If you or your loved one has received the news that you are suffering from dementia or other problem that impacts mental capacity, it can be devastating. However, this can also complicate the legal planning that a senior may need to do.
You’ve probably heard stories about disputes between family members over a will or other estate planning document and whether it was valid or not.
Combine a questionable mental capacity with such a dispute and it is a recipe for disaster.
However, it is easy to add one simple step to the legal planning process that can reduce discord and stress for everyone down the road.
What a Letter of Competency Does
It is a good idea to obtain a letter of competency when a will, advanced directive, power of attorney, or other legal document is drafted. This can help dispel any disagreements about whether the person signing the documents had the mental capacity to make such decisions.
While an attorney cannot help an incompetent individual create or change a document, the legal definition of competency is a bit different than the medical definition of competency.
It is a good idea to ensure that a person is both medically and legally competent to make decisions about their estate, finances, and healthcare so there is no doubt about the validity of the documents they sign.
Obtaining a Letter of Competency
Most people will request that their primary care doctor create a letter of competency because they would have seen the person over a course of several years and be able to recognize any changes in their baseline state.
Other people may choose to have a doctor that specializes in mental health to create such a letter.
The letter from the doctor attesting to the mental capacity of their patient should be made on their letterhead and include:
The patient’s name, date of birth, the date in which their relationship with the patient began
A statement testifying to the ability or inability of the patient to make decisions
Any relevant medical diagnoses as well as the date of such diagnosis,
The physician’s contact information
While a doctor has likely completed a statement of mental capacity before, it is a good idea to have your estate planning attorney review the letter and ensure it meets all necessary legal requirements.
Documentation is Key
We never know whether a child, sibling, or other family members will attempt to attest some piece of legal documentation, and unfortunately, it happens more often than you might imagine. Many of these cases end up going through lengthy and costly guardianship proceedings.
While it may seem excessive to seek proof of mental capacity, it is almost always better to be safe rather than sorry. The energy and time to obtain this documentation are minimal compared to the cost of a lawsuit or guardianship proceeding.
With the coronavirus pandemic sending millions of Americans scrambling to make ends meet, another type of economic fallout is bubbling in the background: consumers' worsening credit status due to late or unpaid bills.
But making a bad situation worse, some credit scores are being mistakenly dinged by the very lenders that, thanks to the protections of the Coronavirus Aid, Relief, and Economic Security Act passed in March, are supposed to be providing payment relief. The law lets you postpone payments on federally backed mortgages for up to a year, suspends all payments on federal student loansthrough Sept. 30, and—supposedly—ensures that your credit isn't negatively affected if you take advantage of these provisions.
But reports of people whose credit scores are nonetheless wrongly being harmed keep piling up, both in media reports and in stories shared directly with Consumer Reports by readers.
They include reports from consumers who say their credit scores dropped when they accepted—and in some cases merely inquired about—COVID-19-related mortgage forbearance, a direct violation of the coronavirus relief law.
And one of the country's largest student loan servicers, Great Lakes, has acknowledged improperly reporting the loan status of as many as 5 million borrowers for whom the relief law had given a break on payments. Many of them took a hit on their credit scores a result.
A credit agency representative acknowledged that mistakes are "bound to slip through the cracks" as lenders try to comply with the new credit law while millions of borrowers are seeking financial help.
Meanwhile, experts say more problems are likely to emerge because of inconsistencies in the way creditors are reporting disaster-related accommodations.
You may wonder if these problems merit your attention right now. Credit scores—numerical grades derived from the information in your credit reports that are used to judge your worthiness for future credit—can indeed seem trivial when many consumers are struggling to put food on the table, maintain a roof overhead, pay utility bills, and buy prescription drugs. "Screw your credit score if you can't cover the basics," says Chi Chi Wu, a staff attorney at the National Consumer Law Center.
But if your short-term needs are well in hand, she adds, it's worth paying close attention to your credit report. That's because it can have serious long-term effects on your ability to weather the crisis and rebuild your financial health after the worst has passed.
Experts say the inability to access credit was one of the reasons it took many Americans so long to dig out of the previous financial crisis. And some lenders are already tightening the flow of credit by closing credit card accounts, lowering credit limits, and slowing or stopping the processing of applications for refinancing, home equity lines of credit, and mortgages.
