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SENIOR ADVOCATE

By Liza Horvath

 

How to Lose Your Inheritance

As our parent’s age they can change, and some of these changes may be alarming. Dad begins to spend too much time at the local casino, or our widowed mother takes up with a younger (and significantly less wealthy) partner. We may ask ourselves, are we concerned that if they spend (or lose) their money they will become destitute in their later years or are we really concerned that we could lose our inheritance? What if dad loses everything at the craps table – is the money spent on his late-life pleasure really a fair exchange for his years of hard work and saving? What if mom’s new young playmate makes off with her assets – is that why mom went without certain luxuries for years, to have her money pass to a virtual stranger?

Whether or not we are motivated by greed or love is relatively unimportant for this discourse. The bottom line is that our parents, if of right mind, can distribute (or spend) their fortunes any way they choose. But that is the question here - are they of right mind.

If you ask an attorney a question, the answer is usually, “It depends.” Often times when it comes to love and law, the answer is dependent on many factors. But, when a parent is exhibiting what we deem to be irresponsible behavior, what can or should we do?

If the problem is just an annoying new playmate, the best tact may be to just smile and hope that this, too, will pass.  If the new friend begins to exert influence over our parent, inserts themselves into significant family decisions or asks you to call him “Pop,” things may be more serious.

So what is the best course of action? Some adult children of a parent who is, in their opinion, at risk will seek a court conservatorship over the parent. A conservatorship is an action where someone – in this case an adult child – files a petition with the court asserting that the parent is not capable of managing their own assets and asks to be put in charge of the parent’s financial estate. The court performs an investigation, a doctor’s opinion is sought as to the parent’s mental capacity and, if the court believes the parent is not capable of resisting undue influence or fraud, will allow the child to become the conservator of mom’s or dad’s assets. The granting of a conservatorship strips away almost all of the financial rights and responsibilities of the conserved person. 

Here is the problem with seeking a conservatorship over a parent’s estate: If you do not prevail – if the court decides not to grant your request for a conservatorship – you have just obliterated any chance you had at a loving relationship with that parent. A mother or father that successfully fights off a conservatorship action undertaken by a child will not only immediately disinherit that child, but will forever despise the child. It is such an affront to have a child state in the public forum that is the court that you are crazy – the parent is deeply humiliated and embarrassed.

Using a conservatorship in an attempt to “save” mom or dad from themselves is like using a mallet to kill a mosquito – you get the job done, but there may be a less destructive means to a satisfactory end.

Using other methods, such as a trust, may safeguard your parent’s assets and still help you maintain control of them. With a trust, the parent enters into it willingly and without the public embarrassment of a conservatorship. Before you take the extreme measure of filing for a full conservatorship over a parent, exhaust other options. Help your parent “plan” their estate with a trust and ask if you can help by being a co-trustee. It not only helps mom save face, it may also save your inheritance.

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com

 


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