Monday, September 17, 2007

Family Contracts to Make Siblings Get Along for the Care of Aging Parents

Category: Elder Law

One of the biggest issues an Elder Law attorney faces is not how to plan for their elderly clients to reach their goals, but how to implement the plan with the dynamics of the family. Gender equalization not-withstanding, daughters (and daughters-in-law) bear most of the brunt of caregiving. Often times there are large financial differences between children, and accompanying differences in financial outlook and responsibility. And all of this occurs in the context of families - where resentments from years past have lingered or even festered.

What's an Elder Law attorney to do? Many times asset protection planning for seniors involves a transfer of assets. How can assets be transferred if children, or their spouses, do not appear trustworthy to the other siblings involved? Or, if one child feels he or she "deserves" more?

One solution that I commonly employ is for a transfer to be made to a trust, not to any one or more children outright. A group of the children, or a third party, can then act as a Trustee to safeguard the assets from waste, greed, etc. during the seniors lifetime, and then distribute them evenly at death.

Another creative solution I have been reading about is a "Sibling Contract". This came to my attention through the Louisiana Estate Planning and Elder Law Blog. In her post she cites a well done article "Caring for Pops: Put it in writing - Lawyer suggests sibling contract to avoid court case over aging parents" out of the Dallas Morning News, where Dallas lawyer Walter Hofheinz discusses how Sibling Contracts have evolved in his practice to avoid costly guardianship and probate disputes.
First came divorce agreements. Then there were prenuptial agreements. Now get ready for sibling agreements.

Dallas lawyer Walter Hofheinz knows from specializing in estate planning and probate law for 23 years that conflicts can erupt in even the most loving families when it's time to figure out how to care for an aging parent. Issues that should have been decided around the kitchen table escalate into disputes fought out in lawyers' offices and court. To manage that familial strife, Mr. Hofheinz has come up with what he calls a "memorandum of understanding" between siblings. The contract spells out each adult child's responsibilities and holds that person accountable for them.

"Ideally, an older person tells his children how he wants to be cared for, but that rarely happens," he said. Instead, the topic never gets discussed, and often something bad happens – the parent has a stroke, or his mind starts to fail. Suddenly, brothers and sisters argue over where Dad will live, how his savings will be spent and even how he will die.

"A little planning can avoid a lot of animosity and a lot of money in attorney fees on the back end," Mr. Hofheinz said.

Elder-law experts say the time is ripe for ideas like the Dallas lawyer's, because they're seeing more sibling disagreements grow into bitterly fought guardianship battles that land in probate courts and decimate families.

Read Entire Article Here

A Sibling Contract looks to be a necessary tool to get all the parties on the same page and focused on the real issue - how to best help the people who brought them into this world and raised them, instead of how to better themselves or get even for the slight that occurred 30 years ago. (guilt intended)


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