Credit report blemishes, which typically stay on your file for seven years, can even affect your ability to get a job, rent an apartment, or secure certain types of insurance, Wu says.
This is an especially crucial time to pay attention to your credit report, says Kelly Cochran, deputy director of FinRegLab, a nonprofit that researches the responsible use of technology in the financial marketplace. Many companies report to credit bureaus in batches, she says, and accounts that are 30 days delinquent typically get reported about a month after the bills were due. That means that many payments missed in the early phases of the COVID-19 crisis are likely to hit the credit agencies very soon.
A new bill in the U.S. Senate would, if passed, prevent any negative information from appearing on consumer credit reports during the crisis. "Consumers need broad relief during the COVID-19 crisis and shouldn't see their credit scores penalized during an economic disaster," says CR policy analyst Syed Ejaz. "Fixing these mistakes on a case-by-case basis isn't enough. Both credit bureaus and lenders should suspend all negative credit reporting. The Disaster Protection for Workers' Credit Act of 2020, a Senate bill sponsored by Sen. Sherrod Brown, D-Ohio, does exactly that."
Until then, the good news is that consumers now have the expanded ability to monitor and to some extent police their own credit reports. Here's what you need to do.
Talk to All Your Lenders Right Away
That means even before checking your credit reports, because the best way to keep your report clean is to prevent negative information from landing there in the first place.
The credit protections of the coronavirus relief package apply to "accommodation" agreements with any creditor to defer, decrease, or modify any consumer debt, not just the ones in categories required by the law, such as federally backed mortgages and student loans. That means your credit reports shouldn't be blemished if you persuade a lender to postpone payments on your auto loan or credit card debt as well as a nongovernment-backed mortgage and student loans. And many lenders across the spectrum have been encouraged by federal regulators to agree to such accommodations.
But you must reach out: The law provides no credit protection if you're late paying your debts and don't get an accommodation, in which case your credit reports will probably reflect a delinquent account regardless of why you were unable to pay.
And make sure to call them all, even if the balance due is relatively small. Even a single account that's more than 30 days past due can reduce your credit score by up to 100 points.
Get Your Credit Reports
With credit reporting problems exacerbated by the pandemic, the three major credit reporting agencies—Experian, TransUnion, and Equifax—are letting people check their reports free on a weekly basis, at least until April 2021, at annualcreditreport.com. Pulling reports online from all three agencies typically takes 10 or 15 minutes.
Doing so weekly is overkill for many people. If you've been able to maintain your income and have been making all your payments on time, check each of the three reports about every six months, Wu says. (In normal times, it's enough to check each report once a year.)
If, on the other hand, your financial situation has taken a hit because of COVID-19 and you agreed to a forbearance or a deferral on a loan, Wu says to check your reports monthly for a while. That's how often lenders usually upload data to the credit reporting agencies.
Scrutinize Them for Errors
Even in ordinary times, credit reports are rife with error. A landmark 2013 report by the Federal Trade Commission found that 1 in 5 contained a verified error and that 1 in 20 had an error significant enough to cause credit to be denied or offered at a higher cost. And complaints about credit agencies now represent 38 percent of all complaints to the Consumer Financial Protection Bureau, more than any other category. Here are the errors to especially watch out for, followed by tips on how to dispute them.
Mixed files. These common errors occur when an account or debt belonging to one consumer is incorrectly attributed to another person, possibly with the same name or a similar one. To spot these errors, look for information about a loan or debt that doesn't belong to you.
Out-of-date information. Make sure closed accounts, with credit cards for example, aren't listed as open in your credit reports. And if you had a credit problem that was resolved, make sure it disappears from your report after seven years, as it's supposed to. Sometimes these passed delinquencies are incorrectly "re-aged," thereby restarting the period during which the negative information stays on your report.
An incorrect change in status. If your creditors agreed to let you defer payments, the coronavirus aid package explicitly says your credit status should freeze at the time you accepted the accommodation. So if an account was current at that point, it should still be reported as current. If you were already behind when your payments were postponed, your status should be no worse than it was before. But it can be better: If you manage to catch up on your payments during the accommodation period, you should be reported as current on that debt.
