Missouri Elder Law Attorney Answers Today’s Question on ElderCareMatters.com

Question:  When does it make financial sense (if ever) for seniors to consider a reverse mortgage? My Mom and Dad have a Reverse Mortgage on their principal residence. Will we need to sell their home when they die?

Answer:  A reverse mortgage is not a financial solution for everyone, in fact, for most people, because there are specific rules that must be followed and very often the funds received are not ultimately worth the cost.

If however, a couple who owns their home outright, are over 62 years of age and at least one of the spouses will be able to live in the home for at least one year from the date of receiving the mortgage, it may make sense.

If a couple has few assets, and needs more income than they currently receive for on-going health or other expenses (for example, to pay for care in the home) or they need funds to pay off existing debt, reverse mortgages can be a solution in that they provide a portion of the equity in the home in the form of a monthly income, a lump sum or line of credit or a combination of all three. Often, the amount of the reverse mortgage is a far less than the actual value of the home.

A reverse mortgage is a loan, so it does not require that monthly payments be made to the lender, as with a traditional mortgage or home equity loan. . Depending on the type of plan chosen, the reverse mortgage becomes due with interest when the borrower moves, sells the home, reaches the end of a pre-selected loan period, or dies. Because reverse mortgages are considered loan advances and not income, the amount received is not taxable. Any interest (including original interest discount) accrued on a reverse mortgage is not deductible until the mortgage is actually pay it, which is usually when the loan is paid off in full.

Not infrequently, individuals who may have a beneficiary or other deed that gives the home to their children or others when they die do not realize that the beneficiary deed or designation is usually ineffective to transfer the home upon the owners’ death, because the home must be sold to re-pay the loan. If the home sells for more than the amount loaned, the additional proceeds may usually be retained by any named beneficiaries; if the home sells for less than the amount loaned, the lending company must accept the sale proceeds and cannot seek repayment for the full loan amount from any heirs, unless they do not sell the home or otherwise pay the full loan amount. Any beneficiaries of a home that has a reverse mortgage may choose to keep the home so long as they re-pay the full amount of the loan from other funds.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

dschuster Missouri Elder Law Attorney Answers Todays Question on ElderCareMatters.com
Debra K. Schuster, M.H.A., J.D.
Debra K. Schuster, P.C.
St. Louis, Missouri
An ElderCare Matters Partner

Alabama Elder Law Attorney Answers Today’s Question on ElderCareMatters.com

Question:   What is a Living Trust?

Answer:  A living trust is simply a trust that is created during your lifetime as opposed to a testamentary trust that is created after your death. And trusts, living or testamentary, can be as different as the various models of automobiles available to your parents today. Whether your elderly parents should set up a living trust depends entirely on what they are trying to accomplish because different kinds of trusts can achieve different results.

Think of the decision like this – your parents can walk, ride a bus, take a train, or perhaps even fly to their destination but they can also drive themselves. If they decide they want to drive themselves then which automobile best suits them? Will they need a van to haul a lot of people? Do they want to travel in luxury such as a Lexus would provide? Do they want reliable and cheap transportation like a Toyota Prius, or will they be carrying tools and supplies to work with them and need a pickup truck?

Just like automobiles, trusts come in many different models. A trust is simply an agreement between a trust creator and a trustee (i.e. trust manager) where the trust creator transfers assets to a trustee to hold and manage under the terms dictated in the trust agreement for the benefit of someone identified by the trust creator. Trusts have gained a lot of popularity in recent decades among the middle class who recognize that trusts can solve many everyday routine challenges even if we don’t have millions or billions of dollars to manage.

Revocable Living Trust

Revocable living trusts, typically, are established by a trust creator who may also serve as the trustee to manage the assets for themselves during their lifetime. They are revocable and changeable by the creator at any time during the creator’s lifetime.

In order to understand the advantage of this type of trust it is necessary to think about the three stages of life that most of us will progress through. First, we are fully capable and competent to mange everything our self and the management of assets in a living trust are not really much different from owning the assets outright and managing them ourselves.

