Elder Law Weblog

Summary Administration

Summary administration is an alternative to formal probate. Typically summary administration will apply for small estates as well as for property passing to a surviving spouse.

Collecting Small Estates Under $100,000

An estate under $100,000 can be collected by declaration. This procedure is available when the value of all decedent’s real and personal property located in California does not exceed $100,000. This procedure is used only to collect personal property, not real property. Certain types of property are not counted within the $100,000 limit. Property not counted includes: property located outside of California, as well as property that passes outside of probate.

The procedure to collect a small estate may be used whether the decedent died with or without a will. The individuals who may use the declaration procedure are those who would succeed to the property had there been a formal probate.

Summary Administration of Real Property

The probate code provides for two alternative procedures to transfer title to real property outside of a formal probate process. The first involves requesting an order from the court to determine the successor to real property when the total value of the decedent’s real and personal property located in California does not exceed $100,000. The second procedure involves transferring real property that does not have a gross value in excess of $20,000 by affidavit.

The Estate Set-Aside

The probate code provides for a procedure for the court to set aside a small estate for the surviving spouse or minor children. This procedure applies when all of the decedent’s personal property wherever located and the real property in California does not exceed a net value of $ 20,000. The Estate Set-Aside procedures do not depend upon the right of the surviving spouse or minor children to be the beneficiaries or heirs of the decedent; rather this is a Set-Aside from the decedent’s testamentary wishes.

Property Passing to Surviving Spouse or Domestic Partner

The probate code provides that no administration is necessary for any of the decedent’s property that passes to the surviving spouse or domestic partner. The surviving spouse still may elect to administer property passing from the decedent to the surviving spouse if there is a concern about creditor issues. The ability to avoid formal administration for property passing to the surviving spouse applies to both real property and personal property.

Avoiding Probate Through Contract

Life Insurance

Life insurance is a form of property that passes to a beneficiary under a contract. Life insurance will pass outside of the probate process provided that the policy is not payable to the decedent’s estate or representative of the estate. Life insurance benefits are collected by filling out the life insurance company’s forms and presenting a certified copy of the death certificate. Life insurance provides significant protection from the decedent’s creditors. Typically the death benefit will be exempt from creditors to the extent necessary for the support of the decedent’s spouse and other dependents.

Life insurance proceeds will be includable in the decedent’s gross estate for estate tax purposes to the extent the decedent owned any of the incidents of ownership of policy or to the extent that the policy is payable to the decedent’s estate.

Annuities and Retirement Benefits

Annuities and retirement benefits are another form of asset that will pass to a named beneficiary on the death of the owner. An annuity is a contract issued by a life insurance company and typically will allow the appointment of a beneficiary. Retirement benefits include those sponsored by employers as well as individual retirement accounts.

Social Security Benefits

Social Security provides benefits in the form of a lump sum death benefit as well as survivor death benefits. The lump sum benefit is minimal and does not exceed $255. Survivor’s benefits are typically paid to a surviving spouse or a dependent child.

Transfers by Trust

The most common way to avoid probate is through a living trust. A living trust is not subject to probate although the assets held in a revocable trust will be subject to estate tax inclusion upon the death of the grantor.

A living trust does not provide protection from creditors of the decedent. Due to the fact that the decedent can revoke the living trust at any point up to his or her death, creditors may reach the assets in the living trust upon death.

Transfers Outside of Probate Through Title

Joint Tenancy

Joint tenancy is when two or more people own property with a right of survivorship.  A joint tenancy can be created when an owner conveys property to two or more people as joint tenants or when an owner transfers properties to himself or herself and one or more persons as joint tenants.

When one of the joint tenants passes away the property held in joint tenancy will pass by operation of law to the surviving tenant. Joint tenancy is therefore not subject to probate administration.

After a joint tenant of real property dies, the property records must be clarified to show ownership of the property. This is done by filing an affidavit of death of the joint tenant. The local recorders office will request a certified copy of the death certificate for the decedent as well as an affidavit executed by anyone with knowledge of the relevant facts.