Mortgage loan errors. An emerging problem concerns mortgage lenders that have been using "special comment codes" to explain the status of accounts in their reporting to the credit agencies. Under ordinary circumstances, lenders use an "AW" code to indicate that a borrower has been affected by a natural or declared disaster, "CP" for a disaster-related forbearance, and "D" when account payments have been deferred.
But the coronavirus relief law doesn't specify how—or even whether—mortgage lenders should use these codes for COVID-19-related accommodations, Wu says. As a result, they've been used inconsistently.
In addition, according to a recent FinRegLab report, at least three mortgage servicers have placed "CP" codes on accounts when consumers simply called to inquire about forbearance but decided not to take it—and in some cases even when no call was made.
These coding errors and inconsistencies shouldn't have a direct impact on consumer credit scores, Wu says. But many mortgage lenders, as well as some auto lenders, landlords, and employers, look at full credit reports, she says, "and who knows how they'll be interpreted."
Her advice? If you haven't accepted an accommodation, insist that the coding be removed. If you did agree to a forbearance and the lender insists on coding, ask for the AW code.
Student loan errors. Coding errors have also had an impact on consumers who have federal student loans. In addition to suspending all payments for these loans through Sept. 30, 2020, the relief law specifies that a suspended payment should be treated by credit reporting agencies "as if it were a regularly scheduled payment made by a borrower." But student loan servicer Great Lakes coded accounts of some 5 million borrowers as having been "deferred," which caused many of their credit scores to decline.
The problem appears to have been addressed by Great Lakes. But if you have outstanding federal student loans, experts recommend making sure that your credit reports don't show a deferment on those accounts and that your credit score wasn't affected.
Dispute Mistakes or Irregularities
If you've noticed any of the errors listed above, contact the reporting agency to correct them. But note that credit reporting agencies have a poor record when it comes to fixing their mistakes, Wu says, so it pays to take extra care when requesting an investigation.
Keep in mind that it's often necessary to dispute an error with more than one of the three major reporting agencies. And although they're the ones that have a legal obligation to investigate your complaint, you should also notify the creditor behind the disputed information.
Wu says the credit agency dispute forms, either found online or sent in the mail along with your credit reports, often limit your options. So either skip the forms entirely and write your own letter explaining the errors, or supplement the forms with additional details and comments.
After printing copies to keep, submit your documents via certified mail to the address on your credit report, and request a return receipt for your records. And keep a detailed list of every document you send to the credit reporting agencies and the creditor involved (conversations, too).
Finally, each credit agency must send you written results of its investigation within five business days of its completion. And if a creditor finds that your dispute has merit, it must notify the three agencies so that they can correct your file.
Consumer Reports is an independent, nonprofit testing and advocacy organization. Since 1936, we have provided unbiased, evidence-based information and advocated to protect consumers rights and safety. Sign up for a free CR newsletter to get expert insights delivered to your inbox. This story was originally published byConsumer Reports on June 2, 2020.
The coronavirus outbreak has elder law attorneys working overtime to help clients navigate issues ranging from the mundane updating of a will to the relocation of a loved one barred from returning to the nursing home where he or she used to live.
When the pandemic first hit, Springfield attorney Gina Barry was swamped with work drafting wills, trusts, powers of attorneys and health care proxies for the many health care workers she has as clients.
"I was at the computer drafting from 6 o'clock in the morning to 11 o'clock at night," Barry said.
Barry continues to see an increased demand for estate planning services.
"People who haven't planned at all want to plan. People who were taking their time are feeling more urgency to finish their plans. And people who have plans in place are making sure they're updated," Barry said.
She added that she's seen a demand for specific COVID-19 language in living wills to address end-of-life concerns.
In order to best serve their clients, members of the elder law bar say they need the Legislature to pass a bill immediately that would allow for the remote notarization of documents to avoid the close personal interractions that risk the spread of COVID-19.
"What's difficult for everyone is reaching our clients that are in nursing homes and assisted living," said Lenox practitioner Paula Almgren, president of the Massachusetts chapter of the National Academy of Elder Law Attorneys.
PLEASE CALL ALEX MATULEWICZ at 508-660-0331. It's a free consultation. If you need help or guidance, please call him ASAP. Don't wait!