The first important advantage of a revocable living trust arises when we become unable to handle our affairs. Traditionally, management of our assets in this situation either required a conservator or an agent under a power of attorney, neither of which is ideal. A conservatorship requires probate court intervention that means we turn over control to a probate judge who may never have even met us and almost certainly will not have any intimate knowledge of us or our families. Because of the loss of control and costs of conservatorship proceedings, many middle class families appoint an agent under a power of attorney instead. This is also not an optimum solution, however, for a couple of reasons:

  • Financial institutions are reluctant to accept a powers of attorney and many states’ laws do not require them to accept a power of attorney so they many times don’t; and
  • A power of attorney is nothing but a super blank check, it typically says whatever I can do with my stuff my agent may do also. The grant of authority does not contain any limitations, conditions, restrictions, or instructions because these provisions would insure that gun-shy financial institutions would not accept the agent for fear that they could be implicated if the agent violated any restriction or limitation.

A revocable living trust, however, is the owner of the financial account and when the trustee becomes incapacitated a successor trustee simply assumes the management responsibilities for the trust just as a new president of a corporation would when the old president retires. Banks are comfortable with this transition in management responsibilities because trusts have existed for hundreds of years and the body of law surrounding them is extensive so their perceived liability is much less than following the directions of an agent.

When we eventually depart this earth, a revocable living trust becomes irrevocable (i.e. unchangeable) and serves as a will substitute by outlining the same wishes that we would put into a will. But, a trust, unlike a will, does not have to be probated. Many people consider this an advantage and, indeed, in states such as California the probate system is so expensive and time consuming that it should be avoided but in many states probate is not very onerous. Even in these states, however, having a revocable living trust serve as a substitute will is desirable when:

  • Minor heirs exist. In probate each minor must have a separate guardian ad litem (i.e. attorney other than the one who represents the estate) appointed to protect their interests whether they are receiving any inheritance or not. As you can imagine, with multiple attorneys working, costs can mushroom; or
  • You anticipate trouble from disgruntled heirs. A probate court is a convenient forum for a disgruntled heir to cause problems. They do not have to hire an attorney or file suit in order to have their claims heard because the estate is already in court. Additionally, it is much easier to claim that you were unduly influenced or incompetent when you made your will because it may have been executed years ago and placed on a shelf to gather dust. The creator of a living trust who also serves as trustee, however, has many witnesses who can testify to capacity and influence issues because they interacted with the trustee during their lifetime.

Irrevocable Living Trust 

An irrevocable living trust can also be used advantageously but many people forego their advantages because (1) they don’t really understand how trusts operate and (2) irrevocable sounds an awful lot like cast in concrete (i.e. non-changeable) and they are afraid they will be trapped if their wishes or laws change.

Traditionally, irrevocable living trusts have been used to minimize estate taxes and had to, therefore, conform to very strict IRS rules that if not cast in concrete at least created a bog of quicksand that would be hard to slosh through to change course. But here is the good news today, an individual must have more than $5.34 million net worth and a couple $10.68 million net worth before estate taxes are relevant so most of us do not have to concern ourselves with the overly burdensome IRS rules. We can, therefore, have an irrevocable trust that is changeable and flexible.

So if we can have a flexible and amendable irrevocable trust how can we use it for middle class folks? The uses are only limited by our imaginations and some of the more popular uses include:

  • Protecting our assets from nursing homes while retaining the income from and access to the assets;
  • Qualifying for a non-taxable Veterans Administration pension of up to $25,020, indexed for inflation and guaranteed by the full faith and credit of the United State government; and
  • Protecting assets from divorce, lawsuits, and other predators.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

sbailey Alabama Elder Law Attorney Answers Todays Question on ElderCareMatters.com
Stephen J. Bailey, Esq.
Bailey Law Firm
Birmingham, Alabama
An ElderCare Matters Partner

Florida Elder Law Attorney Answers Today’s Elder Care Question: What is intestate law?

Question:  What is intestate law?

Answer:  Every state has an Intestate law but very few people understand it or even know that it exists.

