Frequently Asked Questions
about Estate Planning & Elder Law in Southern California
Elder Law and Special Needs Law
Why an elder law or special needs attorney?
Rather than being defined by technical and legal distinctions, Elder Law and Special Needs Law is defined by the clients to be served. In other words, the lawyer who practices Elder Law or Special Needs Law works primarily with seniors and people with disabilities. Elder Law and Special Needs Law attorneys focus on the legal needs of the elderly and people with disabilities, and use a variety of legal tools and techniques to meet the goals and objectives of their clients. Elder Law and Special Needs Law attorneys typically work with other professionals in various fields to provide their clients quality service and ensure their needs are met.
Using this holistic approach, for example, an Elder Law Attorney will address general estate planning issues and will counsel clients about planning for incapacity with alternative decision making documents. This attorney will also assist clients in planning for possible long-term care needs, including nursing home care. Locating the appropriate type of care, coordinating private and public resources to finance the cost of care, and working to ensure the client’s right to quality care are all part of the Elder Law practice.
Today elder law is recognized as a distinct area of practice. Usually an Elder Law Attorney focuses his or practice in several areas. These focus areas typically include long-term care planning, asset protection, wills and trusts, durable powers of attorney, healthcare power of attorney, and convervatorship. A traditional estate planning attorney usually focuses on helping individuals pass their assets from one generation to the next. However, an Elder Law Attorney focuses more on ensuring the life quality and asset protection of his or her clients while they are alive. Also, an Elder Law Attorney takes a holistic approach in meeting the needs of the clients.
Planning for Medi-Cal Qualification
What is Medi-Cal?
Medi-Cal is a combined federal and California State program designed to help pay for medical care for public assistance recipients and other low-income persons. Because of the high cost of nursing home care that can range from $8,000 to $10,000 a month, most Californians rely on Medi-Cal to pay for their long-term care. Medi-Cal, however, is not open to everyone. It is a means-tested program that scrutinizes the financial status of the applicant.
What are the basic requirements to qualify for Medi-Cal?
- You are at least 65 years old or blind or disabled.
- Your medical and nursing home bills exceed your income.
- Your countable assets do not exceed $2,000.
- You are a U.S. citizen or lawful permanent resident and a permanent California resident.
What is estate recovery?
The State of California is required by law to recover the costs of Medi-Cal from a Medi-Cal applicant’s estate. Therefore, Medi-Cal applicants, beneficiaries and their spouses must be aware of the Medi-Cal Recovery rules and plan ahead if they want to avoid recovery on their home or other assets.
Frequently Asked Questions About Estate Recovery
Can the state take my home if I go on Medi-Cal?
The State of California does not take away anyone’s home per se. Your home can, however, be subject to an estate claim after your death. For example, your home may be an exempt asset while you are alive and is not counted for Medi-Cal eligibility purposes. However, if the home is still in your name when you die, the State can make a claim against your estate for the amount of the Medi-Cal benefits paid or the value of the estate, whichever is less. Thus, if your home or any part of it is still in your name when you die, it is part of your “estate” and can be subject to an estate claim.
What happens after I die if I received Medi-Cal?
After the Medi-Cal beneficiary’s death, the State can make a claim against the estate of an individual who was 55 years of age or older at the time he or she received Medi-Cal benefits or who (at any age) received benefits in a nursing home, unless there is a surviving spouse or a minor, blind or disabled child. Thus, if there are any assets left in the estate of the deceased beneficiary, Medi-Cal will seek to be reimbursed for benefits paid. It is important to note that, even if you received Medi-Cal at home, any benefits paid while you were 55 years of age or older will be subject to Medi-Cal recovery.
How much can the state recover?
California’s definition of “estate” includes such assets as living trusts, joint tenancies, tenancies in common and life estates, although claims on the remainder interest in life estates are limited to those that were revocable. Many consumers place their property into living trusts, thinking that this will protect it from an estate claim. It does not. The State can still make a claim against property held in a living trust, joint tenancy or tenancies in common, as long as the beneficiary’s name is still on the property at the time of death.
What planning can be done to allow Medi-Cal qualification?
