Grace Under Pressure

I had a very nice annual meeting a few weeks ago with one of my favorite clients.  He’s a nice man with a keen intellect. He understands investing and, even better, understands monetary policy. He ran a successful regional bank for many years after all.  My client is someone I can talk with about Federal Reserve policy and its impact on the economy and the capital markets, and know he will have useful insights to share with me in return.

My client is 83 years old and suffers from Parkinson’s disease.

Google grace under pressure and it pops up as the title of Rush’s 10th album released in 1984, as part of a Forbes magazine title, as the title of a multimedia website about Burma, a Times magazine title about how to achieve it, ubiquitous is the phrase.

Yet search for its origins and one finds it first in a profile piece written by one Dorothy Parker about none other than Earnest Hemingway, when he responded to Parker’s question, “Exactly what do you mean by ‘guts’?”  Hemingway replied: “I mean, grace under pressure.”

As a high school student I read Hemingway and remember that “grace under pressure” was Hemingway’s definition of courage, from a man who presumably learned something about courage during his time in Italy in 1918, where he was wounded while passing out supplies to soldiers.  The Italian government gave him a Silver Medal of Military Valor for dragging  a wounded Italian soldier to safety.

Guts, courage, whether one in the same or different shades of some deeper essence, my client has them in abundance. His cheerfulness, his obvious enjoyment of life, despite a debilitating disease that makes living a daily challenge, is uplifting and humbling.

And yet, there are complications that come with aging, complications made worse by chronic illnesses such as Parkinson’s disease. Complications that draw in family members out of concern for a father’s health, a mother’s well-being, or… the family money.  Who is trustworthy and who is not?  It’s a dilemma made worse by the interconnected society in which we live. A society that makes investment gurus available 24/7. shouting advice at us from our televisions, or confidently telling us which investments to buy and which to sell in blog after internet blog.  AND WE LISTEN!

“My point is not that mass-mediated financial advice is kind (of) like professional wrestling. My point is that mass-mediated financial advice is EXACTLY like professional wrestling,” writes Dr. Ben Hunt, who is an expert in Game Theory, in a recent Epsilon Theory missive. “No one in his right mind should believe that mass-mediated (Jim Cramer) financial advice is the same thing as professional, individuated financial advice. And yet here we are, in a world where the notion of trust has become so warped that every day, thousands of investors question the trustworthiness of their flesh-and-blood financial advisors and tens of thousand more act on their own because they trusted a piece of Narrative-driven advice they heard on the TV or read in the newspaper (or a newsletter).”

But trust is a two-way street, and those flesh-and-blood financial advisors are increasingly unsure who they can trust in return as America ages. From a recent article in Investmentnews.com:

“In January, Michael Kotin, a financial adviser at Wells Fargo & Co., faced a dilemma. Two longtime clients, a couple who had been married for around 60 years and who were both well into their 80s, were accusing each other of being mentally incapacitated and unfit to make decisions involving a jointly owned trust.”

From the same article: “In other cases, financial advisers suspect that their clients are being taken advantage of by con artists.”  And a few paragraphs further down, “These financial institutions are caught between a rock and a hard place,” said Elizabeth Loewy, who served as the chief of the elder abuse unit in the Manhattan District Attorney’s Office for almost three decades. “They don’t have psychiatrists on staff…I feel bad for them.”

Yes, my meeting went well and my client seemed comfortable with our investment posture. He understands, with a breadth and depth frequently lacking among many, that we are in an extraordinarily unusual monetary position, both in the United States and around the world. Uncertainty is extremely high. The unknown unknowns of former Secretary of Defense Donald Rumsfeld lurk in the shadows of monetary and fiscal policy today, gibbering quietly, biding their time. (No, no, no NOT the end of the world, but a time for caution nevertheless as the unknowns of experimental monetary policy and profligate fiscal policy become known).

And yet he is 83 and has Parkinson’s disease. He does sometimes repeat himself and can wander in conversation a bit more than he probably once did. Perhaps that is why his son picked up the phone the day after my client and I met and called the brokerage firm that custodians his father’s accounts. The son wanted to know more about me. Who was I? What was I doing with his father? What was I trying to sell him?  All questions that his father is more than capable of answering directly, or at least that is my belief.

Of course I let my client know about the call and he is going to talk to his son. My client is very proud of his son; I have heard quite a few stories over the years, stories of his son’s successes. The son has every reason to be proud of the father in return. Grace Under Pressure….courage….guts…. in abundance.

 

Estate Planning Failure

The  bank, the lawyer, the nursing home director, and the older brother were going to commit fraud. They had decided it was the only way to take care of the situation. Bills needed to be paid, specifically the nursing home needed to be paid.  It couldn’t be expected to keep the Alzheimer’s patient fed, bathed, and sheltered for free, especially when the money was just sitting there in her checking account, never mind the fact that no one seemed to actually have check writing authority now that the trustee had died.

