Protect Your Elderly Parents. Lynne Butler
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the telephone directory or speed-dial feature on the phone.
If you are looking into support services that will allow your relative to stay in his or her home, you might also consider whether renovations need to be made to the home for the safety and convenience of your relative. For example, you may need to have a wheelchair ramp built, grab-bars installed in the bathroom, or area rugs replaced by carpeting. Some provinces have government subsidies for this kind of renovation. Many of the suggestions in this section will also apply if you are considering moving your elderly relative into your own family home.
4. Placing Assets in Joint Names
Although this particular alternative is fraught with potential problems, it can be a good solution for a limited number of families. Using this alternative should be approached with a great deal of caution. Think it through carefully.
The basic idea is to put an asset that is currently owned only by the elderly relative, usually a bank account, into joint names. The dependent adult would be one of the joint owners and another person, usually a child of the dependent adult, would be the other owner. The purpose of doing this is to allow the child access to the bank account so that the dependent adult’s pension and other cheques can be deposited and monthly bills can be paid. The advantages of taking this approach are that it is quick to set up, simple to operate, and there is no court involvement.
Sometimes, however, this arrangement is much more to the advantage of the child than the dependent adult. There is a huge risk that the dependent adult’s money could disappear and this risk should be very carefully considered. Many an otherwise honest person has dipped into his or her parent’s funds to cover short-term losses, only to find he or she could not replace the money. In other cases, if the child owes money to a third party, the joint bank account could be garnished to satisfy a debt, causing the parent to lose his or her savings. There is little or no protection for the dependent adult in any of these situations if he or she has voluntarily set up a joint bank account with the child.
The other major problem with jointly held assets is the distribution of those assets when the dependent adult dies. Any asset that is jointly owned, such as a joint bank account, gives both owners a right of survivorship. This means if the dependent adult and his or her child jointly own a bank account, when one of them dies the other one automatically owns the whole bank account. This can have serious ramifications within a family and can be the cause of bitter disputes, particularly if it interferes with an estate plan contemplated by the dependent adult. Consider all aspects of this approach, including how it looks to other family members, before going ahead.
For example, if Mr. Smith owns $15,000, he might put $5,000 into a GIC in his own name and the remaining $10,000 into a joint bank account with his son, Jim. Even though Mr. Smith’s intention was only to give Jim access so that he could help with the banking, when Mr. Smith dies, Jim will own the $10,000 in the account. If Mr. Smith has three other children who will share the $5,000 GIC between them, they might be quite upset at the fact that Jim has received so much more money than they have. Perhaps Mr. Smith trusted Jim to divide the money among his siblings. Or, maybe he wanted Jim to own the money. You will have only Jim’s word for it. This could lead to a bitter, expensive dispute if the siblings believe that Jim influenced, or attempted to influence, their father for monetary gain.
It is never a good idea to ask an elderly relative to put his or her home (or other real estate) into joint names with yourself or any other person without ensuring that the elderly relative sees a lawyer on his or her own to discuss the transaction first. You should not attend that meeting with the lawyer. Let your elderly relative handle the matter on his or her own. If the elderly relative does not understand the transaction or its effects well enough to explain them to a lawyer on his or her own then clearly your elderly relative does not understand what it means to sign over title to the home. Legal documents should not be signed by individuals who do not understand what the documents are and the effect they will have.
A useful legal document sometimes used in conjunction with putting assets in joint names is a bare trust. This brief document simply states that although the asset is in joint names, the elderly relative does not intend that his or her child will own the property after the parent’s death. The document specifically states that the child’s name was only put on the asset for convenience. It is not a good idea to try to draft a trust like this on your own; it is better to have that done by a lawyer. It can be done quickly and inexpensively by a lawyer.
5. Health Care Directive
This document goes by various names across Canada, such as Health Care Directive, Advance Health Care Directive, Advance Directive, Personal Directive, and Power of Attorney for Personal Care. It will be referred to as a Health Care Directive in this book. Though it goes by various names, it has one main purpose: it names an individual to act as a spokesperson and decision maker for an elderly person who is unable to make or communicate his or her own decisions about personal and health matters.
The type of decisions that can be made by a person (called an agent in this book) appointed under a Health Care Directive roughly corresponds with the type of decisions that would be made by a court-appointed guardian. This would include medical decisions about surgery, tests, treatments, and medications. It would also include other personal decisions such as where and how the elderly relative will live. If a valid Health Care Directive is in place, it is highly unlikely that anyone will need to be appointed by the court as guardian.
This is not a document that you can impose on your elderly relative by applying to the court for an order. The courts are not involved at all in creating the Health Care Directive. The Health Care Directive is signed by the elderly relative and it is an expression of his or her wishes. By signing this kind of document, the elderly relative has the opportunity to choose a spokesperson for himself or herself as opposed to having the choice imposed on him or her by other people. The elderly person also gets to express his or her thoughts about whether or not he or she wishes to donate organs after death or be kept alive artificially, if in a vegetative state.
Estate planning lawyers encourage their clients to sign this very useful document well in advance of any mental or physical problems arising. That way, the document is ready to be used when it is needed and the family need not go to the expense, delay, stress, and possible disputes of applying to the court to appoint a guardian. However, not everyone has signed a Health Care Directive, either because they had no opportunity to do so or because they chose not to do so. It is important to note that if your elderly relative has already lost his or her mental ability to understand legal documents, it may be too late for him or her to sign a Health Care Directive.
If you are not sure whether your relative has capacity, you should discuss this with his or her regular doctor. Capacity is a complex concept. A person who has lost capacity to do one thing, such as deal with money, may not necessarily have lost capacity with respect to other things.
If your elderly relative still does have the mental capacity to understand the nature of a Health Care Directive and understand what it would mean to sign one, this might be a viable alternative to involving the courts. It is beyond the scope of this book to give instructions on how the document is to be prepared. You may assist your elderly relative in seeing a lawyer to have this document prepared, or you may look for a self-help book that gives instructions on how to prepare a Health Care Directive. For more information see the Power of Attorney Kit, another book published by Self-Counsel Press.
In the event that your elderly relative does already have a Health Care Directive in place, you should read the document carefully to determine whether it can be used in your situation instead of applying to the court for a guardian. The document will tell you, first of all, who the relative has chosen as his or her spokesperson. It might not be a person you would have chosen but you will have to live with that choice. The document can only be used by the person named in it. It will also give some guidance as to the health care preferred by the relative. If you doubt the document’s validity, you might consult an estate-planning lawyer to review the Health Care Directive. Assuming that the document is valid, it can be presented to the hospital or other facility in which the relative is to be treated or admitted,