Posts By: Gene Osofsky

Q. My brothers and I plan to buy a home together, and wonder whether we should take title to the home as joint tenants or as tenants-in-common. Can you explain the difference?

A. Sure. There are distinct differences between these forms of ownership. The principal differences pertain to the equality of ownership and the right of survivorship. Here is the breakdown.

Joint Tenancy: For owners of property to qualify as Joint Tenants, the property must be (1) acquired at the same time, (2) by the same deed which clearly states that the owners are joint tenants, (3) the interests of all joint tenants must be equal, and (4) each must have the right of full access and possession of the property. These four requirements are often called the “4 unities” in the law of joint tenancy. If so acquired, this form of ownership creates the following right of succession: upon the death of the other joint tenant(s), the last surviving joint tenant takes ownership of the entire property, without probate or other proceedings. This right of survivorship is one of the most important features of Joint Tenancy ownership.

Tenancy-In-Common: By comparison, persons who own their interest as Tenants-In-Common can have different percentage interests in the property and can acquire their interests by different deeds and at different times. Further, upon the death of a Co-Tenant, his interest goes, not to the other co-tenants, but to his own beneficiaries or heirs.

In terms of succession upon death, it is sometimes helpful to think of Joint Tenancy as requiring, upon death, a “sideways” movement of ownership to the other surviving Joint Tenant(s), whereas upon the death of an owner holding his interest as a Co-Tenant, the succession moves “downstream” to his/her own heirs or beneficiaries.

Because of the right of survivorship, married couples will often hold title to their home as Joint Tenants, as most couples typically want the surviving spouse to acquire ownership of the entire home or other property, which would then occur without the need for probate. By contrast, co-owners who are friends, business partners, or even siblings, who may have their own families, would – upon their own death – typically wish their interest to go down to their own family members, and not to the other surviving co-tenants. This difference is significant.

In your situation, you indicate that you plan on making a purchase with your siblings. I presume that, if any of you passed away, each brother would want his share to go to his own family, which may include his own spouse or children, rather than to the other brothers. In that event, you would want to acquire title as Co-Tenants, so that this preference is clear.

An important comment about joint tenancy: if a joint tenant conveys his/her interest to someone else, or even to his own trust, that transfer may sever the joint tenancy, eliminate the right of survivorship, and create a Tenancy-In-Common. So, be mindful about such transfers when you do your own estate planning.

Posts By: Gene Osofsky

Q.  My husband and I would like to make wills, but I am concerned because he has been recently diagnosed with early-stage dementia. Legally, can he still make a will?

A.  It depends, but very often the answer would be yes. Under the law, he must have what is called “testamentary capacity”. This means that at the time he signs a will he must understand what he is signing and the implications of making a will. Simply because he has been diagnosed with a form of mental illness or disease process, does not necessarily mean he lacks legal capacity to make a will.

Generally speaking, he would be considered mentally competent to make a will if: (1) he is able to understand that he is making a will, (2) he understands the nature and extent of his property, which means he understands what he owns, and (3) he knows and understands who his family relations are.  Further, he would only need to meet these requirements at the time he signs his will.  Some persons are more lucid at certain times during the day, and he should sign his will during those lucid periods.

A related question is whether he would also have sufficient capacity to make a trust. The question here is whether signing a trust requires a greater degree of capacity than signing a will, as trust documents are usually more complex.

A few years ago a California court addressed this question in a case called Andersen vs Hunt. In that case, a father made an amendment to his original trust, created years earlier, to leave a 60% portion of his estate to his longtime romantic partner, thereby reducing the share going to his three children. When the father died, his children contested the trust on the ground that their father lacked sufficient capacity, urging that the act of creating a trust required a greater degree of capacity than signing a will.  On appeal, the court upheld the trust amendments, concluding that they were rather simple in nature and therefore the law concerning the capacity to make a will should control. The lessons: (1) if a trust document were drafted to be relatively simple and straightforward, then the requirement of capacity would likely be construed under the more relaxed standard applicable to the making of wills; (2) alternatively, for a person whose capacity were questionable, perhaps a will would be the better choice.

If there is concern that capacity may later be questioned, it would be helpful to have evidence of your husband’s capacity at the time he signs the will or simple trust, such as a current letter from his physician attesting to his capacity and/or a video-taped pre-signing interview conducted by the attorney preparing the will.