The social security checks were automatically deposited into the checking account, as they had been for years. The pension checks continued to electronically make their way into the checking account just as they had before. Yet the nursing home wasn’t getting its money, hadn’t been getting its money for some months now. The patient had Alzheimer’s and was oblivious to the problem. The lawyer, the nursing home director, the older brother, and now, most definitely, the bank were not oblivious to the problem, had, in fact, spent weeks discussing the problem in varying degrees of growing agitation (depending on the participant) in an effort to find a solution that would satisfy everyone.

The problem was that the trustee, the man responsible for paying the bills, had died. It probably shouldn’t have come as a surprise to anyone since he was the older brother of the patient and had been diagnosed with cancer many months before his actual death. No one had thought to prepare for the trustee’s impending death . The nursing home wasn’t even aware that the man writing the checks on behalf of his sister to pay her nursing home bill was sick, let alone terminally so. The bank was likewise unaware. Of course the trustee knew, but he also knew that the trust made provision for a successor trustee and he knew that his older brother was still alive and well, even as he turned the ripe old age of 85. To his older brother would fall the task of picking up the pen once a month on behalf of their younger sister.  And his older brother would have the help of his wife, some thirteen years younger and a lawyer to boot.

It didn’t occur to the dying man to conduct a document review or to ask the bank what it would need to transfer check writing authority to the new trustee. So no one bothered to review the trust, check that the Durable Power of Attorney was adequate to the task, or talk with the bank about what it would require in order for the sister’s checking account, the one that received the monthly social security and pension checks, to continue to function as a conduit for payments to the nursing home.

In fact, the lawyer, the oldest brother’s wife, had started the conversation by calling the bank and asking to have her husband put on the checking account since he was the new trustee, and would they also be so kind as to change the address on the account so that the monthly bank statement would come to them at their address?  She was told no and the conversation went down hill from there… before finally culminating in the contemplated fraud some weeks later.

It turned out that the oldest brother needed to go to the nearest approved bank branch to properly identify himself to the bank before the bank would grant check writing privileges, as well as accept instructions from him for an address change. Getting to the nearest approved bank branch meant a 45 minute trip for the 85-year old, which was certainly better than the first alternative the young lady at the other end of the line relayed to the lawyer (the wife) of the new trustee.  The first response had been that they would need to travel from Florida to Ohio, to the branch where the checking account had been opened so many years earlier. A few days and numerous phone calls later the 45-minute option was in play.

Or at least it was until a somewhat more serious glitch was uncovered. At some point during the back and forth, someone at the bank thought to actually look at the durable power of attorney on file with them.  It must have come as quite a surprise to discover that the document they had relied on for some five years was not properly signed and notarized.  At which point the bank let the lawyer and her husband know that it could not accept instructions from either of them since there was no properly executed durable power of attorney upon which they could rely (never mind the fact that they had been using this very document for the better part of five years to allow the prior trustee to write checks on his sister’s account).

Within a few days of that little bombshell, the nursing home director, the lawyer, the oldest brother, and even the bank were wondering if perhaps, just perhaps, the Alzheimer’s patient might not still be able to sign a new durable power of attorney, thus making the problem fade quietly away. It’s not as if they had many other options, right?

However, before the thought became action the lawyer did what lawyers do… she found a pressure point. The lawyer called a senior vice president at the bank and explained to him that the bank was going to look awfully foolish if it denied the validity of a durable power of attorney that it had been using for five years already. The senior vice president apparently agreed because the deadlock was resolved when he decided that perhaps the durable power of attorney on file was acceptable afterall…never mind the fact that the Alzheimer’s patient hadn’t actually signed it or had it notarized….

Estate planning is for everyone, no matter how small the estate. Everyone needs at least a few basic documents put in place to help themselves and those who love them deal with the adversity that all too often invades their lives.  And those documents need to be reviewed and updated periodically or estate planning failure is all too often the result.

(Editor’s Note: The above story is a personal account from a friend of the family involved. It’s possible that some of the details are not completely accurate, but it is quite likely that the essence of the story holds true.  And the main point is certainly worth acknowledging – confusion can reign when estate planning is incomplete or execution inadequate).

The Circle of Life

She sat there primly, her thin, bony hands folded neatly in her lap. Her short white hair had thinned to wisps, even as it hazily framed her wrinkled, sunken cheeks. Her thin, frail shoulders hunched forward, a shawl draped across them to keep her warm.  She finally seemed to notice me sitting next to her and turned her head slowly until she was looking right at me. Faint surprise registered on her face, then puzzlement. 

“Why Kenneth, how long have you been sitting there?” she asked, her voice still that same cultured Cambridge voice I had known all of my life.

“I’m not Kenneth,” I replied hesitantly, as I suddenly found myself on uncertain ground. I knew Grandma had Alzheimer’s, but her confusion still caught me by surprise. Mistaking me for her son (my Dad)?   “He’s out in the hallway,” I added after a lengthy pause. “But I’m sure he’ll be in any minute.”

