Sunday, June 26, 2011

Elder Abuse by Family Members


In my past life as a financial Guru, I’ve had many encounters with unscrupulous CPAs, lawyers, trust officers and bankers who advise elderly clients to transfer assets to their children so that they may be able to qualify for Medicare and other welfare benefits provided by the government.

Many of these “suggestions” are often instigated by the children or other family members who would be the beneficiaries of such transfers. When a person is a financial advisor to others, whether they’re family members or not, he has to remove himself as a potential beneficiary as a result of any advice put forth.

One case that I’m intimately familiar with involved an older couple with substantial assets, including a house in an exclusive part of Honolulu. The elderly couple had two sons and one daughter.

About 30 years ago, all assets, including the house that the couple owned were transferred to the oldest son as is the custom in a lot of oriental households. Over the years, the elderly couple became restricted to their room. They were able to get their food from the kitchen but had to go back to their room to eat.

The husband passed on a few years ago and the elderly widow became more of a prisoner in her own home. The daughter lived on the mainland and the other son came by once a week to take his mother shopping. That was the only time she was able to enjoy the outside world and to see and talk to real people.

As her health deteriorated, the oldest son placed her in a nursing home. Her younger son visited her weekly and the older son visited sporadically. It was rare that her daughter-in-law visited. Even her grandchildren, who were raised and grew up in her house rarely visited her.

But, she was happy at the nursing home because there were other people that she could socialize with. All costs were paid by welfare or Medicaid.

Another situation I was involved in was where the oldest son was given a “Remainder” interest in the house and the elderly couple retained the “life estate”. The remainder interest means that the house passes to the son only when the elderly couple both pass away. The elderly couple retains all ownership rights to the house while they‘re alive with their life estate.

The elderly father passes on and asked the younger son to protect the mother from the eldest son. In the two months it took to transfer the mother to the younger son’s home, the elder son had already made arrangements to break the life estate by putting himself on title for 50% of the property so he could obtain a loan for a substantial amount.

When the mother passed away, the house didn’t pass to the older son by deed because the life and remainder interests were broken when the son put himself on title. Thus, the mother’s 50% was passed by her will, which gave the younger son everything.

The older son wanted the entire house because he believed he was entitled to it so he ended up suing his younger brother to gain the mother‘s 50%. Once the life estate is broken, the Will controlled how the mother’s half would pass. Needless to say, the brothers are estranged.

The abuse came about because the mother was frail and the elder son bullied her into signing over half the house to him in order to obtain a loan. What’s worse, is that she lived for the rest of her life with the fear that the younger son would find out about the bullying and the transfer.

In many of these cases, the children believe that their parent’s assets are theirs and do whatever they can to keep the assets intact. By transferring the assets, then the government pays for all long term care costs.

Many parents are also of the same mindset. They transfer their assets because they want their children and grandchildren to remember them in a positive way. In my observations, once the assets are transferred, the children and grandchildren will ignore the elderly parents. The elderly become paupers and must live with whatever bone is tossed their way by their children or the government.

These abuses are very commonplace in our society. There are lawyers and estate planners advertising that they can show people how to save your assets and get taxpayers to pay for elder and nursing care.

And we wonder why our government is bankrupt

No comments: