The frustrated daughter made an appointment, brought her mother in, and sat her down in my conference room. "Mr. Mason, would you please explain to Mama how joint accounts work and that her will might not make any difference as to how the account will go.  Mama, listen to what Mr. Mason says."

I had never met either women before, and may never again. It was a rare 30 minute engagement, and all I had to do was a little educatin'.

What had happened was that another sibling in another state "took care of everything" for Mama, and in so doing "had her name on all of Mama's accounts". There are 4 siblings. Sadly, all is not peaceful among them.

The Disaster Waiting

First, here is why a "joint account" may not be the proper approach:

• Mama has likely made the one daughter a co-owner of the account. Daughter now owns the account as much as Mama. Could be bad. What if daughter is sued? What if daughter gets into a messy divorce? Or the IRS takes a keen interest in her affairs?
  
  
• If Mom dies Daughter's sister and two brothers may be out of luck. Happens all the time. Mama dies. Mama may have wanted the kids to share equally, but Daughter suddenly recalls Mama really wanted her to have the accounts since she "was the one who always helped Mama". Since Daughter was a co-owner and likely had "survivorship" rights, she owns the account now - and there is nothing an attorney can do about it.
  
  
• Yech.
  
  

What is the best approach?

A properly drafted power of attorney.

A "power of attorney" has nothing to do with appointing lawyers. The word "attorney" has its roots in an old French Norman word for "legal substitute". A "power of attorney" is simply a document signed by someone called the "principal" (that is, YOU) appointing an "attorney-in-fact" or "agent" to manage some or all of the principal's financial and business affairs.

The terms of the power of attorney control what the agent may, or may not, do. If the document covers a broad spectrum of duties, then it is a "general" power of attorney. An Agent can be given very broad powers, and if that makes the Principal nervous the instrument can require the Agent to secure some other person's permission.

It used to be that a power of attorney would lapse when the Principal became incapacitated. That did not do any good if what was intended was to cover the situations when the principal did become incapacitated. The law stepped in and provided that a power of attorney could be "durable" (or be valid after the incapacity of the principal). Most powers of attorney now are "durable".

Here's the point: Don't put the kids on the accounts as a joint owner. Instead, execute a power of attorney that grants the sorts of powers to the kids you are comfortable with to take over business affairs when, and if, they need to. In the meantime, keep the accounts in your name.

You may email comments to Bob by clicking HERE.

Or, if you prefer, "The Doughnut Hole". In 2003, Congress passed legislation creating the Medicare drug benefit, Medicare Part D, which went into effect in 2006.   The drug coverage included a payment scheme that continues to cause a lot of confusion and distress. The "doughnut hole"   or Part D coverage gap.  The current doughnut hole payment system is described below followed by what will change under the health reform legislation. 

What is the Doughnut Hole?

Here is a brief description of the standard Part D drug prescription plan for 2010:

• A Part D participant pays up to the first $310 of his drug costs. This is called the deductible.
  
• After the deductible is met, the drug plan pays 75% of the covered prescription drug costs and the participant pays the remaining 25% until the total drug costs (including the deductible) reaches $2,830.
  
• Once the cost reaches $2,830, the participant enters the doughnut hole and must pay the full cost of prescription drugs until the total out-of-pocket cost reaches $4,550. This annual out-of-pocket spending amount includes yearly deductible and co-pay amounts.
  
• After the participant spends more than $4,550 out-of-pocket, the drug plan pays most of the costs of covered drugs for the remainder of the year.  There will be a co-pay of $2.40 for each generic drug and $6.00 for other drugs (or 5 percent, whichever is higher). This is known as catastrophic coverage.

While crafting the Medicare Part D legislation, proponents of the doughnut hole saw it as a way to provide some help to all beneficiaries, and substantial help to those with catastrophic drug costs.  However, some Medicare recipients have had to give up critical medications or pay astronomical costs once they fell into the coverage gap.

Health Reform and the Doughnut Hole

The Patient Protection and Affordable Care Act signed into law on March 23, 2010 makes several changes to Medicare Part D to reduce the out-of-pocket costs in the doughnut hole, including:

• Effective January 2010, if a participant has expenses in the coverage gap, she will receive a $250 rebate from Medicare.
  
• Beginning 2011, if a participant reaches the doughnut hole, she will be given a 50% discount on the total cost of brand name drugs while in the gap.  By 2020 there will be an additional 25% in federal subsidies of the brand-name drug cost (phased in beginning in 2013).
  
• By 2020, there will be federal subsidies of 75% of the generic drug costs for prescriptions filled in the coverage gap (phased in beginning in 2011).

By 2020, these changes will reduce participants' costs in the coverage gap from 100% to 25% and effectively close the doughnut hole.

Kristin Cerbone is a partner in the Savannah elder law firm of MasonCerbone. You may email Kristin by clicking HERE.

If you are a senior woman, you need to be diligent in managing your financial resources to enjoy a comfortable lifestyle in retirement. Fortunately, by planning ahead and making the right moves, you can help alleviate any inequalities that may exist between yourself and your male counterparts.

          What are some of these disparities? Here are a couple to consider:

          · Longer life expectancy - Both women and men are living longer these days. But you've still got the edge: Women reaching age 65 have an average life expectancy of 19.8 years, compared with 16.8 years for men, according to the U.S. Department of Health and Human Services. And more years of life mean more expenses.

          · Lower earnings - The "wage gap" between men and women has narrowed - but it hasn't disappeared. Women who work full time still earn, on average, only about 77 cents for every dollar earned by men, according to the U.S. Census Bureau. And

women drop out of the work force for an average of 12 years to care for young children or aging parents, according to the Older Women's League, a research and advocacy group. This time away from the workforce results in more than $500,000 in lost wages.

          Furthermore, there may be lifestyle issues that put greater financial pressure on senior women. For example, when it comes to giving money to their adult children, women may be more generous than men. Of course, that's hard to prove, but according to annual surveys conducted by the Higher Education Research Institute at the University of California at Los Angeles, there has been one major, consistent disparity between the sexes over the past four decades: Approximately two-thirds of women say "helping others who are in difficulty" is an essential or very important life objective, compared with only half of the men. Thus, it seems plausible that retired women may be more committed to providing assistance to their grown children - which, of course, could lead to additional financial strains.

          Taking all these factors together, it's clear that, as retirement approaches, you need to take action. Here are a few suggestions:

          · Take advantage of your retirement plan. Put as much as you can possibly afford into your IRA and 401(k) or other employer-sponsored plan. Every time you get a raise, try to increase the amount you contribute to your retirement plan.

· Know how much to expect from Social Security. Contact the Social Security Administration (www.ssa.gov) to make sure your earnings records are correct and to find out how big your benefits checks will be at retirement.

          · Be aware of wills, trusts and beneficiary designations. If you are married, make sure you know what legal arrangements have been made for you to receive financial assets from your husband should you outlive him - which, statistically speaking, is likely. 

· Get professional help. To identify and quantify your retirement-planning goals, and to choose the mix of investments that can help you make progress toward those goals, you may well want to work with a financial professional.

You've worked hard all your life for what you have.  You're concerned about being left destitute by long term care costs.  You'd like to leave something of your hard work to your children.  You're tired of worrying about it all.

Maybe we've just described a parent. If so, you're concerned about your mother's or father's health care needs, you are busy and don't know where to start, your prime concern is making sure your parent's assets are used in the best way possible for their care.

We can help you.  Using state of the art mastery of complex trust, tax, testamentary, Medicaid, and VA law we can save you thousands, give you a sense of security and ease your troubled mind.