Lawyers Weekly (April 27, 2020) This Week's Decisions:
Where a Probate & Family Court judge, having appointed permanent guardians over three minor children, declined to exercise jurisdiction over petitions to remove those guardians, the judge's decision should be affirmed, as the children and the guardians have lived for several years in California, so the judge did not have home state jurisdiction over the termination petitions.
"At issue is whether the Essex Division of the Probate and Family Court Department (probate court), having appointed permanent guardians over three minor children, had exclusive continuing 'home state' jurisdiction over the petitions to remove those guardians and, if not, whether the probate judge abused her discretion in declining to exercise jurisdiction in favor of California, where the children and the guardians have lived for several years. We conclude that the probate court did not have home State jurisdiction over the termination petition; nor did it have jurisdiction under any of the other provisions of G.c. 209, S2. We accordingly affirm the dismissal of the termination petitions without reaching the question whether the judge acted within her discretion when she declined jurisdiction on forum non conveniens grounds...
"On appeal, the father challenges the dismissal of the termination petition on two grounds. First, he contends that as the probate court entered the guardianship decree, it retained exclusive continuing home State jurisdiction over all matters thereafter pertaining to the guardianship, including its termination. In connection with this argument, he points to the continuing status of the guardianships, the filing of annual status reports in Massachusetts, and the fact that (Steven and Maria Fitzgerals) never registered the guardianship in California. Second, the father contends that the guardianship decree was void for lack of service. ...
"The father argues...that the court's jurisdiction should not be assessed as of the date of the filing of the termination petition, but rather as of the date of the original guardianship petition. ...
"Our law does not support this view. Instead, jurisdiction under the Mass Child Custody Jurisdiction Act (MCCJA) must exist at the time the court is being called on to act; it is not enough that home State Jurisdiction existed at some previous point in time. ...A Massachusetts court does not have continuing home State jurisdiction unless the requirements of MCCJA home State jurisdiction are satisfied at the time that modification of an existing custodial arrangement is sought. ......guardianships are no different in this regard from any other custody determination. For these reasons, we agree with the judge that home State jurisdiction under S2(a)(1) did not exist over the father's termination petition.
"Nor did the court have jurisdiction under the three remaining subsections of G.L.c. 209B, S2(a). ..."
Guardinaship of Minor Children (Lawyers Weekly No. 11-040-20) (15 pages) (Wolohojian, J.) Motions to dismiss petitions for removal of guardians were heard by Jennifer M.R. Ulwick, J., in Probate & Family Court. Robert E. Curtis Jr. for the father; Erin Whelan Pennock for the guardians; John P. Dennis for the children (Docket No. 19-P-296) (April 13, 2020).
A firm handshake, a kiss on the cheek, the clink of glasses at a dinnertime toast — these are among the polite gestures now on hold indefinitely because of social distancing guidelines intended to keep people safe during the coronavirus outbreak.
But etiquette experts say that doesn't mean good manners have gone by the wayside. Instead, they point to safer ways of showing respect for one another, like swapping out handshakes for head nods, that have emerged in the past few months — and that will likely remain with us for some time to come.
"Etiquette is always evolving, it's never set in stone,” says Massachusetts-based etiquette consultant Jodi Smith. “What's set in stone is the idea of respect for myself and respect for others.”
As long as showing respect means keeping our distance and avoiding large gatherings, here's what Smith and others say to expect when it comes to minding your manners in the COVID-19 era:
Handshakes and greetings
Myka Meier, author of Business Etiquette Made Easy, notes that few people are likely to be shaking hands at a time when staying 6 feet apart is the norm.
Even something like an elbow bump means making contact with another person and might not be appropriate in more formal settings like business meetings.
Instead, Meier recommends two totally contactless greetings: what she calls “the grasp and greet” — clasping your hands together and putting them over your heart as you approach someone — and the “stop, drop and nod” — standing still, dropping your hands and putting them behind your back (so you're not tempted to reach out for a handshake), then nodding to say hello.
Invitations, events and RSVPs
Many large-scale gatherings and events have already been cancelled, but if you've RSVP'd “yes” to something that's still scheduled to happen, international etiquette expert Sharon Schweitzer says the rules around declining have become a bit more flexible.