If your husband has sufficient capacity to meet the relaxed standards for making a will, or even a simple trust, I would urge him to do so as soon as possible. Further, if he does not plan to disinherit any children, or to treat them differently in the overall division, the chance of a later contest is much reduced.

Posts By: Gene Osofsky

Q.  Our grandson will be graduating from college soon, and we would like to get him a gift which recognizes the beginning of his adult life and career.  We thought that something of a “legal” nature might be worthwhile, and wondered if you have any ideas?

A.  Great thought and indeed I do.  Why not arrange through your attorney to provide him with a basic estate planning package, which would include an Advance Health Care Directive, a Durable Power Of Attorney and a simple Will. The message, of course, is that he has now formally entered the world of adulthood and needs to take prudent steps to protect himself and his loved ones from the unexpected.  He would also learn that these essential “life planning documents” need to be kept up-to-date as circumstances change, e.g. when he marries, has a child, purchases a home or acquires wealth.

Understandably, his focus will most likely be upon other things, such as deciding where he will live, beginning a new career, and perhaps finding a life partner. But your thoughtfulness can also teach him that these new adventures come with a certain responsibility.  What if, for example, he were in an accident or suffered serious illness and became unable to manage his own affairs or direct his medical treatment.  This happens!

In our own family, while our son was away at college, he suddenly had to undergo emergency surgery.  I can assure you it was quite unsettling to have to scurry around to prepare and arrange the remote signing of an Advance Health Care Directive while, at the same time, make emergency travel plans to be with him.  Fortunately, everything turned out fine, but one never knows.

While your grandson’s own parents may feel that, should anything happen, they can always make decisions for him, they may be surprised to learn that the law does not agree.  Once he  turns 18, he becomes an adult in the eyes of the law, and his parents no longer have the legal right to make decisions for him or direct his medical care.  Instead, if suitable legal documents were not in place, they could only acquire that legal authority through a court ordered conservatorship, a public, time-consuming and expensive legal proceeding.

Your grandson need not worry that his designated Agents will take over management of his life.  The Advance Health Care Directive and the Durable Power Of Attorney can be “springing powers”.  This means that they would only “spring to life” and become operational when– and if– he became incapacitated and could not make those decisions for himself.  Also, he need not feel obliged to name his parents as his agents.  Instead, he could name whomever he wishes, such as a sibling or even a very good friend to serve as his agent or successor agent.

One of the other benefits of this gift would be his introduction to a professional with whom he might build a relationship, and who might be able to assist him over the years as he matures.  You might also consider introducing him to your banker or stockbroker, help him establish a contributory IRA and discover the wonders of compound interest.  Indeed, you might be able to show him how – with regular contributions– he could be a millionaire by the time he is your age:))

**********

Posts By: Gene Osofsky

Q. I recently qualified for SSI and Medi-Cal, but I am going through a divorce . I worry that when my ex-spouse is ordered to pay me Spousal Support, I may then lose my SSI and Medi-Cal. Is there a way that I can keep my public benefits and also receive support? I am now 62 years old, if that makes any difference?

A. Yes, indeed, if the right strategy is implemented. Unfortunately, very few Family Law attorneys and judges are familiar with how to preserve these benefits in the divorce context. As a result, the sad fact is that many persons on SSI and/or Medi-Cal lose their benefits when they divorce. A bit of background might be helpful:

To qualify for Supplemental Security Income (“SSI”), an individual with a disability must meet two financial conditions: The individual must (a) have less than $2,000 in non-exempt resources (e.g. savings), and (b) his or her monthly income must be less than the SSI benefit rate, currently $1,133.73 (in 2023). An award of SSI also entitles the beneficiary to Medi-Cal.

In the divorce context, a spouse would typically be awarded both spousal support and a division of marital assets, such as bank accounts, IRA’s, etc. If that spouse were receiving SSI and/or Medi-Cal, the award of support and/or marital assets could render her ineligible for public benefits if they put her over the income or resource ceilings. The question, then, is whether there is a way to preserve BOTH a spouse’s public benefits AND her right to support and to a share of marital assets in a divorce?