It is usually used when a person dies without a will. But it can also be used when a person dies with a will, but the named beneficiaries have all predeceased the will maker.  In its simplest form, the state states who receives property that is the child or children of the deceased in equal shares.  If there are no children, they look to see who the parents of the deceased are.  Usually these parents are deceased also, but that leads to the deceased brothers and sisters.  If there are no brothers and sisters living, then we are lead to nieces and nephews who would share in the estate on an equal shares.  If there are no nieces and nephews, then we next look to aunts and uncles of the deceased and, of course, they are generally not living either, but that leads us to cousins and so on.  Once the statute has run out of relates under this scenario, the money goes to the individual’s state.  The state then holds on to the funds (property) for a period of time and if no qualified individual comes forth to claim the property, then the money defaults to the state.  The state holds the property in limbo for approximately 10 years before the default.

There can be minor variations of the intestacy statute from one state to another, but they will all follow the general pattern as outlined above.  There may be different treatment for stepchildren known as half-bloods in the law.  It is best practice to know what the intestacy statute in your state so that you can properly draft your own will.

The biggest problem with the intestacy statute is that the deceased’s property may wind up going to someone the deceased would not have left property to if he had his or her choice.  It is therefore, recommended that everyone have a current will where they can name their choices to receive their property.

Next, the intestacy statute would or could influence the court in picking a person to serve as guardians of any minor children of the deceased.  Therefore, it is particularly important for younger families with minor children to leave a current will behind where they express their wishes as to who they would choose an guardians for their minor children.  The court has no guidance from you without your expression of your wishes on this issue.  However, if your chosen guardian is found to be unfit by the court then your wishes may not be carried out depending upon the findings of fitness or lack of fitness of that individual.  It is always good to review your choices every five years or so and, also, should there be an unexpected change in the status of those that you name in your will then you can make those changes as necessary.

Finally, it is always recommended that each individual have his or her own will that will name the proper beneficiaries, name a proper guardian for any minor children, provide for the disinheritance of any children that you choose (if any) and name the persons that you wish to handle your estate upon your death.  This is the only legal way to properly address the issues that will become effective upon your death.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

mtucker Florida Elder Law Attorney Answers Todays Elder Care Question: What is intestate law?
Ivan Michael Tucker, Esq.
Law Office of I. Michael Tucker, PLC
Altamone Springs, Florida
An ElderCare Matters Partner

Connecticut Elder Law Attorney Answers Today’s Question: Can a divorce revoke a Will?

Question:  Can a divorce revoke a Will?

Answer:  If you are facing divorce, or are divorced, you need to take a close look at your estate planning documents to ensure that your wishes are carried out. Wills executed prior to January 1, 1997 are revoked under Connecticut law if the testator of the will is subsequently divorced. C.G.S. § 45a-257e. This severe result under Connecticut law could have drastic consequences to your carefully constructed estate plan. Under these circumstances, your estate would be distributed under intestate law, which may not coincide with your wishes. Another consequence is the additional expense and delay in petitioning the Probate Court to have an administrator appointed. This Court appointed administrator may very well end up being an individual you do not want handling your financial affairs. Although wills executed on and after January 1, 1997 will not be revoked by subsequent divorce, part of your estate could still pass under intestate law if the provisions of your will fail to provide for an alternate beneficiary. C.G.S. 45a-257f. In addition, property that does not pass pursuant to your will may require a change of beneficiary to ensure that your ex-spouse is not an accidental beneficiary to the detriment of your loved ones. A necessary step of the divorce process, although often overlooked, is a systematic review of your estate planning and beneficiary documents. By carefully reviewing your estate planning documents with your attorney, you can ensure the distribution of your assets according to your wishes.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

slebo Connecticut Elder Law Attorney Answers Todays Question: Can a divorce revoke a Will?
Simon J. Lebo, Esq.
Brown, Paindiris & Scott, LLP
Glastonbury, Connecticut
An ElderCare Matters Partner

What are the reasons Wills are contested? Today’s ElderCare Answer Provided by One of Michigan’s TOP Elder Law Attorneys

Question:  What are the reasons Wills are contested?

Answer:  There are four primary reasons that a will can be contested. Knowing the reasons that a will can be contested can be helpful for reducing the chances of a dispute among your heirs, whether you are putting together your own will and or want to know if yours should be reviewed by a probate attorney.

And, of course, these will become very important if you ever find yourself in the unfortunate position of needing to know your legal rights when it comes to a will challenge.

