Legacy of Disaster

I’m watching my in-laws twist in the wind. It’s kind of agonizing to watch the process, to see family getting a raw deal in life. The fact that they’re getting sort of screwed by what was supposed to be a legacy gift from the family matriarch only makes it more discomforting. My wife’s mother suffered from dementia and was victim to a few strokes and heart attacks. In the last decade of her life she grew less and less able to care for herself and more reliant on my wife for care. In the end she was much like an infant in terms of ability to care for herself on any level.  Her family consisted of a daughter and three sons, all of whom pitched in to help, but her medical needs required more. She availed herself of Medicare and, toward the end, Hospice care.

It’s a tight family with all but one offspring living in easy driving distance. The one that moved away only did so for career a short decade ago. My mother in law was happy to divest herself of her different holdings and such as required by Medicare rules, but she insisted on holding on to her house and property. Fully paid for, it was to be her legacy, her gift to her children. The family asked her to write a living will, making all of them equal owners with her in her property, but she refused for some reason. We think it was because she had an element of drama to her, and that the gift of an entire house seemed more to her than simply withdrawing her portion of it upon her death. In any event, it was a sad decision.

Because she had divested herself of all her holdings as required by the rules, when she passed her estate consisted of only the house. Granted, it is a $150,000 house and that’s no small gift. But in the end Medicare and the state wanted repayment for the monies they extended on her behalf.  There were some medical billings, but the debt was an elevated one mostly through the “free services” provided by Hospice. While there is no charge to the patient for these services directly, the services are billed to Medicare on the patient’s behalf. The sum total of the money the system wished to recover was $70,000. Then too, because of no living will, there are estate taxes that must be paid. All in all when the dust settled, there was almost $100,000 owed by the estate. This leaves, if the house sells immediately for its appraised $155,000 worth, a sum of $55,000 to be divided among the heirs. That’s $13,750 each, less capital gains, about $10k. In this day and age that’s not really a lot, considering that it could have been $38,750 each.

That’s a stunning difference and an excellent example of why the elderly should strongly consider a living will. Of course, it’s been a year now since the grand old lady passed away, and the home has continued to accrue taxes and it’s required maintenance. So far, I have been providing those costs as a portion of what I pay to occupy the home with my wife. But we are getting ready to move because the family now wishes to dispose of the property and close out the estate. I’m not being evicted, I’m volunteering to go because it’s time for me to start building a legacy of my own to leave to my wife and children. I already have a living will which makes my wife and kids co-owners of all that I have. In this way, the property and possessions never change hands and my estate bypasses probate and all of the red tape with it. Then too, my needs are fulfilled by the VA as a function of my military service compensation package, and so I will not tap Medicare to the extent that those without VA disability face. There will be assessments against the estate, but they’ll be considerably less than in the case of beneficiaries to a will.

My in-laws are all suffering from the economic turmoil visited upon us all by irresponsible lending and investments. Damage that I personally believe that there will never really ever be full recovery from. Both because the damage was so encompassing and severe it resonated worldwide, and that there really has been no improvement to the system that prevents the same sort of irresponsibility to continue to do damage. We are told about improvements, but the mainstream person hasn’t seen them. So I figure I need to be highly vigilant and cautious about what I invest in and how I do it, so that those I leave behind can benefit from my legacy.