Elder Care / Senior Care Question on ElderCareMatters.com: If my parents die without a Will how will their assets be divided between the children?

Question:  If my parents die without a Will how will their assets be divided between the children?

Answer:  This is a state specific issue and not all of the states treat this the same.  I will speak only to Connecticut law on this subject, which is called intestate succession.  It is highly unusual for both spouses/parents to die at the same time.  Even if it is only minutes apart it is always important to determine the order in which they die.  That being said, lets assume that Mom passed first, even if it was only five minutes before Dad.  The state statutes first consider if there are any surviving issue (meaning children, grandchildren, etc.) of the decedent.  In the question asked we know that there were children.

Next, the statutes look to see if all of the surviving issue are all issue of the surviving spouse (Dad), and if this is the case, then the surviving spouse (Dad) would get the first one hundred thousand dollars, and one-half of the balance of the estate.  As an example, we will assume that in Mom’s estate she had $300.000 solely in her own name.  Dad would get the first $100,000, plus one-half of the remainder (another $100,000) for a total of $200,000 and the surviving issue would get $100,000 to be divided equally between them.

If the surviving issue of Mom were not also surviving issue of Dad, Dad would get one-half of the total estate and Mom’s children would get the remaining one-half to be divided equally between them.  In the above example of a $300,000 estate, Dad would get $150,000 and the surviving issue would get the other $150,000 again to be split equally between them.

This rule applies only to assets owned solely by the decedent.  If Mom and Dad owned any jointly held property, such as a bank account, brokerage account, real estate, etc. upon her death it would pass “by operation of law” to the other named owner.  If Mom owned any assets with named beneficiaries, such as life insurance, annuities, bank accounts, etc. those assets would also pass to the named beneficiary.

As an example, if all the assets Mom owned, i.e. $100,000 worth of bank accounts jointly held with Dad, and real estate worth $200,000 held jointly with rights of survivorship with Dad, when she passed it would all go to Dad and nothing to the children, grandchildren, etc. regardless of who were the natural parents.

Another thing to keep in mind when looking at these situations, is that children who were born out of wedlock and the issue of such children along with legally adopted children are assumed to be natural children for the purpose of this succession of estate assets.

If you need help with this or other legal elder care matters, you can find Elder Law Attorneys near you on ElderCareMatters.comAmerica’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.

An ElderCare Matters Partner
George P. Guertin, Esq.
Guertin and Guertin, LLC
North Haven, Connecticut
An ElderCare Matters Partner


Today’s Q&A on ElderCareMatters.com is about the appropriate use of Reverse Mortgages

Question:  When would it make financial sense for my elderly parents to consider a reverse mortgage?

Answer:  Reverse mortgages can be valuable tools for someone who is house rich but cash poor.  Generally, though, given the costs involved and the new restrictions on use, they are best used when other financial resources are extremely limited and the older adult needs to access the equity in order to stay at home.  Reverse mortgages are not to be used to enhance a lifestyle.

If you need help with this or other elder care matters, you can find Elder  Care Professionals near you on ElderCareMatters.comAmerica’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.

An ElderCare Matters Partner
Robert M. Slutsky, Esq.
Robert Slutsky Associates
Plymouth Meeting, Pennsylvania
An ElderCare Matters Partner


Today’s Q&A on ElderCareMatters.com is about providing Elder Care Services for your parents

Question:  May I charge for the elder care services that I provide to my parents, and will these services be tax deductible for my parents?

Answer:   In general, the answer is yes and maybe.  If you are providing elder care services that word normally be paid for, you can charge a fee as well.  However, whether you want to do that depends upon a number of factors, some financial, some personal.  If one or both of your parents ultimately needs to apply for Medicaid, any payments made to family members will be scrutinized.  The fees would have to be reasonable for the services provided (as compared to normal providers of that services who have similar qualifications), may require a comprehensive written contract setting out the terms of engagement and be documented and reasonable services given the circumstances (i.e. you cannot charge for 24 hour personal caregiving if your parents are playing tennis 3 times per week).  Some states will require that you report your income from these paid services on a schedule C on your tax return. 

There are also personal issues you need to work around.  Are there other family members providing the care?  Are they going to be compensated as well?  Will they resent you being paid.  How will this work within your parents’ testamentary plans? Will your payments deplete their estate causing friction among the other family members who expected to receive money but will not because your services cost your parents a substantial amount of money.  How will your parents feel about that? 