Durable Power of Attorney
A Durable Power of Attorney for financial provisions is a document in which you give an agent to handle your affairs in the event you become incapacitated. It can be an extremely effective Medi-Cal planning tool if it contains a provision that allows the agent to make divestment transfers (including gifts to your spouse) that will enable you to qualify for Medi-Cal. Please note most durable powers of attorney drafted by attorneys that are Elder Law Attorneys do not have effective gifting provisions.
Transfer of Assets
Transferring assets to qualify for Medi-Cal may be appropriate for some individuals, provided that there are sufficient assets to pay for nursing home costs until the ineligibility period caused by divestment ends.
Reviewing or updating the healthy spouse’s estate planning documents, including a new will and/or trust is advisable. It is important to ensure that the ill spouse is not the beneficiary of assets through the death of the healthy spouse. This could cause Medi-Cal ineligibility. Assets can be given by the healthy spouse during his or her lifetime to a trust to avoid probate and cut off the inheritance rights of the ill spouse, or a Special Needs Trust can be established a will that will protect the principal from estate recovery.
When should you do Medi-Cal planning?
The sooner you plan ahead, the less costly the Medi-Cal plan will be. Early planning is essential to maximize the options available to you. However, one myth must be dispelled. Even in crisis planning, the home and most of your other assets can be protected from estate recovery and preserved for your children to inherit.
Do you need an attorney for Medi-Cal planning?
Whether you need to qualify for Medi-Cal immediately or in the near future, your planning must be done with an attorney who is familiar with this area of the law. The Fong Law Group can take you every step of the way in the entire process.
Our services include the following:
- Application preparation and counseling: includes meetings to ascertain an applicant’s asset profile, calculations of penalty periods associated with transfers prior to the application, calculations of eligibility date, counseling on transferring of applicant’s assets, gathering of other information relevant to application requirements.
- Application Submission: completion of Medi-Cal application, compiling of necessary documents to enclose with submitted application.
- Application Review Conference: representation at the Application Review Conference with the Department of Social Services, calculation and submission of information requested by the Department of Social Services in furtherance of the application review.
Questions About Asset Protection
How can I protect my residence from the estate recovery program when I die?
There are many ways to protect your home from the estate recovery program when you pass away. However, an outright transfer to your children or other relative is not recommended. When you transferred outright for purposes of qualifying for Medi-Cal, you will be at the mercy of the recipients. Furthermore, there will be no protection for your assets in case that the recipients face martial dissolutions or lawsuits. Also, the will be a loss of step up in basis in the residence, which means the recipients will pay a lot of more taxes when they sell the residence.
A revocable living trust does not protect your assets because California’s definition of “assets” includes living trusts.
Please consult the Fong Law Group for a tailored-made asset protection plan. The Fong Law Group have different asset protection options with different costs depending on your needs.
Questions About Living Trusts
What is a living trust?
A trust is a legal relationship in which assets are transferred to a trustee to be used for the benefit of one or more beneficiaries. A living trust refers to a trust created during the grantor’s lifetime. A living trust is usally created for the grantor’s benefit during his or her life. After the grantor’s death, the trust assets are distributed or managed for the benefit of the trust beneficiaries, per the instructions in the trust document.
Can a living trust be changed?
Your living trust may be revocable or irrevocable depending on your objectives. As conditions in your life change, you can alter or terminate a revocable trust at any time during your lifetime. A living trust that you create for your benefit is usually revocable, contains safeguards in the event of illness or incapacity, and may continue after your death for the benefit of others. After your death, the trust becomes irrevocable.
Can I serve as trustee of my living trust?
Usually, the grantor (you) will serve as the trustee of the trust while you are alive and competent. The grantor names a successor trustee to serve in the event of incompetence or death of the grantor.
Advantages of a Living Trust
Probate is a court procedure whereby a court-appointed personal representative performs three distinct functions: (1) inventory and appraise the decedent’s assets; (2) pay the decedent’s debts and taxes; and (3) distribute the remaining assets to the decedent’s beneficiaries. Probate is expensive and time-consuming depending on the values and type of assets in your estate.