Another significant type of property held in joint tenancy is bank accounts. A surviving joint tenant has the right to the full balance in the account by presenting a certified copy of the decedent’s death certificate.

With respect to automobiles, joint tenancy is evidenced by the certificate of ownership showing the word “or” between the two owners of the automobile. Where the word “and” appears between the two owners it is presumed to be a tenancy in common unless the title expressly states joint tenancy.

Stocks and bonds may also be registered in joint tenancy. On the death of one joint tenant, the survivor can obtain registration solely in his or her name by presenting a death certificate.

Joint tenancy provides significant protection against creditors of the deceased joint tenant. The deceased joint tenant’s creditors generally have no rights to the property as the deceased joint tenant’s interest is extinguished on death.  There is an exception where the joint tenancy was established to defraud creditors.

While property held in joint tenancy will avoid probate, joint tenancy ownership will not shield the property from estate taxes.

Life Estates

A life estate is an arrangement where an individual retains the right to live in the property or collect rents from real property for his or her lifetime. The property passes to named remainderman on the life tenant’s death. Life tenancies are not subject to probate although they typically are included in the taxable estate. Life estates are generally not in wide use today although there is some use in the context of Medi-Cal planning.

Multiple-Party Accounts

Pursuant to Probate Code 5132 a multiple party account includes joint tenancy, bank accounts, pay on death bank accounts, and a totten trust bank account. As noted previously, a joint tenancy bank account is payable to the survivor on the death of the joint tenant.  A pay on death bank account is a bank account in which a beneficiary is named to succeed to the property on the death of the owner. The beneficiary has no rights to the account during the owner’s lifetime. A totten trust account is basically the same as a pay on death account.

Uniform Transfer on Death Security Registration Act

Under the uniform transfer on death security registration act an owner of a security may designate a beneficiary to succeed to the property on the death of the last surviving owner. Designating the beneficiary will give no present rights to the beneficiary during the owner’s lifetime.

United States Savings Bonds

United States savings bonds may be registered either individually, in a co-ownership form, or with beneficiary designations. These designations are similar to bank account designations.

Property Not Subject to Probate:

Many property interests owned by a decedent can be transferred outside of the probate process. Examples include: stocks, bank accounts and real-estate held in joint tenancy, as well as any life insurance or retirement benefits with a named beneficiary. However, avoiding probate does not mean that the property will pass free of estate tax or claims from creditors; these issues must also be addressed.

Community Property:

A major class of property that may pass outside of probate is community property. All property acquired after marriage, other than property acquired by devise, inheritance, or gift is community property. Each spouse in a marriage has a vested one-half interest in all community property. When one spouse dies, one-half of the community property belongs to the survivor, and the other half belongs to the deceased spouse and is subject to the decedent’s testamentary wishes.

Where the decedent makes no testamentary disposition of his or her one-half share of community property, it will pass to the surviving spouse.

There is another class of property called quasi-community property. This includes all personal property wherever located as well as all real property in California, which was acquired by a decedent while domiciled in a state other than California, which would have been community property if the decedent had been domiciled in California when the property was acquired. Quasi-community property is treated like community property on death. This means that on death one-half of the decedent’s quasi-community property belongs to the surviving spouse and the other half belongs to the deceased spouse.

Special rules apply when property passes to a former spouse of a decedent. Under the probate code, a non-probate transfer to a former spouse, in an instrument executed during or before the marriage, will fail if at the time of death the former spouse is not the transferor’s surviving spouse because the marriage has been annulled or dissolved. The same rule will apply for joint tenancy property owned between a decedent and his or her former spouse.

The probate code provides special protections for the transmutation of property. Transmutation is when the character of property is changed from community to separate or separate to community. Under the family code, a transmutation must be in writing and contain an express declaration that is made, joined in, and consented to, or accepted by the spouse whose interest in the property is adversely affected. This statute provides protection to spouses to ensure that their interest in community property can’t be changed without their express written consent.

There is a special form of ownership called community property with right of survivorship. Such property retains all the features of community property. However, on the death of the first spouse it will pass to the survivor without administration in the same manner of joint tenancy property. Spouses should be careful before titling property as community property with the right of survivorship because there are fewer protections from creditors than traditional joint tenancy property.