Tax deductibility is going to depend on if you can convince the IRS that the need for your services was a medical necessity that would qualify them as an unreimbursed medical expense.  If your parents are in a nursing home, these deductions are more easily documented.  For personal services provided by a family member you would need documentation from a physician that the services you are providing medically necessary in the event of an audit.

If you need help with this or other legal elder care matters, you can find Elder  Law Attorneys near you on ElderCareMatters.comAmerica’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.

An ElderCare Matters Partner
Robert M. Slutsky, Esq.
Robert Slutsky Associates
Plymouth Meeting, Pennsylvania
An ElderCare Matters Partner


Estate Planning Attorney defines difference between a Will and a Living Will

Question:  What Is the Difference Between a Will and a Living Will?

Answer:  A will deals with assets, whereas a living will deals with medical care. Many States have done away with the so-called living will and replaced it with the advance health-care directive (“AHCD”). An AHCD can accomplish a variety of objectives, from saying who will make health care decisions for you if you cannot communicate with your doctors, to saying under what circumstances conventional health care will be withheld from you so that nature will be allowed to take its course.

If you need help with this or other legal elder care matters, you can find Elder Law Attorneys near you on ElderCareMatters.comAmerica’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.

smakuakane
Scott A. Makuakane, Esq., CFP

Est8Planning Counsel LLLC
Honolulu, Hawaii
An ElderCare Matters Partner


On today’s ElderCareMatters.com a New York Elder Law Attorney answers family’s question about Power of Attorney

Question:  Would  you please provide our family with some information about a Power of  Attorney?

Answer:   Below are 10 Q&As about a Power of Attorney that will help you further understand this legal document:

1. What is a Power of Attorney?

A Power of Attorney is a legal document in which you can appoint an agent to make financial transactions on your behalf if you are not present to make these transactions.

2. What is the difference between a Power of Attorney and an Executor?

A Power of Attorney is in effect only during your lifetime. An Executor takes over the management of your estate upon your death. You name the Executor in your Will.

3. What is a durable Power of Attorney?

A durable Power of Attorney states that the Power will be in force even if you become disabled.

4. How do I appoint an agent?

The Power of Attorney form is a form that must be signed before a Notary Public.

5. What powers can I give to my agent in the Power of Attorney?

The form lists the areas of authority that you delegate. These include real estate transactions, banking transactions and insurance transactions, to name a few. However, the Power of Attorney does not in itself authorize the agent to make unlimited gifts.

6. How can I authorize my agent to make gifts?

A Power of Attorney can be personalized to indicate the authority to make gifts and the limits, if any, on this authority.

7. My bank has its own Power of Attorney Form. Do I need it?

A general Power of Attorney must be honored by banks. However, they sometimes are reluctant to honor them, so if you can sign the bank form, it is often easier for the agent to make transactions later on.

8. Whom should I appoint as my agent?

You should appoint only someone whom you trust explicitly. You may also appoint two people acting together as an additional safeguard.

9. If any accounts and house are all jointly held, do I need a Power of Attorney?

The joint accounts should be able to be accessed without the Power, but for real estate, a Power of Attorney will be needed.

10. Can I appoint my agent so that he or she has authority only if I become incapacitated?

The Power of Attorney is not valid for an agent appointed until he or she has signed the Power of Attorney before a Notary Public. You may execute the Power of Attorney but not have your agent sign until you are incapacitated.

If you need help with your Elder Care Matters, you can find Elder Law Attorneys near you on ElderCareMatters.com and on ElderLawAttorneys.us – two online Elder Care resources that are sponsored by the national ElderCare Matters Alliance.

An ElderCare Matters Partner
Joan Lensky Robert, Esq.

Kassoff, Robert & Lerner, LLP
Rockville Centre, NY  11570
An ElderCare Matters Partner


Elder Law Attorney answers today’s question about gifting assets to avoid Medicaid Spend Down

Question:  I am a 65 year old widow who wants to give all my assets to my son to avoid Medicaid Spend Down.  Can I / should I do this?

