When you get the newsletter this month, I will have just seen Bob Seger and the Silver Bullet Band at Jones Beach. One of my favorite songs is
Night Moves. But it means so much more to me now than it did when I was younger. Instead of thinking about young love, my attention is now drawn to the line near the end of the song,
“Strange how the night moves, with Autumn closing in?” So, this month is focusing on “Autumn closing in” and how you can make sure your assets are protected and how to make things easier for your family when you pass.
Let’s create some scenarios to help understand why this is so important.
- Louise is 85 years old and up until right now she has been healthy and strong, living in the home she shared with her husband until he passed, completely self-sufficient. Louise becomes ill and has to go into long-term care at a nursing home.
She can just apply for Medicaid and they will cover the costs, right?
Wrong. If Louise has assets, she will need to pay for as long as she can before Medicaid kicks in and if she can’t afford it, a lien may be put on her property and then when it’s sold, the money has to go to her care.
If Louise has the money to pay for her care or at least part of it, she can’t just get the money from Medicaid due to the Medicaid “look-back period” which for most states is 60 months.
Any transfer of assets, even things like graduation gifts to the grandkids, are reviewed. If a violation occurred, a penalty period (where you become eligible for Medicaid) will happen.
Plan before you get sick, understand your obligations and ensure you have your assets protected before they are lost forever.
- Molly and Sally are siblings. Molly is single and has no children, but she has a long-term boyfriend and is a big supporter of the children’s center in her local community. Molly and Sally haven’t spoken in a decade and are not close. Yet, they are each other’s only living relatives.
If Molly passes away, her money would go to her boyfriend, right?
No. Unless the assets are held jointly, instead of her boyfriend or the charity/organization she loves receiving her inheritance, Sally would automatically receive the money due to New York inheritance laws.
Make sure you have a will in place to spell out where you want your money to go. A relative you don’t even know could end up getting your property and money, instead of the people in your life.
- John and Joe have been together for 30 years but they never got married. John gets into an accident, is unconscious and needs surgery.
Joe can make all the decisions regarding John’s care, right?
Wrong. John’s sister (who is his only relative and doesn’t like Joe) wants to make all the decisions and doesn’t let Joe have any say in what happens to John. In fact, she won’t even allow the doctors to discuss John’s condition with Joe.
Take it one step further, Joe can’t contact the insurance company on his partner’s behalf or to speak with John’s attorney, etc.
Joe is John’s partner, why can’t he make decisions or at least be informed as to his condition? Why can’t he speak with someone at the insurance company?
Without a health care proxy, Joe’s legal rights are limited, and yes, the sister can dictate what happens until John is able to make those decisions himself. This is one of the “advanced directives” that are necessary when making a comprehensive estate plan. Another, a power of attorney, grants a person the legal right to take care of the things such as make gifts in anticipation of spending down an estate to become eligible for Medicaid, or contact the bank.
Part of a comprehensive and complete estate plan includes the advanced directives – health care proxy, power of attorney and living will – which will take care of you while you are still living.
Some other things to think about when it comes to your assets:
- Some people want to put their children on the deed but are afraid to let them take over completely. Keeping a life estate ownership in the property can be a viable option. The life estate extinguishes when you pass, but the children cannot mortgage or sell the property during your lifetime without your permission.
- If you live with a long-time partner, yet aren’t married, make sure both of your names are on the deed of your house. The choice of how you own it depends on your aims. For example, if you hold the title as joint tenants, the property passes by operation of law to the surviving partner. But if you want your share of the property to go to your heirs, then perhaps tenants in common is the best choice.
- If you are married, yet one partner bought the house before you were married, make sure your spouse’s name is also on the deed, especially if it is a second marriage with children from a prior marriage.
- A trust (irrevocable or revocable) when properly funded, can help avoid probate, saving the estate thousands in court and attorney’s fees.Are your assets protected? Are your children and family protected? Estate Planning is key.
If you want to talk about protecting your family and your assets with estate planning, contact my office and let’s discuss a plan of action
*** Note — the above scenarios are fictional and are not based on any past or present client. This newsletter is for information only and is not intended to provide legal or tax advice for any reason. Each person and their circumstances are different, and you should speak with an attorney before you determine which is the best way to proceed.