Answer: YES.  Enter the Special Needs Trust (“SNT”). If set up properly, the SNT can hold both your court-ordered support and your share of community resources without impairing your right to SSI, and thus preserve both your public and “private” benefits.

Working with an attorney with expertise in this area, you could establish your own SNT and even select your own Trustee, who might be a parent, sibling, or even a trusted friend. Alternatively, you could join a Pooled SNT, established and managed by a non-profit organization for a pool of beneficiaries, which would provide professional trustee services for a reasonable fee.

Your court-ordered support would then be paid monthly directly to the SNT Trustee, rather than to you. The Trustee would then deposit the funds into your SNT and handle them in a manner compliant with the SSI and Medi-Cal rules. This typically would mean that the Trustee would not disburse funds directly to you, but instead would pay your third party providers, selected by you, directly for the goods and services that you need, such as a car, computer, clothing, etc. A good trustee would comply with your requests for payment to your selected providers, so long as those payments did not undermine your ongoing eligibility for the public benefit programs. The trustee would also typically make periodic reports to the government programs to affirm compliance with the program rules.

Recipient of Support Must be Under Age 65 When the Initial Order is Made

Also, you must be under age 65 when the Court Order is initially made, but once made, spousal support paid into the SNT even after you turn age 65, continues to be treated as exempt unearned income by SSI.

____________

To make this option work, it is essential that you engage an Elder Law or Special Needs attorney familiar with the use of the SNT in the divorce context. The SNT attorney would then work with your divorce attorney and would help educate the judge and opposing counsel as to the benefits of this technique.

Adult Child With Disability

The same technique would apply in the case of an adult child with a disability who receives SSI and Medi-Cal and for whom a parent is ordered to pay child support. By properly establishing and administering a SNT for that child, he or she could then receive the advantages of both public benefits AND child support, which together would enhance that child’s life.

For more reading, see the article on this website entitled “Special Needs Planning and Divorce”

*******

Posts By: Gene Osofsky

Q. My wife and I hold title to our home as joint tenants, and most of our cash assets are in the form of two large IRA accounts and one big annuity. We have basic wills which leave everything to the other and then on to our children. Our son suggested that our wills may not control what happens to our assets when one of us dies. Should we be concerned?

A. Perhaps, in the sense that your wills will not control what happens to your assets when one of you dies. Rather, the form of title will control as to your home, and the beneficiary designations on your IRA’s and annuity will control what happens to those assets. Here is the way it works:

Your Home: Since you and your wife hold title to your home in joint tenancy, when one of you dies the other will automatically become the owner by right of survivorship. The right of survivorship is the primary feature of joint tenancy. In essence, the form of title overrides your wills. It is only when the survivor later dies that his or her will then control who ultimately gets the home. While many couples in California do hold their home in joint tenancy, it is often not the best form of co-ownership. One principal reason: it does not optimize the tax benefits that go along with holding title as ”community property” where the home has appreciated significantly in value since the time of purchase.

Your IRA Accounts: Each of your IRA accounts will, upon the death of the IRA owner, go to the primary beneficiary named in the account agreement signed when you created your IRAs. The pattern of distribution very much depends upon who you designated as primary and contingent beneficiaries when you created your accounts. Presumably, the primary beneficiary for each of you is the other spouse and, if deceased, your children. It is always wise to review these designations and retain in your permanent file a copy of the documentation you signed when you created your accounts. As a lawyer, I have been involved in at least one case where the IRA custodian lost the paperwork on a very large IRA account, almost costing the designated beneficiary a six-figure tax bill because of the resulting delay in distribution. The IRS has strict rules about handling inherited IRA accounts, and these must be observed on a timely basis to avoid unnecessary tax.

Your Annuity: the person or persons to receive your annuity would, just like the IRA, depend upon who are named as beneficiaries on the annuity contract, itself. The same would be true if you owned any other insurance products or policies. Where you have designated named individuals to be primary or contingent beneficiaries, the contract or policy controls and not your will.

In view of the above, whenever clients come in to see us for estate planning, we always urge a review of all beneficiary designations associated with IRA and other retirement accounts, as well as annuities and other insurance products. Where appropriate, the beneficiary designations can then be corrected, so that the plan design accomplishes the clients’ goals and everything works together.