Answer:  Taking any action, especially something as dramatic as giving all your money away, as part of a long term Medicaid plan should only be done after a comprehensive evaluation by an Elder Law Attorney who can advise you of the many choices which you have and the impact they will have on your life going forward. Your question lacks enough specific details to advise you what is the best planning strategy for you, but I can tell you it would not be to give all of your assets to your son at age 65.  There are many reasons why your idea is a poor one and not well thought out, including:

  1. If you make a gift of all your assets to your son, they become his so if he is ever sued or has creditors they can take the assets.
  2. What if your son spends the money, how will you support yourself?
  3. If your son does not segregate these assets from his other assets, in some states they would become marital property and therefore your son’s spouse could take a large portion of them if your son got divorced.
  4. What happens if your son were to die before you? Would his heirs, whether they are his wife or children use this money for you or for themselves.
  5. If among the assets you gift to your son is your home, do you realize that it will no longer qualify for any local senior citizen tax breaks, and that when it is sold, your son will have to pay capital gain tax on the proceeds since it is not his principal residence and therefore he does not qualify for the capital gains exemption on your personal residence.
  6. If there are assets that have large capital appreciation, on your death your son will have your low basis and have to pay capital gains taxes on the sale, where if the transfer had been structured properly he would receive the same assets on your death but they would have done a “step up in basis” on your death and therefore your son would not have to pay capital gains tax if sold right after your death.

There are many other reasons why your suggested plan is a poor one. However, given that you are thinking about how to preserve your money for yourself and your family at a relatively young age, if you work with a knowledgeable Elder Law Attorney it is possible to implement a plan that will preserve your money for your children, allow you to use your assets for the rest of your life, receive income from the assets for the rest of your life, still qualify for all personal residence capital gain exemption, many senior citizen tax credits, get a step up basis for capital gains purpose upon your death and still allow you to qualify for Medicaid to pay for your nursing home expenses.  These plans are complex, and a good Elder Law Attorney will do a detailed analysis of the impact of each factor based upon your assets, income and reasonable projected time until you will need long term care.  It is very important that when taking any steps to preserve assets from nursing home costs, that you speak with an Elder Law Attorney prior to taking the steps.  Frequently, such actions can have a negative impact upon you and your family. An Elder Law Attorney can usually assist you in achieving your goals while avoiding these negative impacts.  So, I strongly urge you not to gift your assets to your son, but retain an Elder Law Attorney to help you prepare and implement a plan that avoids the negative impact yet still allows you to achieve your goal of asset preservation. Good Luck.

If you need help with your Elder Care Matters, you can find Elder Law Attorneys near you on ElderCareMatters.com and on ElderLawAttorneys.us – two online Elder Care resources that are sponsored by the national ElderCare Matters Alliance.

James C. Siebert, Esq., An ElderCare Matters Partner
James C. Siebert, Esq.
Arlington Heights, Illinois
An ElderCare Matters Partner


Today’s Q&A on ElderCareMatters.com: Challenging Parents Estate Plan

Question:  What is the most common reason for children challenging their parents Estate Plan?

Answer:  In my experience, the disinheritance of a child is the number one reason for a challenge to an estate plan. The child is typically hurt because he or she feels “left out,” angry because his or her siblings were treated better and embarrassed because the whole family knows that he or she was disinherited. This is another reason to avoid probate, how would you like the world to know that your parents disinherited you. These strong emotions, coupled with a perfectly natural desire for an increase in financial well-being inevitably cause problems and sometimes generate a lawsuit against the trustee and the other children in the family.

If you need help with your Elder Care Matters, you can find Elder Law Attorneys near you on ElderCareMatters.com and on ElderLawAttorneys.us – two online Elder Care resources that are sponsored by the national ElderCare Matters Alliance.

hweatherby
Henry C. Weatherby, Esq., CLU, ChFC, CEBS
Bloomfield, Connecticut
An ElderCare Matters Partner


Dying without a Will – What Happens to the Assets?

Question:  If my parents die without a Will, how will their assets be divided between the children?

Answer:  Each state has a statute called an Intestacy Statute or a Statute of Descent and Distribution that is referred to when an individual dies without a will.  The statute in Louisiana may go by a different name as the state is governed by French law while the rest of the country is governed by English common law.  In the scenario that you ask about, each of the children would be treated equally.  In some instances (called per capita), all of the surviving children would share equally in the estate.  In other circumstances (called per stirpes), all of the surviving children and any children of a deceased parent (i.e, grandchild or grandchildren) would share in the estate.  Let’s say that the parent left 3 surviving children, then in a per capita state each child would receive 1/3 of their parent’s estate.  If only 2 children survive, then each would receive 1/2 of their parent’s estate.  Now, let’s look at a per stirpes situation.  Parent has 3 children, but one has predeceased leaving children of their own.  The distribution would be 1/3 to each surviving child with the surviving grandchild or grandchildren of the predeceased child would receive the remaining 1/3.  If there is one grandchild, then he or she would receive all of their parent’s share of the estate.  If there are two or more grandchildren of the predeceased child, then they would divide the 1/3 share equally among themselves.

