People have lost the family residence due to mistakes and lack of flexibility in the estate plan documents


By James Ward

James Ward

There are a lot of estate plans floating around that simply won’t work for elder law needs. What’s the difference?

Estate planning typically looks at how the assets are distributed at the first and second deaths, and who’s in charge of managing and distributing the assets. If the husband and wife both die at home and never need Medi-Cal coverage for assistance at home or to cover payment of the nursing home, then most of these plans are okay if they were prepared by an experienced estate planning attorney.

Elder law looks at estate planning differently. We look for flexible options so we have you covered “just in case.” We don’t know what might be needed to protect you and your family, but we want to have all options open to us. We look at the “what if?” scenarios.

I recently had two problem cases that demonstrate this. A woman who was very recently widowed came to me to transfer multiple properties to a specialized trust to protect Proposition 13 for her children so that the new Prop 19 wouldn’t take away the Prop 13 tax benefit on those properties. Unfortunately, the widow didn’t have full control over the properties because of the way her old trust was written. It was a huge problem and her kids stood to give up thousands of dollars of property tax benefits.

In the other case, the family has a living trust prepared by an estate planner who admittedly knows nothing about elder law. Now, the husband has dementia and the documents don’t allow his wife to make the necessary changes to protect their rentals and stock portfolio to help him get on Medi-Cal to provide for some assistance at home.

I tell people that most of those estate plans will work okay if you both die peacefully at home and never need care, but that isn’t what happens with most people.

Estate recovery is when the state of California gets paid back for expenses that were paid by Medi-Cal. The laws for Medi-Cal eligibility and estate recovery are admittedly complex, and very few attorneys understand them, but you have to make sure you have the right estate plan in place so that an elder law attorney can help if you ever need that help.

I’ve seen people lose the family residence due to mistakes and lack of flexibility in the estate plan documents. The new laws of a few years ago make it easier to protect the residence, but people are still making mistakes.

The son of a woman in the East Bay was referred to me by another attorney. The son had found on the Internet that his mother’s house was protected from the state going after it for repayment of her expenses. Nice plan and nice idea, but it wouldn’t work in his mother’s case. They hadn’t protected the house previously, and the mother’s current documents wouldn’t allow them to make the necessary changes. With the mother’s stroke, dementia, and her being in a locked facility due to COVID-19, it was unlikely new documents could be signed to protect the home. Yes, the residence was protected from a state claim during her lifetime, but the state could place a lien on the house for repayment of the debt following her death.

Don’t let these things happen in your family. Make sure your estate plan is “elder law friendly” so that it will work to protect you if needed.

James Ward
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