"Long-standing etiquette and social graces have always dictated that if you accepted the RSVP and said you would attend, you must,” she says. “However, in light of the coronavirus, you can change your RSVP to decline if you cannot attend.”
In the case of events like weddings, she says, be sure to send a gift anyway — and change your response promptly out of respect for the host (you might also want to write a personal note expressing how much you regret having to decline).
When it comes to saying no to casual invitations, like neighbors asking you to join them 6 feet apart in their backyard, the experts recommend having a go-to script to politely decline. Smith recommends something like: “I'm so thrilled that you invited me, but I'm just not ready yet."
Having a few stock phrases in mind can also serve you well when out and about. Schweitzer's script for keeping your distance from a friendly passerby while walking the dog is something like: “Fluffy and I are both social distancing. Please greet us from at least 6 feet away. We look forward to seeing you after this resolves. You'll be more than welcome to pet her then!"
Income annuities provide guaranteed lifetime income. But there are other types of annuities that are much more complicated and potentially much more expensive (see the next section). Most of them may be more appropriate for sophisticated investors. Among these types of annuities:
Deferred fixed annuities can offer to pay a guaranteed rate of return on your investment for a set period of time, and taxes on the amount that you earn above what you initially invested are deferred until you take withdrawals.
Variable annuities let you invest in mutual-fund-like accounts and the money also grows tax-deferred. However, a normal variable annuity also exposes you to the risk that your investments may lose value. These annuities are more an investment vehicle with tax benefits than a way to get guaranteed retirement income.
An income rider to a variable annuity guarantees, for an additional fee, that you'll receive at least a minimum income for the rest of your life, no matter what happens to your investments.
Income riders are complex. For example, a rider may guarantee that the amount on which your eventual withdrawals are based increases by 5 percent per year, or lock in the high point that your investments have reached, even if the value drops after that. You can then withdraw up to 5 percent of that amount each year for your lifetime — no matter what actually happens to the investments. But if you take all of your money out of a variable annuity with income guarantees, you'll only receive the actual investment value, not the higher benefit base from the guarantee.
These annuities are most attractive to people who want to (and can afford to) risk some of their money in the stock market but plan to retire within three to five years and worry about a downturn in the first few years of retirement. “If it's a bad first five years, it's really difficult for you to recover from it,” says Mark Cortazzo, a certified financial planner and founder of MACRO Consulting Group in Parsippany, N.J., who helps people compare variable annuities and other investment options.
Fixed-index annuities let you benefit from a portion of a stock-market index's gains but protect your investment if the index declines. They typically tie their performance to an index, such as the S&P 500, but don't provide dividends. If the investments grow, you will usually only get part of that increase, such as 80 percent of the index's price increase, or a maximum percentage increase such as 6 percent, even if the index grows by much more. But the amount that you invest may be guaranteed not to lose money.
4. Safety comes at a cost.
The fees for income annuities are embedded in the payouts, and the safety comes at a cost because you can't access your principal in a lump sum after you hand it over to the insurance company.
The fees for variable annuities are spelled out in the prospectus, and while they may have advantages, they can be expensive compared with other types of investments. The average fees for variable annuities without additional features were 2.211 percent in 2019, according to Morningstar. Adding an income rider brings the average cost to 3.2 percent. This can be as much as two to three times what a 401(k) plan investor might pay.
However, some companies offer lower-cost annuities, such as one that charges just 0.25 percent for initial investments of $10,000 or more (or 0.10 percent for contracts of $1 million or greater) and has no surrender charges, but doesn't include an income guarantee. If this type of investment interests you, it is worth shopping around for the best deal.
Fixed-index annuities don't have fees spelled out separately; they're built into the structure of the product. For example, you usually don't receive dividends from the index and may receive only a portion of its gains. “Their performance is more like bonds than stocks,” Maurer says.
And both types of annuities can have hefty surrender charges if you want to withdraw the money you invested in them during the early years. For example, you'll typically have to pay a surrender charge of 7 percent if you cash out the annuity in the first seven years, with the charge gradually decreasing each year you own the investment. “Some fixed-index annuities have longer and higher surrender charges,” says Patrick Carney, a certified financial planner with Rodgers & Associates in Lancaster, Pa.