You can find Elder Law Attorneys near you who can help you with this or other Elder Care Matters on ElderCareMatters.comAmerica’s National Directory of Elder Care / Senior Care Resources for Families – or on ElderLawAttorneys.us – an online resource of America’s Elder Law Attorneys, which is sponsored by the national ElderCare Matters Alliance and ElderCareMatters.com.

An ElderCare Matters Partner
Ivan Michael Tucker, Esq.
Altamonte Springs, Florida
An ElderCare Matters  Partner

 


Today’s Q&A on ElderCareMatters.com is about Medicaid Benefits

Question:  How would we go about applying for Medicaid benefits?

Answer:   The first thing that is important to know is if your loved one’s doctor is recommending long term skilled care.  Once that has happened, if you haven’t checked whether or not the facility accepts Medicaid.  Some do and some don’t.  If yours doesn’t then you will have to make arrangements to find a Medicaid facility that has a room available.  At that point, it would be best to consult with a qualified Medicaid attorney to see if you have the proper legal documents in place (do not rely on older documents that you may have) as requirements from state to state can vary.  You will, also, want the attorney to assist in transferring any assets that may cause a problem.  Usually a Medicaid attorney will know the proper financial advisors to use for this purpose.

Once all of the legal and financial planning is in place, then either the attorney or a representative of the nursing facility will be able to assist you in applying for Medicaid.

You can find Elder Law Attorneys near you who can help you with this or other Elder Care Matters on ElderCareMatters.comAmerica’s National Directory of Elder Care / Senior Care Resources for Families – or on ElderLawAttorneys.us – an online resource of America’s Elder Law Attorneys, which is sponsored by the national ElderCare Matters Alliance and ElderCareMatters.com.

An ElderCare Matters Partner
Ivan Michael Tucker, Esq.
Altamonte Springs, Florida
An ElderCare Matters Partner


Today’s Q&A on ElderCareMatters.com is about Veterans Benefits

Question:  What are the requirements for my elderly mother to receive Veterans Benefits, specifically VA Aid & Attendance benefits from the Veterans Administration?

Answer:   I personally know how difficult and stressful these decisions are.  Taking care of an elderly parent is time consuming, and has its emotional and financial costs, yet it can be very rewarding.  I understand the goal is to ensure your parent(s) receive the greatest quality of care in the least restrictive setting at the least cost to themselves and their family.  It is always wise to plan for the worst and hope for the best.

The laws pertaining to elder law, Medicaid planning, care contracts and Veterans benefits are complex, confusing and ever changing.  You need an elder law attorney to help navigate through these waters.  In regard to Veterans benefits planning you must seek counsel from an attorney who has been accredited by the United States Department of Veterans to prepare, assist, counsel and process claims.

You have asked a specific question in regard to Aid and Attendant Care/Improved Pension Benefit.  This benefit is a non-service connected benefit to war time veterans and the surviving spouse of war time veterans.  For purposes of your question we will assume that your mother is a widow of a war time veteran. In order for one to be a war time veteran one has to have served 90 days in the service  with one of those days during a declared war time period.

In addition to discussing Veteran benefits herein, you need to ensure your mother’s affairs in order.  Therefore, I have also discussed the critical need for your mother, provided she is  competent to establish proper health and financial durable power of attorneys.  As an elder law attorney, I specialize in estate planning but kick it up a notch.  I have a different philosophy than most true estate planners.  This does not mean they are wrong but we approach things very differently.   Specifically I address the issues of:

Who will make my medical decisions when  I am no longer able to make them?

If I unable to care for myself, how can I  achieve the greatest quality of care without bankrupting me or my family?

Who will make my end of life decisions?

What happens if I get sick and can’t stay in my home anymore?

How am I going to pay for it?

I also prefer having medical day to day decisions, specifically the durable power of attorney for health care becoming effective the moment you sign them rather than becoming effective when a person is no longer able to participate in their decisions.  It is just more workable.   Last, the financial power of attorney needs to authorize gifting and authority to apply for Governmental benefits.  However, Veterans does not recognize power of attorneys but use a different procedure.

We need to determine who owns what asset and if the financial power of attorney provides the authority to someone to gift (transfer) assets so that we can protect them and qualify your mother for Veteran’s benefits.  Further, if you mother is not competent and has power of attorneys we need to take immediate steps to implement your mother’s durable powers of attorneys for health care and financial decisions.