Initial Steps When a Loved One Dies:

This article addresses the initial steps in the estate administration process.  When a loved one dies, the family is often faced with grief.  Unfortunately, several issues must usually be addressed.

The first step is dealing with the funeral.  In some cases, the family may be faced with a coroner’s inquest or autopsy.  The coroner will usually be involved where the death was sudden or violent, unattended, or was the result of a criminal act.

The family may also be faced with the issue of anatomical gifts.  The decedent may authorize such gifts.  In addition, certain family members and agents may authorize an anatomical gift.  Because of the time sensitive nature of organ donation, the family will often receive assistance from the hospital staff in dealing with this issue.

Families will also need to arrange the funeral.  If a conflict arises, the first place to look is any instructions left by the decedent.  In the absence of instructions, the following persons, in the order named, have the right to dispose of the decedent’s remains:

• An agent under an advanced health care directive.
• The surviving spouse or registered domestic partner
• The decedent’s children.
• The decedent’s parents.

(These rules are set forth in Probate Code section 7100.)

Death certificates can be ordered through the funeral home.  Make sure to order sufficient copies to deal with all real estate, bank accounts, life insurance policies, and retirement plans.

The next issue to address is whether probate will be required.  Many assets do not pass through probate like joint accounts, community property passing to a surviving spouse, trust assets, life insurance and retirement plans.  In addition, formal probate can be avoided where the value of all real and personal property held by the decedent is less than $100,000.

For estates that must go through probate, the process will typically last 12-18 months.  The functions of probate are the collection of assets, payment of debts and taxes, and the distribution of the estate.

Probate can be an expensive process.  The initial filing fee is $320.  In addition, the attorney for the estate and the personal representative will receive fees based on the size of the estate.

Handling Grief in the Estate Administration Process:

Estate administration is the formal process by which a decedent’s trust or probate estate is administered.  The process requires the appointment of a representative, collection of assets, payment of debts, and distribution of the remaining assets to the beneficiaries.  Unfortunately, most families are faced with administering a loved one’s estate while they are still grieving.

Grief is a process.  It may start with denial.  Most Americans are insulated from dying.  While in the past, death was more personal in nature – often occurring at home.  Today, more than two-thirds of deaths occur in a hospital or nursing home.  Because we are so insulated from the dying process, often family members will not be able to accept the death at first.

The representative appointed by the decedent (trustee or executor) must deal with grieving and also take steps to protect and preserve the estate assets.  In most cases, the estate administration is secondary to the emotional aspect of the recent loss.  The grieving process may also take as long, if not longer, than the administration of the estate.  Professionals who assist clients in administering estates must keep this in mind.

Even after a client is able to start work on administering the estate, he or she may still be distracted, have difficulty in absorbing information, and may be suffering from anger.

Life Care Planning: A New Approach to the Practice of Elder Law

Introduction

Elder Law is a legal field focused on assisting clients with protecting their family home and other assets when faced with catastrophic nursing home costs.  The traditional elder law practice has been transactional – helping clients apply for public benefits and draft estate planning documents with a typical matter taking between 6 and 12 months.

Life Care Planning is a new approach to the practice of Elder Law.  Life Care Planning focuses on providing legal and geriatric care planning services to a client for the remainder of his or her life.

With a Life Care Plan, you can choose to pay one fee, one time, to create a roadmap for a lifetime of care.  Rather than exhausting your finances by paying extensive hourly legal fees, a Life Care Plan can take care of senior planning for one affordable flat fee.

What is a Life Care Plan?

A Life Care Plan combines geriatric care planning and asset protection with the goal of providing the senior with the right care sooner, maximizing independence, and allowing the senior to age with dignity.

Recommendations are provided by your consulting attorney based on the senior’s current level of care, amount of assets, and original estate planning documents. Care is taken to ensure that the plan fits the needs and desires of the client and their loved ones.

A Life Care Plan becomes a convenient package that answers all of the questions concerning the senior’s long-term care, presently and for the future. The plan becomes a safeguard for elders and their loved ones.