Posts By: Gene Osofsky

Q. It seems that my father lost the will that he signed some years ago. It might have been misplaced when he moved from his home into an assisted living facility two years ago, but we only just noticed its absence when we were helping him organize his papers and affairs. What do we do?

A. Surprisingly, this is not an uncommon occurrence. Indeed, the actual court form required to initiate a probate proceeding in California actually has a question asking if the will has been lost. If so, it requests that either a copy or a “statement of the testamentary words or their substance” be attached to the court petition. However, merely because the petition asks for this information, does not necessarily mean that it is a simple matter of furnishing a photocopy to the court in order to validate his will and testamentary intentions.

Indeed, under California law, if a lost will was last in the testator’s possession, if he were competent at the time of his death, and if there is no “duplicate original” that can be found, there is a presumption that the testator destroyed it with the intent to revoke it. Further, there is one California judicial opinion that has held that a photocopy of a lost will did not meet the test of being a “duplicate original”, which would actually be an original duplicate signed by the testator at the time he executed his will .

So, if his will still cannot be found at the time of your father’s death, then the presumption will apply, at least initially. At that point, unless you can produce evidence to convince the court that it was misplaced without intention to revoke it, the court would likely then proceed with the case as if he had died intestate, which means dying without a will. California law would then control what happens to his estate and the designation of beneficiaries and their corresponding shares of his estate. Unfortunately, if your father does not now have capacity to sign a new will, you will either have to convince the court after his demise that he never intended to revoke it, or have your father’s estate be distributed according to the California Law of Intestate Succession.

So, if your father is alive and able to do so, I would strongly urge him to execute a new will, and to make arrangements to keep it in a safe place. Some folks prefer to keep their original will in their bank safety deposit box. This is okay providing that the designated executor knows where that box is located and, further, knows where your father keeps the key to his box. Alternatively, your father might open a safety deposit box with two co-owners, each of whom has a key to the box, so that the co-owner (presumably his designated executor) can access the box without administrative delay following your father’s demise.

If there had been a calamity, such as a fire, or burglary, or something of that nature, and if there is evidence to believe that the will was lost or destroyed in that event, I would then urge the family to secure and keep safe a copy of the fire or police report, which hopefully references the loss of valuable papers, will, etc. That report might later be shown to the court when the executor files a formal Petition for Probate, and may then be deemed sufficient evidence to explain the “lost will”, overcome the presumption that your father intentionally destroyed it, and accept a photocopy, or statement of its contents, as sufficient evidence of his will.

Posts By: Gene Osofsky

Q. My wife and I have 4 sons. Unfortunately, one of them is not deserving of an equal share of our estate when we pass, and we have shared that with him. He now threatens to challenge our trust after we die on the ground that we lacked capacity when we recently created it. We are both in our 80’s, but fully competent. Is there anything we can do now to ensure that our wishes, as expressed in our trust, are honored after we pass?

A. Yes. Here are three suggestions, and you can undertake one or all if you wish:

1) Arrange a Forensic Evaluation Of Your Capacity: Arrange for an evaluation of your capacity by a forensic psychologist or psychiatrist now, while you both are fully competent. The evaluator should be a professional who is well versed in the forensic aspects of evaluating capacity, and should be someone who will be able to testify, if necessary, down the road. You should arrange this through your attorney, who can assist in locating a suitable professional. It is likely that the interview of each of you would be recorded and preserved for possible future reference. The evaluator should inquire fully about your reasons for wanting to treat your one son differently, and would ultimately render an opinion in writing regarding your capacity, the basis for your decision, and other relevant factors. Try to select a professional younger than both of you, who is likely to be alive and available to testify when you have both passed on. In any event, at least the evaluator’s recorded interviews and psychological testing should be preserved for later access by another professional who could then testify.

2) Include a “No Contest” Clause in Your Trust: To make this effective, make sure to leave the one son enough to discourage a contest. If you leave him little or nothing, then he would have nothing to lose by initiating a contest. See this Article for more on this topic.

3) Initiate A Court Proceeding Now to Affirm the Validity of Your Trust: Perhaps the most effective approach would be to formally initiate a court Petition now, during your lifetimes, to confirm the validity of your trust by an Order of Court. You would be available to tell the court why you created your trust as you did. If successful, the resulting court order affirming your trust would then foreclose anyone from later on challenging it, provided that the would-be challenger(s) received notice of the court proceeding and an opportunity to challenge your trust. If any challenger fails to object, or if he objects but the judge rules against him, then he would thereafter be foreclosed from later challenging your trust, under a legal doctrine called “res judicata”, meaning that the matter had “previously been adjudicated” and is now foreclosed from challenge.

