February 9, 2010
Could You Be Forced to Pay Your Parentís Nursing Home Bills?
Many baby boomers are currently facing difficult decisions about long-term care for their aging parents. Despite the desire of boomers to help their parents, many are still raising their own children, working full-time, and scrambling to save for college funds and their own retirement. For some seniors that become mentally or physically incapacitated, a nursing home may be the only option. But what if your parent lacks the savings or monthly income to pay the cost of long-term care? Could you be held responsible to pick up the tab?
Approximately 30 states in the U.S. currently have filial responsibility laws on the books. Filial responsibility statutes allow adult children to be held liable for the cost of food, shelter, health care, and other basic needs of their parents. While many of these laws have not been enforced in decades, some of them are being used by state programs, institutions, and other creditors in an effort to make sure someone pays the bills.
Under the filial responsibility laws of some states, if parents refuse to pay their nursing home bills, their adult children may end up with judgments against them, their wages garnished, and their credit ruined. In some cases, an adult child can even be held liable for the bills of a parent from whom they have been estranged for years. Also, the laws of approximately 12 states allow courts to sanction an adult child with criminal penalties for failure to support a parentís basic needs.
In a few states, adult children have been sued by Medicaid and nursing homes to recover the cost of caring for his or her parent. There are some defenses to these claims, but if you are sued, it can be very expensive to hire an attorney and litigate the case. Rather than actually being sued, in most situations the adult child is contacted by a nursing home and threatened with a lawsuit if they donít pay at least a portion of the debt owed. Many people are so intimidated by these threats, they pay huge nursing home bills for which they have no responsibility.
What steps can you take to avoid being liable for Mom or Dadís medical or nursing home bills?
1. Discuss your concerns with your parent and become informed about in home care, assisted living, and nursing home options available to your parent if he or she becomes disabled or incapacitated. Do as much planning as possible with your parent to prepare for his or her long-term care needs.
2. If your parent is still able to qualify for long-term care insurance, talk to him or her about purchasing a policy. Help your parent research the cost of care from local providers and facilities. Obtain quotes for long-term care insurance that will be adequate to cover these costs if your parent needs care.
3. If your parent attempts to transfer or give away his or her home or other property in an attempt to become eligible for Medicaid, explain the penalties and other consequences. Help your parent get information about Miller Trusts and suggest he or she consult an estate planning attorney about Medicaid planning and preparing an effective estate plan.
4. Be aware that if you begin paying your parentís nursing home or medical bills, you may be held responsible for all bills from that provider or institution in the future. Your payment can be construed as a promise to pay, even if you can no longer afford to be financially responsible for your parent.
5. If you have financial power of attorney for your parent, be extremely careful when signing any documents or contracts on your parentís behalf. You should always make clear you are signing in your representative capacity, such as Bill Smith, agent for Edna Smith, rather than signing as an individual.
6. If you are contacted by a nursing home or a Medicaid representative seeking payment for your parentís debts, donít make any commitment or accept responsibility without first obtaining professional assistance. Consult an attorney to find out your rights under the laws of your state and have the attorney represent you if necessary.
If youíve ever been admitted to the hospital for a simple procedure and later received an exorbitant hospital bill that caught you by surprise, you can imagine how quickly your parentís nursing home bills can add up to hundreds of thousands of dollars. If you donít have that kind of extra cash to spare, make sure you are prepared if confronted with this issue.
For more information on debts of a parent that an adult child may be asked to pay, visit our page on Parents Debts.
February 19, 2010
Are You Being Fair In Your Estate Plan?
While an estate plan is a great opportunity to be generous with others, it can also be used to express disapproval or even hurt a family member. It is the nature of human relationships that family members disappoint each other, say hurtful things, and sometimes do things that are difficult to forgive. But because of the permanent nature of a bequest or disinheritance, careful thought should be given to any estate plan that will favor one child over another or completely disinherit a child.
In my experience preparing estate plans for parents with minor children, parents almost always want their property left to the surviving spouse first and then divided equally among their children. I have never seen an estate plan in which a parent intentionally cut their 12 year old son or daughter out of their will. Yet it is not uncommon for a parent to make a will to disinherit an adult child or strongly favor one adult child over another.
A will or living trust gives you the chance to express your sentiments toward your heirs in a very powerful way, whether positive or negative. Because most estate planning documents remain private until the makerís death, there is often no discussion between family members about how a parentís property will be distributed. The parent may not want to experience the conflict involved in talking with a child about the reasons for the disinheritance. Unfortunately, this means many children learn about their parentís feelings only after it is too late for them to ever make amends.
There are many reasons parents reduce or eliminate a childís inheritance. Some want to reward another child that has devoted more time to caring for the parent. If one child is already financially secure, the parent may leave a greater inheritance to another child they feel is more in need. Then there are parents who use disinheritance as a means to punish a child that has disappointed or disobeyed them.
Every individual has the right to make his own decisions about how to distribute the property he has accumulated over a lifetime. If a parent is going to take adverse action against a child in his estate plan, the parent should consider whether the child will benefit from knowing it in advance. When a parent discusses his estate planning decisions with the affected child, it allows both parent and child to communicate while there is still a chance for understanding or resolution.
One valuable lesson trust and estate litigation teaches us is the lasting emotional pain that is caused when a child discovers his parent chose to disinherit him. In addition to the loss of a parent, the child may be forced to deal with his parentís disapproval or resentment toward a brother, sister or other family member who received a more favorable inheritance. Regardless of what your adult child says, when it comes to an inheritance, he will expect to be treated equally with his siblings.
A parent may derive a fleeting moment of satisfaction by executing a will or trust that speaks from the grave about perceived or actual wrongs. Nevertheless, if you are contemplating this type of action with your estate plan, make sure you are fully aware of how this will impact your child forever. If you still intend to go forward with your plans, try to have a conversation with your child so there are no surprises. Even if your child doesnít respond how you want, you will probably feel better knowing you were fair.