5. The seller — and the salesperson — matter.
Monthly payouts for income annuities (the kind discussed at the beginning of this article) can vary a lot by company, so it helps to work with a broker or adviser who deals with several insurers and can show you the best rates for your age and type of payout. In addition, a number of comparison websites can provide price quotes from several insurers for immediate and deferred-income annuities.
Since you're counting on the income to continue for the rest of your life, look for an insurer with a financial-strength rating of A or better, Carney recommends. Several providers, including Fitch, A.M. Best, Moody's and Standard & Poor's, rate insurance companies’ financial strength. Their ratings can be found online.
Variable annuities are not as easy to compare. The investments and fees can vary significantly, and it gets much more complicated when analyzing income benefit riders. Fees are based on terms that may be defined differently from company to company. Companies may also differ on how investment gains are measured and how often measurements are made.
Fixed-index annuities can be even more complicated. Performance can be based on different indexes and limited by complex participation rate calculations or caps. In all cases, if you don't understand exactly what you are paying for, ask questions or consider a different type of investment.
"Annuities have historically offered some of the highest commissions for salespeople,” Maurer says. In other words, some advisers have every incentive to sell you a product regardless of whether it best suits your needs. You may only be getting part of the story if you work with a salesperson who only sells annuities and doesn't explain your alternatives.
Finally, if you already have an annuity and discover it might be too expensive or not the right fit for you, you need to be careful before cashing it out — you could end up with a big tax bill or surrender charges, and you may lose an income guarantee you had locked in. Make sure that you understand the potential cost and your alternatives before acting.
The Law Office of Alexander F.X. Matulewicz, Esq. is ready to help you with all your probate issues.
We find it helpful to advertise by word of mouth to our co-workers, friends and relatives how important it is to be prepared when the day comes and one of ours has passed away.
The real question becomes, will you be ready with all the information necessary to answer who ges what? Do you want a funeral, casket, burial plot, or prefer cremation? Do you know where all the important information is being kept?
Is there a will, trust, power of attorney, healthcare proxy, bank account and insurance info? There are so many questions, but if you aren't prepared, who gets what, when, how - I'd want my closest family and friends to benefit from what I leave behind. You can't take it with you! And you don't want the state to get it.
The Office realizes people are hesitant to come forward, admit they need to do this now, before it's too late. My own father used to be afraid that if he wrote a will, he'd die. He also thought if he retired, he'd die. All crazy ideas and superstitions. When he did retire after 45 years, he did a part time job where he could still participate in working everyday. It was my mother who talked him into doing a will and getting things "prepared." As an RN she saw too many people die without a will and all the complications that come with it.
The Office even goes one step further to help you. Alex and his paralegal, Amy can come to your house and set up a free consultation - where you are most comfortable in your own surroundings. For example, I'm thinking my sister (and her family) can host a meeting and invite her elder inlaws, who are in failing health, to see the benefits of getting prepared. They can ask all the questions and explain their reservations about their reluctance. It's free consultation. You can learn so much. What do you have to lose?
Call the Office today and check it out at 508-660-0331. You will be glad you did!
With all the talk about opening up various establishments in a state-wide roll out by dates one wonders what it all means. The unemployment numbers are mind boggling and recession like. People are afraid of losing money in the stock market, just trying to get by day-by-day. What about those being threatened to get evicted by their landlords? It's just a crazy world right now.
I spoke to a neighbor of mine who works at a restaurant with his wife and both don't know if their place will survive another month of "just takeout". It only provides approximately 40% of their profits. That's not enough to survive. They think it will have to close and it's been running in the family for well over 4 decades. Very sad indeed.
Imagine graduating from high school and having big plans to go on to college. The dreams, thoughts, plans, all put aside so we can "just live through each day".
It has brought about many positive things too. My daughter thinks her company is going to have many people work from home permanently. She is working from home and discovered that she is more productive because there are less distractions and interruptions when at her workplace. She works harder and knows a lot is riding on her being successful and wouldn't mind having this arrangement become permanent. Wonders how many others feel the same way?
I'm thankful I've done the 30+ years in the corporate world and can more or less work at my own pace. I just want to make a difference every day by helping those that need it. I'm thankful I have my health and those I love are healthy too. Please, help those around you who need it. Especially those who do not ask for it but you know that they do. MAKE A DIFFERENCE! Be safe and help others.