Reason #1: The Testator Did Not Have Testamentary Capacity To Sign a Will

In Michigan, there are four components to testamentary capacity (or what Michigan law calls a “sufficient mental capacity”): (1) understanding that he or she is providing for the disposition of his or her property after death, (2) knowing the nature and extent of his or her property, (3) knowing the natural objects of his or her bounty (i.e., family members), and (4) understanding in a reasonable manner the general nature and effect of the act of signing the will.

While this legal test for testamentary capacity may sound complicated, experienced Michigan probate litigation attorneys can help make sense of it, and whether it can be met in your case. This depends on many different factors. For example, the witnesses to the will signing can be crucial – especially the estate planning attorney who prepared the will. In a will contest, their testimony can be the critical aspect of determining whether the person signing the will was in the right frame of mind and body to do so. Having an experienced estate planning attorney stand behind the will is often a determining factor in will contest cases in Michigan.

Reason #2: The Testator Was Subject To Undue Influence

The essence of this claim is that an individual was coerced, compelled, or otherwise forced into signing a will. Undue influence from any party is usually very difficult to prove, because there rarely is direct evidence of the influence. But it can also be very hard for the party defending the will against an undue influence claim, because of what Michigan law calls, “the presumption of undue influence” that applies in many cases.

Smart estate planning attorneys will take extra precautions in the right cases. For instance, we sometimes recommend making a videotape of the conversation relating to the will drafting and signing, to demonstrate that the person is executing the will of his or her own free choice. Having an independent attorney involved in the drafting process is also critical. In fact, even many attorneys in Michigan don’t properly handle will signings, which can make undue influence cases even murkier.

Reason #3: The Will Didn’t Follow The Formalities Of Michigan Law

This reason does not occur as often as undue influence or mental incapacity, but it still can be important in the right case. Traditionally, Michigan had very specific and clearly codified rules regarding what is needed for a valid will. For the most part, these require that witnesses be present and sign the will too, and that the will be dated and signed, with certain language that attested to the validity of the document. When a will was handwritten in the signer’s own handwriting, the rules could be relaxed, however, and proving a valid will was easier.

With some recent law changes, however, Michigan law now allows greater leniency to the rules regarding will formalities. If the person arguing in favor of the wills validity can show, by clear and convincing evidence, that the document was intended to be a will, it can still be accepted in probate court as a valid will, even without meeting the test of formalities. This sometimes leads to more complicated will contests in probate court, because family members often disagree if a certain writing was intended to be a will or not.

Reason #4: The Will Was Created Or Signed Due To Fraud

If the Testator was tricked into signing a will, family members can dispute the document’s validity down the road. For example, if the Testator believed that he or she was signing another legal document like a power of attorney, then the will could be considered procured by fraud.

While cases in Michigan based on fraud often go hand-in-hand with undue influence claims, there can be important differences. This is especially true when the person signing has problems with eyesight, such as macular degeneration. Testimony of witnesses can be especially vital in a will contest case where there are allegations of fraud.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

drosenberg What are the reasons Wills are contested?  Todays ElderCare Answer Provided by One of Michigans TOP Elder Law Attorneys
Don L. Rosenberg, Attorney and Counselor
The Center for Elder Law
Troy, Michigan
An ElderCare Matters Partner

One of Missouri’s TOP Elder Law Attorneys Answers Question about Trusts

Question:  When would it make financial sense to place our assets in a Trust? Are there different types of Trusts?

Answer:  A trust is an estate planning document that allows assets and other property that has a title or deed to be re-named in the trust so when the person creating the trust dies, the assets and property in the trust are distributed according to the terms of the trust and avoid probate. The most common reason people create trusts is to avoid having their assets go through the probate process for failure to name a beneficiary. If people are married, they can create their own, individual trusts or a joint trust. 

A trust allows the person or persons who created the trust (called the “Grantor”, “Settlor” or “Trustmaker”) to handle their money and assets as they always have done so long as they have capacity, but if they become incapacitated and unable to handle their finances, a trustee that is appointed then assumes the duties as Successor Trustee. The Grantor may include specific instructions for the Successor Trustee regarding support of dependents, support of the spouse (if both spouses are incapacitated) and other financial matters.

