Articles Tagged with elder law

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Like all other unique forms of real estate ownership, Co-Op Housing presents some interesting difficulties for those in the real estate market.

The end of World War II marked the beginning of an acute housing shortage in the United States. Returning servicemen and woman, many of whom had lived with their parents before the war, returned home looking to live independently and to begin raising families. Unfortunately, major cities like Chicago, had little to offer.

The Federal Government recognized the need and opportunity to provide service members with affordable housing while stimulating the building trades. As part of the Serviceman’s Readjustment Act, federally approved builders were given the green light to construct 4-unit apartment style buildings to house veterans and their families. The veterans would obtain a mortgage subsidized by the Veteran’s Administration and enter into an agreement to manage the property.

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One of the most important, but most often overlooked estate planning documents, are the Powers of Attorney. Powers of Attorney fall into one of two categories: (1) Powers of Attorney for Property and (2) Powers of Attorney for Health Care. Essentially a Power of Attorney legally authorizes a trusted family member or friend to make decisions on your behalf in the event that you become incapacitated or are unable to make decisions on your own. Powers of Attorney are powerful documents that can protect you and your family from the need for expensive guardianship proceedings.

Although Powers of Attorney for Health Care are regularly accepted by hospitals and doctors, many banks and financial institutions are making it harder and harder to use a legally valid Power of Attorney Document. If a manager at your financial institution believes, in good faith, that your Power of Attorney is no longer valid you may be left with no choice but to petition a court for guardianship.

To avoid this from happening we advise that you review your Powers of Attorney to ensure (1) the your Power of Attorney documents are up to date and include the most recent statutory language; (2) that your Powers of Attorney are no more than 5 years old; and (3) that your Power of Attorney allow sufficient authority for your agent to amend trust documents, make gifts, and designate or change beneficiaries.

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The Reverse Mortgage has gotten a bad reputation in the time since it was first created by the Federal Housing Administration in 1988. The mere mention of the Reverse Mortgage usually brings to mind foreclosed homes and declining financial health. In fact a Reverse Mortgage is simply an equity loan secured by someone’s home with a deferred payment plan. Unlike a traditional home equity line of credit, no reverse mortgage interest or principal is due until the loan reaches maturity. As long as the homeowner resides in the property and stays current on property tax and insurance payments, they can reside in the home without making any payments on the money they have borrowed.

In order to qualify for a reverse mortgage, a homeowner must be age 62 or older with substantial equity in their home. There are no income or credit score requirements. Typically, the older the homeowner, the more they can borrow. A homeowner has the option of taking out a lump sum amount or establishing a line of credit that grows over time if money is not withdrawn.

A homeowner does have the option to pay down the balance of a reverse mortgage over time. Interest paid on the loan can be taken as a tax deduction. If no payments are made, the reverse mortgage is still not due until the last surviving borrower passes away or fails to occupy the home as their primary residence. Reverse mortgage lenders will give the heirs of an estate up to 12 months to complete the sale of the home or refinance the balance of the reverse mortgage. It is VERY important that the heirs of a deceased home owner contact the mortgage lender as soon as possible to inform them of the passing and the heirs’ plans for the property.

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When clients think about Asset Protection Off-shore trusts or some elaborate scheme of trusts and other entities usually come to mind.  However, there are several vehicles that are less complicated that a client can use that will probably suffice for her protection.

Here are some strategies that are not complicated and relatively easy to implement:

  1.  Purchase an Umbrella policy in addition to a Homeowners policy for your home.  An Umbrella policy is very inexpensive and will protect you for claims that exceed other policies for your home and auto.
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Many times clients will call our firm and state that they need a Power of Attorney for their elderly relative because he/she has dementia or some other condition which causes diminished capacity.  Unfortunately, depending on the current mental capacity of the relative, it may be too late for them to sign a Power of Attorney.  The person signing the Power of Attorney has to completely understand the document to which they are executing.  It is not simply enough to be able to physically sign one’s name.  They need to comprehend the nature of the document and who they are appointing as their agent under the POA.

Powers of Attorney are important legal tools that allow a person to name an agent to handle their financial or medical decision making.  These are crucial documents which must be executed according to the standards set forth in the law.  If the documents are not executed properly, it could invalidate the Power of Attorney.  One common problem is where people attempt to have their relative sign the Power of Attorney when they lack the proper mental capacity.

However, even if someone does not have the proper mental capacity, there are other routes which are available to the family members.  Often times the only choice for the family in this situation is to pursue a guardianship.  When this happens, one or more of the family members will petition a court to become the court-appointed guardian of their relative (known as the “Respondent”).  If the judge approves the petition, the family member(s) will have the ability to handle the personal and financial affairs of the Respondent, in the same manner that an agent under a Power of Attorney would act.

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