Thursday Q&A: Estate Planning & Elder Law- August 13, 2020

Each week, estate planning attorney Bill Henry spends time educating the community about their estate planning and elder law options.

Thursday Q&A is dedicated to answering your questions. See what Coloradans asked on August 13, 2020. (A transcript of the event is available below.)

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Alright, Bill Henry here from Robinson and Henry back with another Estate Planning Thursday, where I answer your questions, questions that I’ve heard throughout the week and just other things I generally find interesting that I hope that you will as well. So let’s jump right in get to it.

What steps can I take now to help plan long-term care for my elderly parent?

First question we have, it is tough to get a currently independent elderly parent to understand they need to plan for long-term care, which may include a nursing home, what steps can I take now? And what can I say to them to convince them that this needs serious consideration? Well, you know, obviously, it’s gonna depend on the person that’s for sure. At the end of the day, it will be up to them as to what they want to do. So we can’t force anyone to take any actions and we’ll totally loser their capacity. So what do we do ahead of time? Well, one way I would approach this is just to talk about what that cost of long-term care is going to be. So the average cost in Colorado rounding slightly is $100,000 per year for a nursing home. Most people can’t afford that. And if this person this elderly parent is one of those, then we gotta talk about, well, what about your entire life savings? If they’re married, what’s your spouse going to do? How are they gonna be able to live if you don’t plan for this? Likewise, if they can get long-term care, my guess is if they’re elderly, they can’t. But if they can get long-term care insurance, that could be a great easy way to protect for these or save for these future expenses if they’d ever does come to pass. So hot conversations to have. The other part, you always wanna talk about is what do you have in place in terms of powers of attorney? And the question there is, well, if you don’t have a power of attorney in place, how is someone gonna be able to make decisions for you? And the answer is somebody would have to go to court and there’ll be a court appointment. And it might be somebody that you don’t want to be in charge of you. And so how do we avoid that? We use powers of attorney that’s medical powers of attorney and financial powers of attorney. So hopefully that helped. I know those conversations can be pretty difficult.

How often does the State file against someone’s estate after they pass?

How often does the State file a claim against someone’s estate after they die in an effort to recover Medicaid benefits? And is this preventable? So it’s not really preventable, so let’s back up a second. So what are we talking about in this question? So if you receive Medicaid benefits, there is an opportunity on the house is what we’re normally talking about, for Medicaid after you die to file a lien against the house, because they paid money on your behalf. And so in an effort to try to recoup some of that money that they paid for you, they file a Medicaid lien on the house or they do an estate recovery. And they say, “Hey, any any property that this person has, “even though we didn’t count it “for qualifications of Medicaid purposes, “we are we want that money.” So when we go to qualify for Medicaid, the general rule is we’re only allowed to have $2,000 of countable assets. But a house, for most people is a non-countable asset. But if I have $300,000 of equity in that house, when I die, if Medicaid paid $100,000 of benefits, they may say, put a lien on the house and say, “Hey, we’re doing an estate recovery. “We want some of the proceeds from the sale of this house, “because we pay these Medicaid benefits.” So that’s what an estate recovery is. So then the question is, how often do they do that? Well, I don’t really have the data on that, there’s no clear way to know that under the law, they are required to do it. So federal law actually requires the states to do an estate recovery. Practically speaking, whether they do it that’s a different question. More often than not, I would suppose but I don’t know the actual number. It’s a great question but I don’t have any resource for those particular statistics. But under the law, they are required to do it. So is it preventable? No, but if you plan ahead of time, you can position the estate in such a way that there are really any assets to be recovered against. And how do you do that? Well, we’ve got spouses, there’s certain ways you do it, where there’s assets between spouses that are allowable under the Medicaid rules, things of that nature. So very, very be very particular as to whether or not that is preventable, but there’s not like a magic wand, there really would require some pre planning ahead of time to think about this whole estate recovery issue. So again, estate recovery means Medicaid paid stuff for you while you were alive and they want to get repaid for the amount that they paid you after your death.

Can a long lost half sibling contest my father’s will?

What could I do if someone comes forward claiming to be a half sibling and says they plan to contest my father’s will, can they do this? So we’re talking about a will contest, we assume we’re talking about a Colorado will contest. You know, they anyone it’s America, so anybody can file just about anything. So you really can’t stop them from contesting your father’s will. In your father’s will, he if he’s still alive could be very clear about saying that this half sibling doesn’t get anything and if they do contest it, then they’re automatically written out regardless. So that would help to prevent or reduce the chance of a contest. So really, it requires your father to handle it, not you. You can’t stop it after your father passes, your half sibling has the right always the one claiming if you have has the right to file and say that I am entitled, I am an immediate heir means I was not included in the will, but they really meant to include me. But your father can clear up all that in their will, and that’s really the way to do it. Other thing you can do is look at a trust. And sometimes there’s a belief that hey, if I have a trust, and I’m again, very clear in my trust then I can have a little less likelihood of a will contest or, in my case, a trust contest after I die. So great question. There’s nothing you can do. There is absolutely something that your father can do, the person that is drafting those documents has the control to decide where they want that property to go. And in this case, who they don’t want it to go to assuming that is what your father wants.

When would I need a pour-over will?

Next question, when do I need a Pour-over will? We talked about this last time might as well hit it again. You generally need a Pour-over will, if you have a revocable living trust, because your trust only contains the assets that you put inside it. So let me give you a quick, dirty down example. If you have a house, and that house is titled in your name, so let’s say my house is titled name of Bill Henry, and then I have the Bill Henry Living Trust. Well, if I die and that house is still titled in my individual name, it’s not in the trust, it’s outside of the trust. In that case, if I had this Pour-over will, the will would say, “Anything that’s not included in the trust, “I want you to take those assets “and I want you to put it into the trust for me, okay?” So that’s what a Pour-over will does. Oftentimes used with a revocable Living Trust, doesn’t have to be revocable but that’s where you’re gonna see it most often.