When the Grantor(s) has died, the Successor Trustee will likely have specific instructions about distribution of trust assets to named beneficiaries, charitable organizations or other beneficiaries the Grantor designated. The Successor Trustee may have on-going trustee responsibilities if there are minor or disabled beneficiaries whose inheritance under the trust will continue to be managed by the Trustee.

The most common type of trust is the Revocable Living Trust. It can be changed at any time, can easily accept additional assets as the Grantor acquires new assets and property and only becomes irrevocable (unable to be changed) when the Grantor dies. During the Grantor’s life, the Grantor’s Social Security number is the identification number of the trust and no separate tax return is filed for the trust.

Irrevocable Trusts are used primarily to hold either life insurance, to take advantage of favorable tax treatment of life insurance held in such a trust and to enable the Grantor (the owner of the life insurance policy/policies) to be able to designate to whom and how the life insurance is to be distributed upon his or her death or to protect and preserve assets for estate or Medicaid planning. The terms of an irrevocable trust cannot be changed, other than administrative provisions that may need to be changed due to changes in the law or as a court may allow. Since these trusts cannot be changed, a person considering creating this type of trust should consult with an experienced attorney who knows the pros and cons of creating such a trust. Although these trusts do protect assets for Medicaid and VA planning purposes, they do not allow the Grantor to have access to the trust funds and have other restrictions that may make these undesirable.

Special Needs Trusts are another type of trust, but applicable to individuals who are disabled. This type of trust allows a disabled individual to qualify and maintain eligibility for public benefits, such as Medicaid, SSI, food stamps, and keep assets that would usually be counted as disqualifying the individual from these need based programs. The assets in a Special Needs Trust are not available to the disabled person – the funds and other assets are held in the trust and the Trustee has the discretion whether to use the assets for good and services that the disabled individual’s benefit programs do not pay for. The intent of this type of trust is to supplement, not replace, public benefits available to the disabled individual. In this way, a disabled individual can receive an inheritance, maintenance through a divorce, a lump-sum Social Security disability payment or settlement/award from a lawsuit and not have these funds spent-down to regain eligibility or to become eligible for public benefits.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

dschuster One of Missouris TOP Elder Law Attorneys Answers Question about Trusts
Debra K. Schuster, M.H.A., J.D.
Debra K. Schuster, P.C.
St. Louis, Missouri
An ElderCare Matters Partner

Is my husband automatically my Power of Attorney (POA) or must I appoint him to this role?

Question:  Is my husband automatically my Power of Attorney (POA) or must I appoint him to this role?

Answer:   No one, including your husband is automatically your agent under a Power of Attorney. The person who you wish to be your agent must be appointed in an instrument with the specific wording required in your particular State and must be executed with the formality of other estate planning documents such as a Last Will and Testament, i.e. witnessed by two (or three) disinterested witnesses, sworn to under oath, and notarized.

A Power of Attorney is a very powerful legal instrument and should not be taken lightly. The person you name as your “agent” usually has all of the same powers as you have. This means that the agent could go to your bank with your signed document and take all of the money out of your accounts, and more.   Regardless of the dangers of having one, this is probably one of the few legal instruments every adult should have. Without it a court may have to decide who will help you if you become incapacitated.

There are basically two types of powers of attorney. The first type is usually used for a specify purpose and is limited in time. For example, if you owned a piece of real estate in another State and wish to sell it, but don’t want to travel to that state for the closing. You could name another individual who could sign all of the closing documents on the day of the closing. Then the Power of Attorney would be limited to that particular day and only for the purpose of the closing of your real estate.

The second type, which most people prefer, especially between husbands and wives, is called a Durable Power of Attorney. These documents are usually broad in the scope of duties that the agent could perform and will be good until you revoke it or die. This document will also last through your incapacity, which is when your will need it most. Most States require specific language in the document saying that it is a Durable Power of Attorney.

