Estate Dispute

In Charge of Mom’s Finances? Need an Accounting?

For several years you’re taking care of Mom, dashing her to many doctors and handling her finances. All this while juggling a full-time job. Suddenly your siblings ask, “What have you done with Mom’s money?” “Please account for Mom’s funds for the years you were in charge.”

As children you fought over the teddy bear. Now you’re fighting over a million dollars or more. Family members tend to accuse the financial in-charge of mismanagement, improper transactions and pocketing funds. The financial in-charge may be a guardian, trustee or executor with control over a trust or estate, or a Power of Attorney in charge of the assets of an aging person.

Family monetary disputes can escalate quickly. Providing an accounting to interested parties can prevent explosive family battles and avoid costly litigation.

An accounting? No problem! After all, you kept all the bank statements and receipts for every expense. However, unfortunately, a formal accounting must be in a specific format strictly mandated by NJ Statutes in the Uniform Principal and Income Act. The following do not constitute a formal accounting:

A stack of all the bank and brokerage statements
Boxes, envelopes and binders of all receipts for all expenses paid
The check register for the estate checking account
The fiduciary income tax returns for the trust or estate (Form 1041) or the individual income tax returns (Form 1040)
An Excel summary of all expenses paid
A profit and loss summary from Quickbooks
Mom’s medical records

Preparing a formal account can be an overwhelming process for a fiduciary. The starting point is a list of all assets for the first day of the account period. All receipts, disbursements, gains and losses from disposition of assets, transfers and distributions are detailed.

We can relieve your burden, take your crates of documents and convert them into a formal accounting. If there is a dispute about a specific asset or disbursement, we will add additional documentation to clarify, strengthen and justify our client’s position. Please contact us to see how our CPA firm can assist you.

Grandma is struggling and someone must take her to her many doctor visits, do her shopping and handle all her finances. Grandpa now needs assistance with daily living activities. It is much easier to take care of grandparents if they live closer…so, they move into your home.
As nursing home costs increase, adult children are finding that living together is an excellent arrangement, both financially and emotionally. However, having a parent move in is a huge adjustment and many logistics are involved.
Siblings tend to resent that one child may be enriching himself under the guise of taking care of Mom. They will be very concerned about many issues which can be subject to great controversy including:
• Compensation: Should Grandpa pay rent? How much can or should the parent contribute to the household? Should Grandma compensate the care-giver child? Will the adult child reduce his work hours or take early retirement as a result of the care-giving duties?
• Renovation of Home: Will the house need to be remodeled to accommodate an aging parent? Usually a room must be converted to a bedroom. Bathrooms need to be fitted with equipment for the elderly. Ramps are needed for easy access to the home.

Will the parents gift the funds to renovate?
Will the parents retain an ownership interest in the house?
Will this affect the parent’s eligibility for Medicaid?

• Tax ramifications: Can the adult child take Grandpa as a dependent and qualify as head of household?

Can someone deduct as a medical expense the renovations to the home done to accommodate a disabled person?

• Healthcare: Should Grandma attend an adult day care? Will home-health aides be needed? What level care is needed? How do we properly pay the aides?
• Finances: Should Grandpa execute a Power of Attorney or is a Guardian needed? Will Mom qualify for Medicaid? Should an accounting be provided periodically to address financial concerns on an on-going basis? This may eliminate suspicions and avoid brewing family disputes.
There are many legal, financial and tax issues involved. Even if there are no siblings, all these items should be reviewed with an elder law attorney and a CPA. We work with many competent elder-law attorneys who can establish and document the plan most suitable for your family. We can advise as to the many tax ramifications. A plan well-structured and documented can reduce income taxes, maximize funds for grandparent’s care, enable your parent to qualify for Medicaid and avoid explosive family battles. Call our CPA firm to see how we can assist.

Estate Dispute

Safeguard your Parent’s Assets

Did Mom Move in with Your Family?