The proceeding would be brought under CA Probate Code § 17200 to “determine the existence of the trust”. The fact that there is legal authority to permit you to bring such a Petition during your lifetimes is a matter not well known to even many attorneys, as the common wisdom is that proceedings to challenge a trust can only be brought after the death of the Trustors who created it. Not so. In fact, in addition to the statutory authority, there are interpretive judicial opinions, which embrace the notion that proceedings to affirm the validity of a trust, or an amendment to trust, can be brought before a judge during the lifetime of the Trustor(s).

Of course, how you approach your concern is a matter that you should discuss with your attorney, as there are significant factors to take into account before going forward. For example, initiating a court proceeding during your lifetimes may exacerbate family disharmony, or precipitate unpleasant and expensive litigation. By the same token, even seeking a forensic evaluation of your capacity now might, itself, raise questions as to whether it was motivated by a concern about your very capacity to create the trust.

So, consider these matters carefully with your attorney before undertaking any of these strategies. But, at the same time, know that there are ways to protect your trust against a post-mortem contest.

**************************

References regarding the Court Proceeding: California Probate Code § 17200; Conservatorship of Irvine, 40 Cal. App. 4th 1334, 1342 (1995); Murphy v. Murphy, 164 Cal. App. 4th 376, 398-399 (2008).

Posts By: Gene Osofsky

Q:  I heard on a radio program that Living Trusts should be HIPAA compliant, but I didn’t quite catch the full comment. Can you shed any light on this?

A. Sure. Most trusts and powers of attorney contain provisions which call for a change in trustee or agent when the maker of these instruments (you) becomes incapable of handling his or her own financial or personal affairs.  These documents typically require that incapacity be proved by the written statement of one or, sometimes, two physicians.  The problem:  these provisions often assume that the physicians will provide the written statements upon the simple request of another family member.  But here’s the catch:  under current law relating to medical privacy, the physicians cannot legally provide the statements unless a “HIPAA Authorization” has been signed in advance by the trust-maker.

HIPAA refers to a federal law designed, in part, to protect the privacy of one’s medical records. It stands for Health Insurance Portability and Accountability Act, and the provisions concerning medical privacy became generally effective in April, 2003.  The law provides stiff fines for doctors, hospitals and other providers who disregard the requirement of written authorization.

So, the term “HIPPA Compliant” refers to a trust or other estate planning document which includes, among its provisions, a section expressly authorizing someone — usually the nominee next in line to be trustee or agent — to request competency statements from the trust maker’s physicians. Alternatively, the HIPAA Authorization may be contained in a separate document. But preauthorization, in some form, should be part of the person’s estate plan in order to satisfy the medical release requirement, encourage physicians to provide the needed statements and thereby permit the smooth transfer of management responsibility when incapacity arises.

Many persons with long standing relationships with their physicians assume that their own doctors will comply with a request from the family without the necessity of a release.  However, this approach is risky, because at the time of need you may not be under the care of your own personal physicians: for example, you may be in a critical care hospital or in a nursing home where your care is managed by other physicians who practice only in that care facility. Further, even your own doctors may be reluctant to breach privacy protocols, especially if the request for disclosure arises at a time of family conflict.

A word to the wise: review your trust, powers of attorney and related documents to make sure that you have pre-authorized designated persons to request letters from your physicians when they reasonably believe that you are no longer capable of managing your own financial and personal affairs. Doing so will help smooth the transfer of management responsibility as you originally intended and may avoid the need for court intervention to resolve the issue.

Posts By: Gene Osofsky

Q,  My wife and I were wondering whether a Power of Attorney that each would give to the other would end upon death? Can you advise?

A. Short answer. Yes! A Financial Power of Attorney (“POA”) generally ends upon the death of the principal, the principal being the one who gives the “powers” to an agent, the latter being a person whom we sometimes call an Attorney-in- Fact (”AIF”). The only exception to this rule is where the agent, in good faith, is not aware that the principal has died, and in good faith exercises the powers granted in the document for the benefit of the principal, even after his or her death.