A living trust avoid probate because, unlike a will, the trust does not have to be proved in court and the successor trustee need not be appointed by the court in order to take charge of decedent’s affairs.
Tax Planning for First Death
In a proper drafted trust, on the first death the assets are split into various sub-trusts depending on the size of the estate. The allows the survivor to do a great deal of tax planning involving the discounting of various assets.
When your estate goes through probate, your will and other documents become public record. A living trust provides you with a greater degree of privacy because the contents of the trust are not subject to public disclosure.
Expedites Asset Distribution
As a trust administration is not overseen by court, asset distribution to beneficiaries is often much faster than asset distribution in a probate.
Proper Management of Assets
A living trust may reduce the risk of inexperienced and unskilled management of property by allowing you to select a successor trustee to act in the future. Should you die or become incapacitated, the successor trustee takes over management of assets. In addition, the trust assets can be maintained in the trust after your death instead of being distributed outright to beneficiaries who may be unable to handle the management of assets themselves due to their age or other factors.
Buyer Be Aware
The popularity of living trusts has exploded in recent years. A living trust often reduces the cost, hassle, and time involved in post-death administration. A living trust can only accomplish these goals if it is properly drafted and funded.
Unfortunately, the living trust phenomenon has given rise to a new industry. California has been overwhelmed by “trust mills” that are often owned by non-attorneys and that engage in mass marketing of living trusts by traveling from town to town to hold seminars promoting living trusts like nutritional products. The business model of those trust mills depends on quick production of documents and the volume of sales. In order to engage in mass production of trusts, trust mills produce “cookie-cutter”, “one-size-fits-all” documents in a hasty manner without regard to consumers’ different needs and expectations. Due to the nature of these documents and the business model of the trust mills, it is not uncommon to find glaring drafting errors and ambiguities. Unfortunately, most of these errors are not discovered until the grantor has passed away when the remedial action can only be taken through expensive court proceedings.
Fortunately, most people can obtain competent legal assistance from an Elder Law Attorney for the about the same costs that the trust mill charge. Moreover, an Elder Law Attorney is for more likely to meet you personally, customize your trust to your particular situation, be around to answer your questions over the years, and be there at death or onset of capacity when legal advice and planning becomes critical.
Questions About Durable Power of Attorney
What is a power of attorney?
A power of attorney is a document by which you appoint a person to act as your agent. An agent is one who has authorization to act for another person. The person who appoints the agent is called the principal. The agent is called the attorney-in-fact. If the agent acts within the authority spelled out in the power of attorney, the agent’s act is legally binding on the principal. The power of attorney can authorize the attorney-in-fact to perform a single transaction or multiple transactions.
What is a durable power of attorney?
Many people are unaware that an ordinary power of attorney is revoked when the principal becomes disabled or incapacitated. A durable power of attorney is not affected if the principal becomes disabled or incapacitated.
Do I need one if all property is owned jointly with spouse?
Yes. If you are disabled, your spouse can still sign checks and make withdrawals on join bank checks and make withdrawals on joint bank accounts, but your spouse cannot sell jointly owned stocks or your jointly owned home without your signature. Your spouse cannot name or change a beneficiary on your life insurance or your retirement benefits. Even if you own everything jointly, you and your spouse should consider having durable powers of attorney.
Can a durable power of attorney be revoked?
As long as you are competent you can revoke your durable power of attorney. The revocation should be in writing, and it should be delivered to the agent and to third parties with whom the agent is dealing. Finally, the durable power of attorney terminates at the time of your death, except for making funeral arrangements.
Whom should I name as my agent?
You may name any adult. However, you should select an agent who is willing to act and in whom you have confidence and trust because your agent may be making important financial and personal decisions for you.
What are the agent’s obligations to me?
Your agent has a very standard of care (legally called fiduciary duty) to you. Furthermore, your agent is obligated to follow your instructions and act in your best interest. If your agent improperly handles your affairs, he or she is legally responsible for damages to you.
If your agent abuses the authority under durable power of attorney, you can revoke the durable power of attorney. In addition, you can sue your agent for damages caused by the agent’s abuse of authority.
