Q: First off, I have to say I am a huge fan of your radio show. I’m really glad to hear you on the radio when you substitute for Clark Howard. I need some advice from you today.
My grandmother is 87 years old and getting to the point where she might need to be looked after. It’s sad to say but her mind is starting to go. So, I need help.
My mom (grandma’s daughter) and I are trying to help her out by putting my mom on grandma’s checking and savings accounts.
But, the kicker is that my cousin (mom’s niece/grandma’s granddaughter) has decided to “borrow” a sum of money from grandma that all of us know she won’t be able to pay back. My cousin is on disability and really has no way to pay back my grandma.
Do you think it is a good idea to start helping my grandma? What are your thoughts on trusts with rights of survivorship? How about checking accounts?
I could use any advice you can give.
A: You need to do more than simply put your mom on Grandma’s checking account. While Grandma still has her faculties, she should sign a power of attorney for health care and a power of attorney for financial matters. Your mother — or another relative — should be given the power to make financial and health care decisions for Grandma when she is no longer able to do so for herself.
You should discuss this issue with Grandma now, as well as talk to her about where she would want to live once she is incapacitated. Grandma should also draw up a simple will, in which she decides where she will want her assets to go after she is gone.
The person you need to help you is a qualified estate attorney. It shouldn’t cost much to have the powers of attorney and will drawn up. The attorney may also have ideas about whether you actually need a trust (this may depends on the assets your Grandma has).
By the way, a trust doesn’t have rights of “survivorship.” What happens is that people are named the beneficiaries of the trust. When the owner of the trust dies, the beneficiaries immediately receive the proceeds of the trust. This transfer is automatic and bypasses probate, which is why trusts are often used in estate planning.
You should also work with the attorney about the situation with your cousin. Taking from Grandma is wrong and everyone in the family should stand up to your cousin to let her know that no one approves of what she is doing, disability or not. She should be made to sign an agreement with Grandma that outlines her repayment plan.
If your Grandma decides to give everything she has to her grandchildren, the amount of money your cousin took should be subtracted from her share. This can be accomplished with the written agreement and the attorney can write this into Grandma’s will. Your mom, or another trusted relative, should be named executor of the will.
If you don’t know of a good estate attorney, contact your local bar association to get some referrals. You can also ask your real estate attorney (if you have one), doctor, and colleagues who they know.
But be sure to find out how much you’re being charged ahead of time. Grandma doesn’t have a lot of time left — so be sure to get on this as quickly as possible.
Good luck, and thanks so much for listening to me on Newstalk 750 WSB.