For the longest time, whenever I heard someone ask me or someone else how much money they make, the answer that quickly came to mind is… “It’s none of your business, and whatever I make is between me, God, and the IRS!”
It is not unusual for an individual to be protective of their personal finances. The concern on this issue, especially for most parents, is often that if their children (and/or family) know what they have they will be more likely to ask for money and less motivated to work hard and save their own money. While there is some merit to this point of view when children are younger and impressionable, as you, and they, age the value of this secretive approach can have diminishing and detrimental returns.
On those occasions when children have been kept in the dark about their parents’ and/or grandparents’ finances and a sudden illness or tragedy strikes, the family often has great difficulty handling the unknown financial affairs for their loved ones, which can adversely impact those finances from an estate tax and/or long-term care planning perspective. For example, let’s say Dad just had a heart attack and is mentally incapacitated and in need of significant physical therapy and care for the immediate future. Obviously, Dad’s finances are going to play a major role in whether or not he will be eligible for the Medicaid nursing home and/or home care program. Additionally, depending on the size of his estate, Dad may also have estate tax issues that the family is unaware of. Thus, before able to even approach the hurdle of making a plan of care, the family will first be forced to gather all of this information, while simultaneously determining the best plan for Dad’s health needs.
Without having an accurate picture of the income and other financial information for an ill individual, the individual’s family members and/or named agents under a Power of Attorney will struggle to ascertain what steps they should be taking. They won’t, for example, be able to calculate how much of the ill person’s income is available to finance the cost of long-term care and how much of the loved one’s savings will need to be used to make up the difference. An attorney won’t be able to provide informed legal advice to the family on numerous important issues without knowledge of the finances.
While it is always preferable for an aging person to provide specific financial information, if one is concerned about privacy, it may be sufficient to provide a detailed list of the assets, as well as how they are titled and the corresponding account numbers and financial institutions, without exact dollar amounts. In addition to making this financial information available in some form to trusted friends or family, it is equally as important to ensure that the person has executed a General Durable Power of Attorney with broad powers so that loved ones can handle the ill family member’s finances and undertake everything that the ill individual could have done themselves if they were competent.
In conclusion, as one ages, keeping secrets from family may result in the family’s inability to take the necessary steps to protect their loved one’s estate from estate taxes and the cost of long-term care. It’s not the surprise a family wants!
* Anthony J. Enea is the managing attorney of Enea, Scanlan and Sirignano, LLP of White Plains, New York. He focuses his practice on Wills, Trusts, Estates and Elder Law. Anthony is the Past Chair of the Elder Law and Special Needs Section of the New York State Bar Association (NYSBA), and is the past Chair of the 50+ Section of the NYSBA. He is a Past President and Founding member of the New York Chapter of the National Academy of Elder Law Attorneys (NAELA). Anthony is also the Immediate Past President of the Westchester County Bar Foundation and a Past President of the Westchester County Bar Association. He can be reached at 914-948-1500 or at www.esslawfirm.com.