Is there ever a time when someone’s last wishes are called into question and not fulfilled?

Here’s an interesting one. We all heard about a woman’s last wish to be buried with her dog. So a healthy dog was euthanized to fulfill that wish. Is there ever a time that someone’s last wishes are called into question and not fulfilled? Could a court ever overrule someone’s will due to the ethical question above? Well, in Colorado start off with that, in Colorado dogs and animals are property, you own them, they are not their own person, so to speak, they don’t have rights in and of themselves. So the ethics of it are that their properties and therefore really more or less anything can get done. Now, there’s obviously you can’t use animals and things of that nature, but that’s kind of where this is stemming from is that the dog is considered the woman’s property. So could it ever be called into question? Well, yeah, of course, because if the woman for example, when she drafted those instructions didn’t have capacity, well, then that would be a reason that that will would be invalidated. Likewise, if there was undue influence, somebody I don’t know really didn’t like her dog and said, “Oh, you really need to do this.” And force her so to speak, to euthanize the dog in her will even though that’s not really what she would have wanted, well, then that would be grounds for challenge as well. So there are ways to challenge it but fundamentally, animals are property in Colorado.

I am a caregiver and the bank refuses to recognize my financial power of attorney, what are my options?

Next question. I am a caregiver and the bank refuses to recognize my financial power of attorney, what are my options? So it really isn’t gonna go to you’d have to look at the power of attorney to even have an idea of what you can do. So under Colorado law, if that power of attorney was acknowledged notarize, then the banks are required to take it unless there’s a good faith belief that for some reason that they should not accept it. So there’s actual law on this point. So what you would want to do is write a letter to the bank citing these statutes. Of course, of time ahead I couldn’t tell you what the numbers are but there are statutes of Colorado that say, “Hey, if you don’t accept this power of attorney “and you don’t have a good faith reason new to “you can be liable for the attorney fees of damages “for not taking.” Now if it wasn’t acknowledged, then there’s nothing you can do at that point. So that’s why it’s important anytime we do financial powers of attorney we have to be acknowledged that means we have to notarize it at the firm, not only will we have them notarized, we would also have them witnessed by two witnesses as well. So that would be kind of the answer to that is you gotta write a letter demanding that they accept the power of attorney and base it on Colorado law, which says that you bank are required unless you can show me good faith reason that you’re not gonna accept this. And banks have a certain period of time to do something of that, I think it’s seven days off the top of my head. So great question.

Could my elderly mother paying household expenses complicate her Medicaid eligibility?

My elderly mother lives with us and she insists on giving us money for her part of the household expenses and I’m concerned this could complicate her Medicaid eligibility, could it? Wonderful question. How could it complicate her Medicaid eligibility? If those payments to you were deemed a gift, then that will create a disqualification to the extent those payments were paid to you within 16 months of the date that your mother files for Medicaid. So she files for Medicaid, January 1st 2020 and those payments were made anywhere between, lower that day January 1st 2015, then those could be deemed to be a gift to you. So how do you solve that issue? We know it’s an actual for value transfer, she’s doing it on the expenses. So what I would say here, the place to start is with a contract with your mother. Now, you guys really understand more of details, I want you to undergo off and act on this because it’s so very specific to the circumstances. So you really need to talk with an attorney an elder law attorneys type of attorney that you’d be looking at to say, “Hey, how do I handle this type of the scenario “so that it is not counted against me “in other words, or against my mother?” What I really needed to do is not be counted as a gift. That is the fundamental question here and definitely you can avoid to be counted as a gift because she is paying for something in this case, but it really needs to be well documented for sure. Anytime we give something to our family members under the law, it is presumed to be for love and affection and therefore deemed a gift. So great question, really thinking ahead there. That’s great.

My father passed in another state and he left everything to his girlfriend. He stated he was single with no children, where do I start?

All right oh last question. My father with whom I was on good terms, died in another state, and left everything to his girlfriend. His will stated that he was single with no children, where should I start? Well, unfortunately, it’s one of those questions where I can’t really answer it because he died in another state. So the other state’s law is what’s going to control in this case, not Colorado law. Having said that, most states, if your father didn’t have capacity, at least we’ve got a little bit of indication here because, you know, he said he was single with no children, and that was obviously untrue, and he didn’t know who his natural heirs were. That sounds problematic to me. So where would you wanna start? Absolutely, with an attorney to talk about challenging the will or whatever document was used to transfer these assets and try to build the case some sort of a breach of fiduciary duty or basically lack of capacity type of case on a will contest, but I, you know, I really can’t answer it because I don’t even know what state it is let alone I only practice here in Colorado so I can only answer as to Colorado law. But what I just told you how we would handle it in Colorado if father lived in Colorado, is we really be looking to challenge the will on lack of capacity or undue influence. They can be hard cases though you should know that, not easy cases to prove, but sounds like at least here, there’s something to start on maybe a thread that needs to be pulled to see if there really are some opportunities there to challenge that.

Great questions as always, I’d love for you to share questions every week. If you have anything specific, feel free to give us a call sign up for a case assessment or otherwise, if not, I hope that you do find solid representation. These issues often have other issues buried inside of them, so it’s really important that we get qualified legal help in the right state for what we’re looking to do. Again, I’m Bill Henry Estate Planning lawyer with Robinson and Henry, answering your questions every Thursday and I will talk to you then.