Putnam County Estate Planning & Medicaid

Fearing Loss of Control is One Reason People try to Hide Alzheimer’s

Planning for life with Alzheimer’s includes selecting trusted family members or friends who can assist with legal and financial matters.

It was at least three years after his diagnosis that comedic actor Gene Wilder revealed he was suffering from Alzheimer’s disease. This is not unusual, according to experts discussing his situation in the Investment News article, “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients.” Wilder, star of Blazing Saddles, Willy Wonka and the Chocolate Factory and many other classic comedies, died at age 83 from complications of Alzheimer's disease. He wanted to leave his audiences laughing, rather than being sad that he was suffering from this dreaded disease.

Most Alzheimer's patients will hide their symptoms as long as they can because they fear losing control of their lives if family or friends are under the impression they can’t take care of things on their own.

The first thing to recognize is that cognitive impairment is a significant risk. Financial advisers and elder law attorneys should take steps to protect these clients' finances from the impact of debilitating conditions like Alzheimer's. This is best accomplished before they notice any changes in the individual’s behavior. With dementia and Alzheimer's so common in the elderly, criminals frequently target older individuals because they can more easily be swayed into releasing money or disclosing personal information.

The first thing elder law attorneys will do is have their clients execute a legal document that lists the family members or friends whom the attorney can contact to discuss private information if he or she believes the client is starting to have cognitive problems. Clients may need some time to consider this difficult issue. However, if they refuse to provide this information, financial planners will often require them to sign a different document that releases the adviser from liability if the client is harmed because of his or her cognitive decline.

Get the complete legal picture from an experienced elder law attorney.

Advisers may also have a checklist to complete each year about their clients to monitor changes and document them over time. When they see “red flags,” like a client with memory loss or difficulty understanding the consequences of decisions, advisers may ask that a trusted contact start attending planning meetings.

There is no way to make a diagnosis of Alzheimer’s pleasant. But once this has occurred, the family needs to address the medical, legal and financial matters that will be faced in the future. An elder law attorney with experience in this area will be able to help.

Reference: Investment News (September 1, 2016) “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients”

Social Security’s Less Known Customer Services

Certain organizations are known for providing amazing customer service. Social Security is not usually one of them. However, there are some services that Social Security does offer that are not well known and that could make life easier for many.

Good news is hard to find when it comes to dealing with large government bureaucracies, including Social Security. That makes this information provided by AARP’s article, “Discover Little-Known Social Security Benefits,” especially welcome.

Some years ago, Social Security officials saw that the long waiting time for decisions on disability applications was resulting in severe hardship for the seriously ill. As a consequence, the agency established the Compassionate Allowances List.

This program’s goal is to swiftly grant disability status to those who suffer from any of the 225 serious medical conditions on the list. They include rare diseases, cancers, traumatic brain injury, stroke, early onset Alzheimer's disease and related dementias, schizophrenia, cardiovascular disease, multiple organ transplants and autoimmune diseases.

The Social Security Administration says that folks who can show they suffer from any of these afflictions will receive approval in weeks rather than months or years.

If you see that a loved one isn’t good at managing money, Social Security can help with its Representative Payee Program. It matches people who require assistance managing their finances with people who are willing and able to help them.

If you're concerned that a loved one has become incapable of managing or directing the management of his or her benefits, speak with an elder law attorney who focuses on Social Security to discuss your concerns.

Social Security will typically look to family members or friends to serve as representative payees. If no one is available, they work with social service agencies to locate people to serve as representative payees.

Social Security also provides free interpretation services for people who do not speak English. The agency can translate a surprisingly large number of languages—from Arabic and Armenian to Tagalog and Vietnamese. They also provide interpretation for more common languages like Spanish, French and Italian. These services are offered by phone and at local Social Security offices.

Reference: AARP (August 2016) “Discover Little-Known Social Security Benefits”

Collecting Death Benefits from Life Insurance Policies

If you are the beneficiary of someone’s life insurance policy, you should know that there are options as to how the policy funds, known as death benefits, can be distributed.

In most situations, the beneficiary of a life insurance policy does not have to pay income taxes on death benefits, according to a recent article in Forbes, “Are Life Insurance Proceeds Subject to Taxes?”

But depending on your situation, you might want to consider different options for that money that may be more productive in the long term. The insurance company can cut a check, but you can also have the insurer hold on to all or some of the funds and distribute them at a later date or in periodic distributions. If the money is held by the insurer, it will continue to earn interest—and that interest is taxable.

Another option is to transfer those funds to a trust that could control the proceeds of the policy based on the stipulations you set when creating it. However, remember that trust planning can get complicated if you establish “incidents of ownership” in the policy, in other words, if you are controlling the policy in some way. For example, such “incidents” include borrowing against it, using it as collateral or assigning it in a contract. If that happens, the proceeds of the policy might be considered a part of your estate and be subject to estate taxes when you die. Those estate taxes may be delayed if your spouse is the beneficiary, but taxes may be due when he or she passes away.

Also, remember that while you can state in your will that the proceeds of a life insurance policy should go to one of your beneficiaries, only the named beneficiary of the policy gets the funds. When your intentions change, you must contact the life insurance company to update your beneficiary designation. You should also update any 401(k)s or IRAs.

To avoid any expensive mistakes, including creating taxable events, speak with an estate planning attorney to make sure that all of your life insurance policies are aligned with the overall goals of your estate plan. These can be complex financial instruments, and the help of an experienced professional will ensure that you reach your ultimate goal: protecting your loved ones.

Reference: Forbes (August 30, 2016) “Are Life Insurance Proceeds Subject to Taxes?”