount of agony.  I hope it will be a time to savor the past; encourage others; and, find small ways to give and experience joy in the present.  Those who avoid becoming mentally “stuck” in a previous chapter seem more likely to be better prepared for whatever lies ahead.  Those who enjoy what life holds during each chapter, accepting the sweet with the bitter, seem to better handle what life offers during the 5th Chapter.

        A short conversation with a next door neighbor’s 95 year old mother has taken a place of honor in my mind’s eye. She embodies the idea: "The present is the Present (gift)".

       She was out walking in the neighborhood leaning on her walker for a moment when I happened to see her.  She told me “today, the Spirit moved me to go outside” while she lifted her arms to embrace the day.  She is full of grace, kindness and an appreciation for life. Even though she lived through a Nazi concentration camp, losing her whole family, she is almost giddy with joy at still being alive.  Her attitude is so refreshing because she remembers her past but embraces what she can enjoy today.  She told me her “amusements” these days are to cook for her family and write short poems.  I call them “amuse bouche” which is an incorrect use of the French term that means tasty morsels.  See http://wordsmith.org/words/amuse-bouche.html for a definition. I like the term for her short poems, because she offered me a moment of “amuse bouche” while she shared her willingness to be available to the life she has today.

What “amusements” can you imagine might be part of your life during your 5th Chapter?

Thursday, July 14, 2011

Moving Closer?

My mother turned 75 today.  Later, we will celebrate her creativity, vibrant energy, health & well-being by attending an art reception at a gallery showing some of her paintings. She rides a bike, swims laps and hikes, a lot!  She keeps her mind healthy with meditation and prayer.  Ever since she read an article that brain games exercise the brain cells, she plays Sudoku and Free Cell to “relax”.  She keeps her heart engaged with other people through her art and continuing therapy practice.  In other words, she is the picture of good health on all fronts.

Still, she recently admitted to me that she is more easily tired.  Also, the idea of possibly moving to live closer to me, her only daughter, is a stressful decision. And I understand why.

There is a house for sale in my neighborhood.  It is almost close enough to set-up an old-fashioned tin can string phone between it and my house.  It would be perfect for her and my step-dad.  It has a lovely view. It is near a wonderful hiking area and bike paths. Wonderful doctors live all around. It has an “in-law” unit for either an art studio or a live-in care taker, if that is ever needed.

The information processing that goes into a decision like this one could cause overload for some people.  Also, there are friendships and possibilities blooming where she is now.  To move closer is a subtle statement about dependence rather than independence.

We both wonder how this will flow.  I walk by the house every morning and imagine what it would be like to live near my mother again.  It has been a lifetime since we spent more than a few days together every so often.  The last time we lived in the same house, I was a spoiled, selfish young lady (now I wonder, am I the same only older?).  She and my father were beginning the end of their marriage together.  Needless to say, we did not talk much then.

Now, I enjoy her sage advice, when I ask her for her thoughts.  I enjoy her enthusiasm about people and color and nature and art.  I enjoy the optimism she is learning from her “possibility thinker” husband.   As I walk by this house, with its possible future, I think I would like to have them closer. Still, we both worry about how much care will be needed, required, or even demanded; and, how to stay independent while moving closer.   

Maybe that tension is part of all of our close relationships.  We want to be close, but we want to see ourselves shine in our own story as well.

Whatever my mom decides about moving closer, I am glad to have parents that have provided support, encouragement, and love. I am also grateful that she is still quite capable of making this decision herself.  Happy Birthday, Mom.  Thanks for being the colorful, sprite of my life!

Monday, July 11, 2011

The 5th Chapter of Life

        Various writers on the stages of life offer different perspectives depending upon the purpose of their prose.  Some are tied to age categories; others to poetry.  Each provides some insights.  For instance, Shakespeare, in his play, “As You Like It”, describes seven stages of life and the last scene of life is “second childishness and mere oblivion; Sans teeth, sans eyes, sans taste, sans everything.”  The Talmud lists 14 stages of life, the last few being described in the following manner, “ at seventy for gray hairs, at eighty for special strength, at ninety for decrepitude, and at a hundred a man is as one who has already died and has ceased from the affairs of this world.”  Rudolph Steiner, an early twentieth century philosopher described a seven stage life process which he linked with astrology.  The final seven year period and seventh stage was associated by Steiner with Saturn (56 - 63 years old) “when Saturn completes its second “return” (e.g. comes back to its position it had at one’s birth), and the soul can manifest an even higher element of Self called Spirit Man.”

        Indeed, while we do not tend to associate our “second childhood” to such an early age these days, many begin to experience the higher element of "spirit self".  As we age, we can experience a greater awakening of spirit and freedom as we begin to let go of the dross while we allow ourselves to let go of some of our “possible selves”.  Laura A. King and Joshua A. Hicks have written about this phenomena of aging in “Whatever Happened to ‘What Might Have Been’” in an October 2007 article published in American Psychologist.  Still, in my study of various attempts to categorize Old Age, it is not obvious when the aging adult’s feisty lack of concern about appearances and other people’s opinions can be seen to have turned from a healthy acceptance of limits into an unhealthy stubborn need to hang on when independence is no longer helpful.

        So to help sort out the distinction, I have come to think of this stage as the 5th Chapter. This is mostly due to the widely acclaimed book by Gail Sheehy, Passages.  Ms. Sheehy admirably calls attention to four stages of adulthood - predictable crisis points - which had not been adequately covered in developmental psychology.  Even so, in this book, it is almost as if menopause ends the adult life passage. There is no fifth stage or chapter to cover how to handle the ultimate adult crisis, the decline of adult functions, hence, the 5th Chapter.

        But here is the problem. There is no certain cut off age.  There is no specific time when we will know we need to hand over the car keys or ask others to pay our bills. It slips up on us. For some, this loss of independence comes over them all at once through a major health crisis. For others, the loss of independence and ability to care for Self, creeps in quietly, slowly and almost imperceptibly.

        Yet, there are more people hitting 100 years of age these days. According to the U.S. census the number of people turning 100 in 1990 was 37,000.  Ten years later this number had come close to doubling as 72,000 people turned 100 in the 2000 census.  There are aging “heros”, like Frances Perenon of Oakland.  She was on the pitcher’s mound on June 18th to throw out the first pitch of the Oakland A’s game in honor of her 100th birthday.  See the article by Suzanne Bohan, published on June 27, 2011,in the Contra Costa Times www.contracostatimes.com.  What do you want to be doing for you 100th birthday?

Thursday, June 23, 2011

The "Talk"

My daughter recently announced to me, “Mom, we need to have The Talk sometime.”
        “You mean the one about sex?” I glibly said.
        “No,” she said.  “We had that one when I was 13 years old.  I mean the one about what to do with you when you are old.”
        “Oh, I guess I’m glad you don’t think I’m old enough to have that Talk yet,” I said laughing.   “But when do you think we should have that talk?”
        “Before you actually get old.”
        “When do you think that would be?”

        Her answer was pretty consistent with the June 29, 2009 Pew Research Center published findings on “Growing Old In America: Expectations vs. Reality”.  A large percentage of her age group, 19 - 29 year olds sited the following  as markers of Old Age;

        * Frequently forgets familiar names.
        * Has bladder control problems.
        * Is no longer sexually active.
        * Retires.
        * Has grandchildren.

        Needless to say, my age group, 50 - 64 years old, does not list any of these markers with the same enthusiasm as the young.

        However, a few potential markers - an inability to live independently, an inability to drive safely, failing health and difficulty with stairs, along with turning 75 were named by a large proportion of respondents, regardless of age group.
What do you think? When should you have "The Talk"?
Next post: Life Stages or The 5th Chapter