As for Veterans benefits they are and can be an excellent option to help pay for assisted living, home care and subsidize medical expenses.  A husband and could be eligible for a benefit of $2,054 a month or $24,000 a year tax free income.  Usually the benefit is paid to the Veteran and if the Veteran is deceased to the surviving spouse.   If the Veteran does not need care and is paying for the care of his “ill” spouse then the Veteran may be eligible for base pension which can be up to $1,360 a month tax free.  If both veterans need care then the maximum is $2.054 a month.  Assuming your father is deceased, then your mother as a widow of a war time veteran would be entitled to $1,132 a month.  Remember as long as the Veteran is alive the benefit flows through the actual veteran.

However, there are four prongs that must be satisfied to qualify for the AA Benefit. Each prong is explained in detail below..

First, There is a Service Prong:

First, in order to be eligible for the AA Benefit the Veteran must meet the service requirement. That is, the Veteran must have served in the active military, navy or air service: (1) for 90 consecutive days or more during a period of war, (2) during a period of war was discharged under conditions other than dishonorable or released from such service for a service-connected disability, (3) for a period of 90 consecutive days or more and such a period began or ended during a period of war; or (4) for an aggregate of 90 days or more in two separate periods of service during more than one period of war.

Second, There is a disability prong.  Additionally, the applicant must be “permanently and totally disabled”; however, the VA presumes “disability” for individuals over the age of 65. To qualify for additional funds, the VA requires one to need “care or assistance” on a “regular basis” from another person which protects him or her from “dangers of a daily living environment”. It is generally presumed that an applicant  who is residing in an assisted living facility satisfies this requirement. The VA has issued clear guidelines that a veteran or a widow of a veteran must need assistance with at least two activities of daily living, such as eating, bathing, dressing, transferring and toileting or being cognitively impaired.  The VA has made it clear that assistance with ones IADL’s is not enough, such as medication reminders, laundry and meal assistance/preparation.

Further, one needs to obtain the proper physician verification to satisfy the disability requirement. If possible, the physician should indicate that one is able to “oversee” his or her financial decisions, but not able to “manage” his or hers financial decisions. In the event the physician states that one is not competent to make his or her financial decisions, then the Veterans Administration will find a level of incompetence which will delay (but not preclude) the application process.

Third, is the asset prong. The VA pension benefit is a needs based benefit and a surviving spouse shouldn’t have more than $40,000.00 plus a home and a car. Some persons assisting Veterans will say $80,000.  There is no hard and fast rule and therefore we recommend an asset limit of $40,000.  Currently there is no penalty (at this time) for transfers. Accordingly, we can transfer everything over $40,000 into a special trust to protect the assets should your parents need them.  **NOTE: this is where you have to be very careful because transfers of assets may affect any Medicaid eligibility in the future.  Sometimes a proper VA plan for benefits have terrible consequences for Medicaid planning.  It is very important to understand if a one’s health deteriorates and need a nursing home then any gift to qualify for Medicaid within 5 years will be very problematic.

Fourth, is the income prong. The basic rule is one’s unreimbursed medical expenses have to exceed or equal their income to qualify for the full benefit amount.   If the expenses do not exceed income then if there is a short fall the Veteran can receive a partial benefit.

This may seem simple on the surface, but can be very complicated when you begin to look at transferring assets and eligibility. Additionally, if one were to sell their home while a claim for benefits were pending or after benefits were approved, the proceeds of the home would most likely result in a suspension of benefits for a period of at least one year or longer if the laws change and impose a lookback as we discussed.

Additionally, Congress is considering implementing a 3 year lookback on any transfers.  For now the bill did not get of committee, however, it is expected to be reconsidered in the coming year.

The first two steps are to compile one parent(s) medical expenses and obtain the physicians certificate.  Once the application is filed it can take anywhere between 6 months to a year to obtain the benefit, but the payment is retroactive to the date of the application.  The VA has recently established a “fully developed” process which is much faster than the regular application process.  This is the process that one wants to make sure they use.  Of course processing times are not guaranteed.  Additionally, once the VA acknowledges the application there are ways to expedite the process from there.

As you can see it is not that simple when one says how can I qualify for VA benefits.  The bottom line is one should consult a competent elder law attorney accredited by the US Department of Veterans.

If you need assistance with this or other elder care matters, you can find Elder Care Professionals near you on ElderCareMatters.comAmerica’s National Directory of Elder Care / Senior Care Resources for Families.

Michigan State Coordinator - ElderCareMatters.com
Don L. Rosenberg, Attorney and Counselor
Troy, Michigan
An ElderCare Matters Partner


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