There is also third type, calling a Springing Power of Attorney. This instrument does not become “active” until such time as you become incapacitated and need someone to act on your behalf. This document usually specifies when it will “spring” into being. Depending upon the terms specified, but usually there is a requirement for one or two physicians to attest to the fact that you are incapacitated and cannot do certain tasks i.e. pay your bills. We do not do many of these because it may be difficult to locate the physicians necessary in a timely manner and if a person is that incapacitated; they may not even remember that they have the document, or where it is kept.

Although, the Power of Attorney will be valid until you revoke it or die, be aware that many banks, brokers, etc. may not honor these documents if they (the bank, broker, etc.) determine that the document is “stale”, meaning that it is too old. We find that this practice is more common with the larger national banks than the local ones. Some States have statutes which prevent banks, etc. from asserting this claim of staleness.

When discussing these documents with your attorney, consider the “best” person for the job. Some people pick their agent not by considering who would be the best, but by who is the oldest child, who lives the closest, or some other “plan” so they don’t offend anyone. Pick the best person you think will do the job for you. You should also pick a back-up individual in case your first choice dies before you or becomes unable or unwilling to serve. Your document could say you want your husband, Peter, but if he can’t serve, then you want your daughter, Pamela. Some individuals want to have two agents serving together, Bert and Ernie, jointly. They are trying to set up a situation where there are checks and balances (one will watch the other) and feel safer with this arrangement. This can become cumbersome when something needs to be done quickly and one of the two can’t be located.

Some final thoughts-The document should be specific as to what the agent is allowed to do. The document should be drafted by an attorney who will ask the right questions of the client before preparing the Power of Attorney and you should ask the attorney exactly what the language means before you sign it. The document should be safeguarded as there is usually only one original and keep in mind that some government agencies i.e. Social Security, and other institutions will not honor it regardless of its age, formalities, etc.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

gguertin Is my husband automatically my Power of Attorney (POA) or must I appoint him to this role?
George P. Guertin, Esq.
Guertin and Guertin, LLC
North Haven, Connecticut
An ElderCare Matters Partner

My mother has dementia but is still lucid. Is it too late for her to designate me as her Power of Attorney?

Question:  My mother has dementia but is still lucid. Is it too late for her to designate me as her Power of Attorney?

Answer:  Not necessarily.  The issue of whether an individual has the capacity to execute a document, whether it is a contract, a Last Will or Durable Powers of Attorney is a legal issue not a medical issue.  Proper execution of a legal instrument requires that the person signing have sufficient mental “capacity” to understand the implications of the document. While most people speak of legal “capacity” or “competence” as a rigid black line–either the person has it or doesn’t–in fact it can be quite variable depending on the person’s abilities and the function for which capacity is required.

In addition it is also important to understand that there are different standards for capacity for different matters.  A greater understanding is required for some legal activities than for others; for instance, the capacity required for entering into a contract is higher than that required to execute a will.  Each State has slight variances in the exact requirements, but in every State the law lays out certain factors to examine to determine if an individual has the capacity to do certain things. 

The law presumes individuals to be competent. In my State, a person has sufficient mental capacity to make a will if, at the time he executes the document he has:(1) The ability to know the nature and extent of his property;(2) The ability to know the natural objects of his bounty; and (3) The ability to make a disposition of his property in accordance with some plan formed in his mind.

The standards for entering into a contract are different because the individual must know not only the nature of her property and the person with whom she is dealing, but also the broader context of the market in which she is agreeing to buy or sell services or property. Contractual capacity requires the ability to comprehend the nature and quality of the transaction, together with an understanding of what is “going on,” but an ability to comprehend the nature and quality of the transaction, together with an understanding of its significance and consequences.

In your case the issue is whether your mother has the capacity to execute a Durable Power of Attorney. While some States set forth specific standards in regard to capacity to execute Durable Power of Attorney, unfortunately other States such as mine have no defined standards.  Most States which do have defined standards tend to use the contractual definition of capacity.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

jsiebert My mother has dementia but is still lucid. Is it too late for her to designate me as her Power of Attorney?
James C. Siebert, Esq.
Law Office of James C. Siebert & Associates
Arlington Heights, Illinois
An ElderCare Matters Partner

What are the requirements to be eligible for Medicaid?

Question:  What are the requirements to be eligible for Medicaid?