Purpose of a Life Care Plan

The purpose of a Life Care Plan is different depending on the circumstances of each senior, but generally the plan aims to ensure quality care and appropriate funding in the later years of a senior’s life, and to protect the assets that they currently own.

Life care planning is a vital task for seniors, whether they have assets to protect or not.  Less than 25 percent of Americans have expressed their wishes in writing about how they want to be cared for at the end of their lives.  Three years ago, the country witnessed the painful case of Terri Schiavo, a woman in Florida who collapsed and suffered permanent brain damage. Unfortunately, she had not written down her wishes about medical care. Her family disagreed sharply about how she should be treated, leading to a long legal battle. The Schiavo case shows how important it is for not only yourself, but also your family, to put a Life Care Plan into place.

Protect Your Assets, and More

Like a traditional estate and asset preservation plan, a Life Care Plan includes the legal protection needed to safeguard assets, honor your wishes, and provide for family members.  But it doesn't stop there. It describes how your long-term care, financial, physical and psychological needs will be met.  It's a roadmap for total legal care with two simple goals: to maximize quality of life--until the end of life--while preserving wealth for the family's future.

With a Life Care Plan, you’ll never question whether you are properly taking care of yourself and your loved ones. You will be able to rest easy knowing that your care, funding, and assets are taken care of for the remainder of your life.

What Will Be in My Life Care Plan?

Your Life Care Plan includes the services of a Certified Specialist in Estate Planning, Trust and Probate Law, who works together with you to coordinate care, maximize quality of life and protect family wealth for future generations.

Every Life Care Plan is designed to achieve three primary objectives:

•    Help you ensure that you get appropriate care, whether at home or in a residential facility.

•    Locate public and private sources to help you pay for long-term care while solving the asset protection problem created by the high cost of care.

•    Give you and your family the peace of mind that comes from knowing that you are safe and getting the right care.

Pre-Crisis Planning Leads to Peace of Mind Today

Trigger events like those listed below signal that your loved one's condition is deteriorating, even though it could be months or years before long-term care outside the home is needed.

•    A diagnosis of caner, Alzheimer’s disease or other chronic condition.

•    A catastrophic event such as a fall, medication mishap, fire, accident in the home or a car wreck.

•    Discovering that your loved one is wandering, malnourished, dehydrated or unable to care for him/herself due to functional limitations.

•    A medical event such as a stroke, heart attack or aneurism.

•    Burnout of the loved one's primary caregiver.

A Pre-Crisis Life Care Plan benefits you and your family in several important ways:

•    It helps obtain the care you need today, which offers welcome relief for caregivers.

•    It increases the chances that your loved one can age at home, which helps preserve independence and dignity.

•    It puts all of your legal and financial affairs in order.

•    It enables your family to avoid the asset protection crisis when the transition is made to long-term care.  

•    It empowers you with a network of support that will help you deal with every legal, health care and long-term care transition that you will face for the rest of your life.

Now is The Time to Start Planning

People are living longer. As we age, there is the possibility that a chronic medical condition will affect our quality of life and require changes in lifestyle. Families who face these challenges may be required to balance jobs, childcare and taking care of elder family members. The Life Care Plan places special emphasis on issues surrounding long life. The Life Care Plan connects your concerns about your physical, financial and legal health in the later stages of your life with our knowledge and expertise.

The legal issues created by aging, illness, chronic conditions or disability can be terrifying. Nonetheless, there comes a time when we all must consider how to best prepare for the long term care for ourselves and our loved ones. Having a Life Care Plan uses legal services to protect your loved one’s interests now and in the future, creating peace of mind and security. 

Medi-Cal Update: Drastic Changes to Medi-Cal Program Anticipated

Did you know that California has the most generous rules in the country that allow an individual to qualify for Medi-Cal and still protect their home and other assets?  Unfortunately, time is running out to take advantage of these lenient rules.

Senate Bill 483, signed by the Governor on September 27, 2008, will bring drastic changes to the Medi-Cal Long Term Care program.  SB 483 implements the changes made by the Federal Deficit Reduction Act of 2005.  The DRA requires states to impose limitations on eligibility for applicants of home and facility Medi-Cal benefits.   States are required to implement these limitations or risk loss of funding from the Federal government.