What are the advantages of a durable power of attorney?
- You (not a court) select your agent.
- It can give you and your family some peace of mind knowing that you have named someone to handle your affairs.It can save time and the expense of a court proceeding.
What are the problems if durable power of attorney is not properly drafted?
The first problem is that one cannot make gifts using a power of attorney unless the power of attorney specifically allows for gifting. This is a major concern for those on Medi-Cal. Many drafters of power of attorneys are unaware of this. This is very important for the middle class, as this gifting language is necessary to do proper public benefits planning.
Second, a trust cannot be amended or revoked using a power of attorney, unless the power of attorney specifically allows this. Many drafters are unaware of this.
Third, inherited property cannot be disclaimed unless the power of attorney specifically allows disclaimers.
Questions About Conservatorship
What is a conservatorship?
A conservatorship is a proceeding where the court appoints a responsible person (called a conservator) to care for another adult who cannot care for him or herself physically or financially (called a conservatee). The conservator is responsible to the court.
There are two kinds of conservatorship. A conservator of the person cares for and protects a person when the court decides that the person can no longer care for himself or herself. A conservator of the estate handles the conservatee’s financial matters such as paying bills. The court can order a conservator of the person or estate or both
When is a conservator needed?
If someone has an illness, such as Alzheimer’s, or an accident that leaves him mentally or physically incapacitated, he may need to have a conservator make caregiver decisions or manage their affairs. Typically, a conservator is appointed when a court decides that a person is physically or mentally incapable of managing their affairs.
Who can file a conservatorship?
There is statutory preference for the court to choose a conservator who is a spouse, adult child, parent, or sibling. In some cases, the court appoints a private fiduciary if there is a dispute.
What process must be followed in a conservatorship?
A petition for conservatorship is filed with the court. Notice is given and a hearing is held to determine if the proposed conservatee needs someone to handle his or her affairs. A court investigator will report to the court and make a recommendation concerning whether or not a conservatorship is needed. If the court determines that the proposed conservatee is not competent enough to manage their physical or financial needs, a conservator is appointed.
Once appointed, the conservator will submit a list of assets of the estate and debts to the court. The conservator will develop a plan of conservatorship. The court must approve the conservator’s accounting of assets and approved all sales.
What is the duty of the conservator?
The conservator has a duty to make prudent investments, keep assets separate from anyone else’s property, and use interest-bearing accounts and other investments. The conservator cannot pay himself or an attorney without court approval. The conservator is not allowed to give away the estate or borrow money without court approval.
What is a temporary conservatorship?
If the court orders a temporary conservatorship, the conservator has the same duties and powers that a regular conservator has except that the conservatorship will end on the date that a permanent conservator is appointed.
Are there any alternatives to a conservatorship?
One option to conservatorship proceeding is a durable power of attorney. A durable power of attorney is an arrangement whereby one person authorizes another to take action on the first person’s behalf as his or her agent. This agent has the authority to conduct business and make health care decisions.
Another option is a living trust. With a living trust one can decide in advance and appoint the person who would manage assets should one become incapacitated. The trustee has the right to manage assets for the trust without court supervision.
What is a limited conservatorship?
A limited conservatorship is available only for an adult with developmental disabilities. A limited conservator will be appointed if the court finds that the proposed limited conservatee lacks the capacity to perform some, but not all, of the tasks necessary to provide properly for his or her personal needs or manage his or her financial affairs. A limited conservator has duty to secure such habilitation or treatment, training, medical and psychological services, and social and vocational opportunities as are appropriate to assist the limited conservatee in the development of maximum self-reliance and independence.
What is the difference between a general conservatorship and a limited conservatorship?
A limited conservatorship is intended to protect the conservatee’s health, welfare, and safety to the extent necessary while reserving to the limited conservatee any civil rights that he or she can reasonably manage without conservatorship. A general conservatorship, on the other hand, transfers all but a few very civil rights to the general conservator.
Because conservatorship for adults with developmental disabilities is so “limited”, the petition for appointment of a limited conservator must specify the powers that are to be taken from the conservatee and transferred to the conservator.
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