Grandma’s faint puzzlement turned to obvious confusion. I felt very sad.

Grandma died in 2006 after a long stay in an assisted living facility. My Grandpa had died a few years before her. Fortunately, there was money to cover the expenses.  Unfortunately, there was more than a little confusion over who was in charge in those last years and, ultimately, which, out of a number of different wills signed over the years, governed the dispersal of her estate. The exact issue seemed to turn on when Grandma’s Alzheimer’s made her incompetent to sign a new will…

I was still running a private fund  in 2006. My days were spent crunching numbers on small companies that were down on their luck, or at least out of favor in the stock market. I was a treasure hunter back then, looking for diamonds-in-the-rough where others saw only lumps of coal.  Creating mathematical blueprints and poring over SEC filings was my job.  I had no time for people in 2006, the year my Grandma died.  (It seems that as I age I learn, but my learning can’t change the past).

Today,  I  realize I had almost no understanding of what my grandparents went through in their last years, what so many seniors go through as they struggle to maintain their quality of life. People age, the shadows lengthen, and life fades for many, sometimes prematurely, all too often slowly and, yes, even cruelly. 

My grandparents story is played out by the tens of thousands every year. The emotional distress can devastate whole families, sometimes tearing them apart. Yet we don’t talk about it as much as we should.  It is an intensely private thing, the slow dying, but the strong desire for privacy leaves us too often unprepared for what should be done to bring dignity to what is fundamentally undignified – the slow loss of control, both mental and physical, that brings a person full circle, often leaving them as helpless and dependant as when they were a newborn.

Inadequate end-of-life-planning is all too frequent. When and how to take away the keys from a 91-year old who runs stop signs and ignores red lights with abandon. When to say no to parents returning to the ancestral home after yet another bad fall and broken hip.  How to take the checkbook away from a loved one who is calling to ask for a loan to pay their utility bill, even though they have substantial assets of their own (but have forgotten that they are not poor).

Who makes the determination that it’s time to give up control due to an extended period of mental disability resulting from Alzheimer’s, Parkinson’s, Vascular Dementia, or an accident? Randall Law, a member of the National Network of Estate Planning Attorneys, recommends their clients name a panel of family members and trusted medical advisors to make the “when” decision.  Their reasoning is straightforward; The people closest to the client are best positioned to see how a client’s condition differs from normal.  Having a panel of loved-ones and medical experts improves the odds of making a timely decision.

“We often get a call when the caregiver has a stroke or heart attack,” Pat told me last summer over coffee.  Pat’s company, Senior1Care,  provides custodial and medical care to clients, primarily in their homes.  His point was that the responsibility of taking care of a mentally and/or physically disabled loved one can weigh heavily, creating so much stress that sometimes the caregiver’s health is compromised.  Planning for disability needs to include not just a mechanism for giving up control, but also a realistic assessment of who is best suited to take on the responsibility. It may well be that control should be allocated to more than one individual, rather than hoping that a spouse can shoulder the whole burden.

Randall Law recommends appointing more than one “helper” to reduce the burden otherwise placed solely on the spouse.  “The control issue can be handled by naming a “second helper”.  (For instance) two or more co-trustees can be named in a living trust and, if there is a disagreement, the spouse-trustee controls,” writes Rick Randall.

Which brings us to what a caregiver can do for the mentally and/or physically disabled. Not all trusts and Power-of-Attorney documents are the same. You may want your helper to be able to spend money on your spouse’s care, your children’s care, or grandchildren’s care.  Yet, unless given those powers, your helper may not be able to do what needs doing to comply with your wishes.

The daughter trying to avoid probate costs for her mom couldn’t sign a Transfer-on-Death form because the Power-of-Attorney didn’t allow her to assign beneficiaries.  The husband trying to move a brokerage account titled in the name of the couple’s living trust couldn’t because the custodian required a Power-of-Attorney inside the trust document (His wife, a co-trustee, was incapacitated and unable to sign for herself).  A niece flying in from Colorado with a new will for her terminally ill aunt to sign – an action that has triggered an 18 month (and counting) court battle over 200 acres of farm land.

But even the more basic “what” is often left in Neverland rather than committed to paper. What happens to the couple who wants to stay in their home as long as possible, even if it is more expensive than moving to an assisted living center? Without instructions for that contingency in a living trust, a helper may feel obliged to move their loved one to minimize costs, observes Randall, even though it may not be what the loved one had wanted before they became incapacitated and could no longer speak for themselves.

I will always remember that look of confusion my Grandma gave me on that day. The woman who enjoyed doing the New Yort Times crossword puzzle on Sundays – and finished them! The Cambridge lady who once (or maybe more than once) gently explained to me when I was younger that one simply did not eat porkchops with ones fingers.  The gentle woman, who used to hold me close and stroke my head when I was much younger, was still my grandma, and, yet, she wasn’t…