Where the agent acts in good faith, the law protects him from liability. It also provides a procedure whereby – upon the preparation of a sworn affidavit attesting to the agent’s lack of knowledge of the principal’s death – the agent’s innocent actions under the POA may be affirmed and bind the estate of the principal, just as if he were still alive. Otherwise, upon the death of the principal, the agent is only authorized to take proper steps to return the principal’s property and records of transactions to the proper custodian, and to provide an accounting of the agent’s actions if properly requested.

By the way, another circumstance that would terminate the agent’s authority is if the agent and AIF were husband and wife and their marriage is dissolved or annulled.

For a principal who wishes to have a surrogate continue to manage his property after death, the most appropriate options are to so name the Agent as Executor in a Last Will, or as Successor Trustee in the principal’s Trust.

As to a Healthcare Power Of Attorney, or what is more frequently called an Advance Health Care Directive, the document normally does confer upon the agent limited post-mortem powers even after the principal’s death. Those powers are as follows: to dispose of the principal’s remains, to authorize an autopsy, to donate all or part of the principal’s body for transplant, education, or research purposes, and to inform individuals designated by the principal of his or her death. Of course, the principal may– in the Advance Health Care Directive, itself– restrict even these post-mortem powers if he wishes, but otherwise the Agent would the have powers indicated even after the principal’s death.

I hope this helps.

Gene L. Osofsky is an elder law and estate planning attorney in the East Bay.  Visit his website at www.LawyerForSeniors.com. 

Posts By: Gene Osofsky

Q. Our 85 year-old mother is frail but wishes to remain at home.  She has limited financial resources, so my sister is living with her and providing care without pay.  Are there any government programs that might help us hire a caregiver and give my sister some relief?

A. Yes. There are a number of programs, but one that may be of special interest is the In-Home Supportive Services Program (“IHSS”).  It is designed for persons of limited financial means who are blind, disabled or over age 65, and who are unable to live safely at home without assistance.  For qualifying individuals, it provides nonmedical services such as meal preparation, cleaning, laundry, bathing, feeding, dressing, grooming, toileting, and monitoring for persons with cognitive impairments who are at risk of injury at home.

 It works like this: The applicant must first qualify for either SSI or Medi-Cal, and then submit an application for the IHSS program.  An in-home assessment is then made by a social worker to determine the number of hours of care needed. This can be up to 195 hours per month for a non-severely impaired applicant and up to 283 hours per month for one who is severely impaired.  Upon approval, the beneficiary then selects and hires a caregiver and the IHSS program pays the worker for the approved number of hours per month, currently at the rate of $18.10 per hour in Alameda County and $16.50 per hour in Contra Costa County (as of January 1, 2023). See this chart for rates in other California counties.

Resource Limits:  The program is designed for persons of very modest resources who are either (1) eligible to receive Supplemental Security Income (“SSI”), or (2) eligible for Medi-Cal.  Medi-Cal eligibility is now easier to achieve as the current resource caps have recently been dramatically expanded. To qualify for Medi-Cal, the applicant can now have up to $130,000 in savings if single, although more is allowed if married.  Note:  for those persons with excess assets, there may be lawful strategies to accelerate eligibility without the need to first spend down the excess.

Income Limits:  For persons with low monthly incomes, the benefit is available without a share of cost (“co-pay”).  However, for persons whose monthly income is above certain levels (currently, above $1,564 for a single person and $2,106 for a married person, as of December 2022), the applicant will have a share of cost that must be paid to the worker(s) before the IHSS program pays the balance.  Thus, the program only works well for persons with low incomes, or persons with great need who are awarded hours close to the maximum.

In many cases, the caregiver may hire a family member, whether a spouse or an adult child.  Also, for the caregiver who works at least 80 hours per month, the program makes healthcare available at a nominal monthly premium, a valuable benefit to the worker.

If your mother qualifies for IHSS, she could hire your sister so she could receive both a modest salary and health insurance.  Also, to give your sister some relief each month, your mother could split care hours, hiring your sister part-time and another caregiver for the balance of approved hours.

To find out more, call the Alameda County Area Agency on Aging at 510-577-1800, or go to www.AlamedaSocialServices.org.