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Seniors Who Self Lawyer Can Create Bigger Problems
Jan L. Warner & Jan Collins

Question: My 78-year-old father has gotten himself into a pickle, and I’d like to see if there is a way to get him out of it. I have one sister who lives closer to him than do I, which is part of the problem. Our mother died last year. Since then, Dad has been obsessed about going to a nursing home, keeping assets out of probate, and not wanting to use up his assets. I told him to go to a lawyer, but he balked at spending the money.

So, without contacting me or anyone else, Dad set out to make sure that my sister and I would receive his assets when he died. He went to the bank and transferred all of his CD’s -- $80,000 – to my sister and me, then went to a lawyer and signed a deed allowing him to live in his home for his life; it would pass to us at his death. I learned about this when the bank called and wanted me to come in and sign the $40,000 CD that went into my name, which I reluctantly did when Dad insisted. All he asked was that we send him the little bit of income to add to his Social Security and small pension when he needed it.

A month ago, Dad needed some money to make roof repairs to his home. He went to the bank to get a loan, only to be told that he no longer owned the home and could not get any money. He panicked and called me. I told him I would gladly sign anything he needed and give the money back, but my sister insists that Dad should have thought about that before, and she refused. I told Dad to hire a lawyer, and I gave him my $40,000 back. Did I do the right thing?

Answer: You did the right thing by giving the money back, but we don’t know if hiring a lawyer to take your sister to court is a worthwhile investment, given the facts you describe.

Obviously, your Dad was in sound mind when he made the transfers and was not influenced by anyone who had a fiduciary relationship to him. Therefore, the transfers were valid. He thought that by “self-lawyering”, he had solved what he perceived to be a problem by 1) having the continued use of the home and income from the CD’s for his lifetime, and 2) making sure these assets passed to his children at death. But when he finally realized that his grand plan included a loss of control over what had been his, he, as you say, “panicked” – and rightly so.

As to the CD’s: We assume, in hindsight, that Dad intended to create “pay on death” (POD) or “transfer on death” (TOD) accounts with his CD’s, meaning that he would control the accounts until his death, at which time the accounts would pass to you and your sister automatically without going through the probate process. Instead, he made an absolute transfer.

As to his Home: Dad retained a life interest in his home without realizing that during his life, he would be responsible for taxes, repairs, maintenance, and the like, but had given up the ability of taking out a loan – unless you and your sister, as holders of the “remainder interest”, agreed.

Bottom Line: We believe that if you can’t reason with your sister and get her to at least return the money, going to a lawyer will be a waste of time and money and will perpetuate your father’s agony. In our view, this is a case that can’t be won. Dad made a mistake, and he will have to live with it. The courts can’t remedy bad judgment.

Taking the NextStep: Dad’s self-planning left him without money and without the ability to borrow or take out a reverse mortgage on his home to get funds that might be required to keep him afloat-- a sad state of affairs for a 78-year-old man who has worked all of his life.

Unfortunately, ill-informed and unduly influenced seniors engage in transactions like this every day. We take this opportunity to warn seniors not to transfer assets or engage in transactions until they fully understand the consequences. As your Dad has learned, the cost of getting advice from a competent lawyer pales in comparison to self-inflicted losses.

Note: In a recent column about “The Will,” a planned new “reality show” on CBS that we believe will encourage unscrupulous viewers to prey on wealthy seniors, we listed an e-mail address where comments could be sent. That address is no longer valid. Readers wishing to voice their concerns to CBS should telephone the network at 212-975-4321 and ask for the “Comment Line”.

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