Answer:  There are basically three requirements to be eligible for Medicaid.  First, skilled nursing care must be recommended for that person and the state agency must approve that recommendation of the need for skilled nursing home care.

Second, there is an asset limit which will vary from state to state as each state.  This asset limit is usually $2,000 for the Medicaid applicant and $117,240 for the spouse (non-Medicaid applicant).  If both spouses are in the nursing home the figure is $3,000 for both of them combined.  However, do to some differences between states, it is always best to check with an Elder Law Attorney for any variations from the norm.  In proper planning for these individuals or couples, it may become necessary to change the character of an asset (for instance a CD) into an income stream (place funds into an annuity) or convert the asset into an exempt asset such as a roof repair on the family home.

Third, there is an income limit that must be met as well as the asset limit. For instance in Florida the limit is $2,163 a month and this includes all income (Social Security, pension, rental income, interest income, etc.).  Florida is an income cap state, which means that if you receive more than $2,163 a month then the Medicaid applicant must establish a Qualified Income Trust to hold most, if not all, of his/her income.  Whether or not the need for a Qualified Income Trust is necessary, all of the Medicaid patient’s monthly income goes to the nursing facility with $35 a month set aside for the patient’s haircuts, nails, etc.

In all instances, whenever a question exists regarding Medicaid eligibility, one would be wise to consult with an elder law attorney as the rules can be tricky and may a family has tripped over a Medicaid rule although well meaning in their intentions.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

mtucker What are the requirements to be eligible for Medicaid?
Ivan Michael Tucker, Esq.
Law Office of I. Michael Tucker, PLC
Altamonte Springs, Florida
An ElderCare Matters Partner

What is a Special Needs Trust?

Question:  What is a Special Needs Trust?

Answer:  While the majority of the clients we see love their children equally and wish to treat them equally when they die, there are circumstances where this is not a good idea. One of those circumstances is where a child has “issues”. Issues, in this context, usually mean that he or she has a developmental disability that may last for their lifetime and now or later they may need government assistance. Issues could also mean that he or she has an alcohol or drug dependency and also may need government assistance, or worse yet, may use their inheritance to further their addiction with a terrible ending.

Although it may seem like a good idea, I strongly discourage people from establishing custodial accounts or leaving cash or other assets outright to heirs with disabilities, if they are or will receive benefits from the State. The distribution of assets outright may disqualify the beneficiary from government assistance, which is means-based.

When the assets of an individual with special needs exceed the governmental financial resource limits, the individual may be disqualified from both Supplemental Security Income (SSI) and Medicaid.

A more appropriate way to pass an inheritance to a special needs beneficiary is to utilize a Supplemental Needs Trust, also known as a Special Needs Trust. Supplemental Needs Trusts can be either self-settled Trusts, or third-party Trusts. A self-settled Trust is a Trust set up with the disabled persons own assets. The disabled individual is the Grantor and the beneficiary. A third-party Trust is created by one person (the Grantor) for the benefit of another, so long as the Grantor is not legally responsible for providing support for the disabled individual.

A Supplemental Needs Trust containing certain provisions may be established to administer and distribute Trust assets to a beneficiary with special needs without otherwise disqualifying them from governmental benefits. If drafted properly, the assets in the Trust are not counted for the purpose of determining eligibility for governmental benefits. A properly drafted self-settled Supplemental Needs Trust will require the Trust to pay back the government after the death of the special needs individual for governmental benefits provided to the individual.  If the assets are depleted then they do not need to be reimbursed.   Supplemental Needs Trusts should be drafted with care. The instrument should not direct the Trustee to make disbursements for a disabled person’s heath, maintenance or support as this will cause the Trust assets to be includable in determining eligibility for governmental benefits. One way to accomplish this goal is to give the Trustee absolute discretion on disbursements. When distributions are up to the Trustee’s sole and absolute discretion, the assets in the Trust are not counted when calculating eligibility for governmental benefits.

Supplemental Needs Trusts can be a valuable tool in planning for disabled individuals. The process requires consideration of many issues and should be approached with care by a qualified legal professional.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

gguertin What is a Special Needs Trust?
George P. Guertin, Esq.
Guertin and Guertin, LLC
North Haven, Connecticut
An ElderCare Matters Partner