This column first appeared in the San Antonio Express-News on October 24, 2017.
Dear Mr. Premack: My mother is the kindest, most giving person in the world. She is financially stable but is not wealthy. She has been diagnosed with mild dementia, and gets confused and easily led astray. A few weeks ago she made an oversized contribution to a charity that she has never before supported, and when asked about it, said that a very nice man came to her house to ask for her help. I’ve got nothing against supporting legitimate charities, but this was a much larger gift than she’s ever given before, and we (my sisters and I) feel she was manipulated. She can’t afford to keep doing this. Is there any legal solution that retains mother’s dignity but protects her from being exploited? – M.B.
Your mother needs to see a Certified Elder Law Attorney as soon as possible, while her dementia is still mild. The attorney can assess her capacity, and if she fully understands what she is doing, then she needs an updated Durable Power of Attorney, an updated Medical Power of Attorney, and a Living Trust.
Under the new Durable Power of Attorney law (which took effect September 1, 2017) she can authorize her Agent to establish a Living Trust. She can authorize her Agent to transfer her funds and assets into a Living Trust. If she has an older Durable Power of Attorney that does not grant that authorization, then it may be more difficult to protect her.
A Living Trust has three positions of authority. The Grantor (in this situation, your mother) establishes the Trust and generally retains the right to revoke or amend the Trust. The Trustee acts as the manager of the Trust. The Beneficiary (again, your mother) is the person for whom the Trust provides financial support.
The Grantor would, by agreement, select someone (in whom she has great confidence) as Trustee to be her financial fiduciary. She might select one or more of her children to act as Trustee, or might ask a well-established Bank Trust Department to provide that service. The Grantor would also declare that the purpose of the Trust is to provide financial support for the Beneficiary (your mother) and for no other person, so long as she is alive.
Once the Trust is created, it must be funded. All of the Grantor’s bank accounts, investments, real property and funds are placed under the Trust’s umbrella. The Trustee controls those assets, and pays all of the bills needed to keep the Beneficiary as comfortable as is possible under the circumstances. The Trust Agreement can be written so that no funds (or very few funds) are left in the Beneficiary’s actual control. As such, if she is solicited for a donation, or is approached by a con-artist, she will have protected herself because she will lack the authority to give away unprecedented amounts of her funds.
It may be advisable for her to retain a credit card, so she can pay for her incidentals. However, you don’t want her to have a standard, high-limit credit card. Instead, investigate options like TrueLink, a business which can issue a credit card that can only be used at certain locations and for no more than specific set amounts.
All of this can only be done while your mother is able to understand and to give her approval. Her mild dementia may not yet be a roadblock, but it will certainly become one when enough time has passed. Don’t delay. Get the family and your mother together with a certified Elder Law Attorney to discuss the pros and cons of establishing a Living Trust for her benefit.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.
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