The only good news is that until the Department of Health issues regulations to implement these changes, the current law still applies.  This means that there is a limited window to engage in planning under the current rules.

Individuals who should consider engaging in legal planning now include:

•    Anyone on Medi-Cal who owns a home.
•    Anyone paying privately for care in a nursing home who might be able to qualify for Medi-Cal long term care benefits.
•    Anyone who anticipates the need for nursing home care in the near future.

The following sets forth a summary of the anticipated changes to the Medi-Cal program:

Treatment of Assets:

The look-back period in California is currently 30 months.  The period of ineligibility currently runs from the first of the month of the date of the transfer.  The DRA increases the look-back period to five years (60 months) and the penalty period will begin to run when an applicant is in a nursing home and applies for benefits, not when the assets were given away.

Home Equity:

SB 483 limits equity in the exempt homestead to $750,000.  In addition, SB 483 defines "equity interest" as the lower of the assessed value or the appraised value, minus encumbrances.  The home equity limits will not apply if:

•    The individual's spouse, minor, blind, or disabled child is living in the home,
•    The individual was eligible for or was receiving home and facility care prior to 1/1/06, or
•    Denial of eligibility would result in a demonstrated hardship.

Treatment of Annuities:

The annuity provisions of SB 483 will require applicants to disclose any interest the applicant or applicant's spouse has in an annuity.  SB 483 will also require the State to inform applicants and beneficiaries that the state will become a remainder beneficiary in certain types of annuities. The annuity provisions also:

•    Specify those annuities owned by an individual or an individual's spouse in which the state may become a remainder beneficiary; defines transactions that are subject to these rules; specifies the notice process to the issuer.

•    Specify those annuities that are exempt from the DRA requirements, including annuities purchased with the community spouse's CSRA, work-related pension annuities, and annuities that are irrevocable and non-assignable, actuarially sound, and that provide for fixed, equal payments over the term of the annuity, with no deferral and no balloon payments.

Nine Questions to Help You Find A Qualified Elder Law Attorney

1.    How can I know if an attorney is qualified to help me with my estate planning or elder law needs?

A.    You should ask whether the attorney has been certified as a Specialist by the State Bar of California Board of Legal Specialization in Estate Planning, Trust and Probate Law. California attorneys certified as specialists must pass a written examination in their specialty field, demonstrate a high level of experience in the specialty field, fulfill ongoing education requirements and be favorably evaluated by other attorneys and judges familiar with their work.

2.    Will the attorney help me when I am in a crisis?

A.    The attorney needs to have a trained staff and detailed systems in place to promptly and accurately address your needs in a crisis.

3.    How can I tell whether the attorney keeps up to date on developments in elder law?

A.    The attorney should be active in the National Academy of Elder Law Attorneys and its California chapter. The attorney and staff need to participate in continuing education programs.

4.    Is elder law and estate planning the attorney’s only business?

A.    The attorney should focus on elder law to develop and maintain the expertise required in dealing with complex elder law matters.

5.    Does the attorney have malpractice insurance?

A.    You have the right to ask if the attorney has malpractice insurance, and this proof should be provided by the attorney upon request.

6.    Should the attorney provide me with client references and testimonials?

A.    A qualified attorney will stand behind his or her client service and be eager to share client references and testimonials.

7.    Does the attorney have a client confidentiality and security policy to protect my personal information?

A.    Without careful and systematic precautions, confidential client information can be at risk of disclosure. For example, careful attorneys shred all client-related documentation rather than disposing of it in the trash.

8.    Does the attorney have any disciplinary history?

A.    You should always check the attorney’s history to determine if they have been disciplined by the state bar. http://www.calbar.ca.gov is the official State Bar of California website where you can search for this information.

9.    Does the attorney treat all people with respect and dignity regardless of age, special needs, or mental capacity?

A. A quality elder law attorney will talk directly to clients and treat them with dignity and respect, regardless of age or decisional capacity.