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June 2021 Newsletter

Posted on June, 2021

Dear Clients and Friends,

In the office this month.

Trustee Help

Alice, a longtime client, came in to see me this month. She recently lost her husband and was now faced with managing the family finances on her own. She had a Durable Power of Attorney for Financial Matters naming her son, Bob, as her agent. That power of attorney permits Bob to deal with her assets in her name but not those assets that are in the Trust.

Alice is Trustee of the family trust. A Trustee is a Fiduciary and, as such, cannot delegate her duties and authority. Bob cannot use the power of attorney to act as the Trustee.

Alice’s trust has some pretty standard provisions that allow Bob to act as Trustee if Alice becomes incapacitated (as determined by 2 doctors) or dies.

There is another option. Alice can name Bob as a current Co-Trustee in an amendment to the Trust. He serves as a Co-Trustee with Alice. Co-Trustees can either act alone or must be in agreement with the other Trustee depending on how the Trust is written.

Alice does not lose her own authority to act as Trustee. She has simply named Bob to act as her equal. It is the same way she managed the Trust with her husband. This way, she gets the help she needs without having to have 2 doctors say she is incompetent.

When your Children Need Fianacial Help. Gift or Loan?

Diane, a widow, passed away in April. Elton, her oldest son, is the Personal Representative of her estate. Diane left $400,000 to be divided between her 4 children. However, Elton finds that Diane wrote a check two years ago to Frank, her youngest son, for $25,000. Was it a loan? If so, it should be taken into account in the final distribution. It should be treated as an advance on Frank’s inheritance. Was it a gift? If so, it is ignored when the $400,000 is divided up and distributed.

Gift or Loan? This question has broken up many families. The sibling calling it a gift is often ostracized by the other siblings for claiming it was a gift but without any proof.

The best practice is for the parent to sign a letter stating whether it is a gift or a loan. If a loan, have the child sign a promissory note with the terms of repayment on the loan.

Seminars For The Summer

Our seminars remain in a state of flux due to the variance in the rules of the senior centers regarding social distancing. Please check our website for the latest information:

Transfer on Death Designation for a Vehicle

Many of you rely upon beneficiary designations to avoid your assets going through probate after death. One gap is that procedure was that the Secretary of State did not have a process to name a beneficiary on a vehicle title. You can name a joint owner but that opens both parties to law suits from accidents.

Now there is a process to name a beneficiary to your vehicle. I have a form to do that and it is part of this newsletter. The Secretary of State does not collect or record the Transfer on Death certificates. You should complete the form, sign it, and attach it to your current Certificate of Title. Then, in the event of your death, the title and the transfer on death certificate are together and can be delivered to the Secretary of State offices with the death certificate.

In the past, most families relied on the statute that allowed the “next of kin” to retitle a vehicle into their name after death of the owner. This works with no problem when the next of kin is a spouse. When the next of kin is 2 or more children, they must all be on the new title or sign a document that they do not want their name on the title. This process fails when you want your vehicle to go to someone who is not a next of kin. These situations often arise when the decedent wants to leave a vehicle to a grandchild, a friend, a trustee, a niece or nephew. In other words, anyone not necessarily your next of kin.

In summary, this is a way to avoid probate when you want your vehicle to go to anyone other than your next of kin.

When Do I Apply for Medicaid

I received a call from the children of William. William is in his late 80’s, has been in the hospital and rehab for many weeks. He is to be discharged but must go to a nursing home to get the daily care he will need.

William has a home, a car and about $70,000 in cash and investments. The nursing home will cost $9,000 a month and his pension and social security is $2,000 a month. His savings will be reduced at a rate of $7,000 per month. In 10 months, the balance of his savings will be less than $2,000. A house and a car are exempt or “non-countable” assets. They do not have to be liquidated and “spent down”. Once his cash and investment are below $2,000, he will be eligible to have Medicaid pay the $7,000.

The question is when to apply for Medicaid? Should they wait until there is only $2,000 in the bank or is there something else that should be done sooner?

There are a number of strategies that can be implemented to protect the savings firm being spent on the nursing home. For example, use some of the $70,000 to do any of the following:

  • Make repairs to home

  • Purchase a newer car to replace the old car

  • Prepay his funeral

  • Purchase burial plots for William and his family

These are legitimate expenditures that will get you to $2,000 quicker and therefore to Medicaid eligibility quicker. The home and car will be worth more when sold after death.

There are other, more complicated strategies in addition to those listed. Contact me as soon as you learn that a loved one will need to go to a nursing home or memory care.

A Word about Newsletters

I enjoy writing this monthly newsletter/email/blog. It can be a little nerve racking because communication can be difficult at times. Here are sample efforts that failed taken from Church bulletins:

  • Irving Benson and Jessie Carter were married on October 24 in the church. So ends a friendship that began in their school days.

  • Pot-luck supper Sunday at 5:00pm – prayer and medication to follow.

  • Low Self Esteem Support Group will meet Thursday at 7pm. Please use the back door.

Feel free to share this newsletter.

Very truly yours,