Elder Law and Estate Planning Information

Estate Planning Myth No. 2

The perils of joint tenancy ownership.  Many potential clients tell me that they do not need estate planning.  Instead of doing a will or a trust, they explain that they will just put their children on title to the house and bank accounts.  When I hear this, I look at them and ask if they have really thought that decision through.  Usually they say they have.  I then proceed to point out the problems with their money saving “solution” to estate planning.  Problems such as:

1.    A child, once added to an account, having the ability to remove all of the money at any time.

2.    A child, once added to title to an asset, has that asset available to satisfy that child’s creditors.  In addition, that asset is now subject to attachment should the child ever have a judgment against him or her.

3.    A child, once added to title to the house, dying before the parent, thereby giving title back to the parent and leaving the deceased child’s family with nothing.

These are just a number of common issues that come up with joint tenancy ownership that people usually do not think about.  When I explain to the potential client the downfalls of joint tenancy ownership, they realize that the subject was far more complicated than they thought and that they should, in fact, do a complete estate plan, including a will, trust, power of attorney, and advanced healthcare directive, to avoid these problems. 

Rather than engage in self-help that may result in significant and severe unintended consequences, consult with an estate planning attorney who can sit down and explore all of your options, including adding people as joint tenants, and what the pros and cons are of each option.    

Gerald W. Cummings is a San Jose, California attorney who helps families find peace of mind.  He is on the web at www.cummingslegal.com  and can be reached at (408) 286-2122.

Estate Planning Myth No. 1

Probably the most common estate planning myth I see is the belief that a person does not own enough to justify estate planning.  This is absolutely untrue.  Every adult should have, at a minimum, a power of attorney for finances and an advanced health care directive.  These documents will specify who can make financial and medical decisions for you, respectively, should you be unable to do so yourself due to incapacity.  The advanced health care directive also gives the signer the ability to specify what types of health care he or she wants, including instructions regarding end of life treatment.  In addition, every adult should have at least a will to specify who will receive that person's stuff when that person passes.  Detailed instructions, such as those found in a will, can go a long way to heading off any conflict after death.  Finally, in California at least, everyone who owns real property and/or has more than $100,000 in assets should consider a living trust.  The main feature of the living trust is to avoid probate after death, a process that, in California, is expensive and takes a long time.  More on these documents later.

Estate Planning Myths

In the many years that I have been helping families find peace of mind through estate planning, I have come across several beliefs over and over again that are just not true.  These "myths" of estate planning are often cited by people I speak with as reasons not to do any type of planning.  Over the next several weeks I will explore these myths in greater detail.  Among the myths I will look at are:

1. The belief that a person does not have enough to justify estate planning.
2. The belief that joint tenancy ownership is a good substitute for a properly drafted estate plan.
3. The belief that a will is sufficient and that a living trust is only for the "rich".
4. The belief that a special needs child needs to be disinherited because he or she cannot have any money and still receive government assistance.
5. The belief that the only way to qualify for paid public benefits to pay for skilled nursing care is to go broke.

Gerald W. Cummings is an estate planning and elder law attorney in San Jose, California.  He dedicates his practice to helping families find peace of mind by showing them how to avoid probate, how to find and pay for skilled nursing care without going broke, and how to provide for a disabled child.  Find him on the web at www.cummingslegal.com or contact him at (408) 286-2122.

Planning for a disabled child

I have many clients who have special needs children.  It is incredibly rewarding when I explain to them that they can leave money to their special needs child in a way that will preserve that child's ability to receive SSI, Medi-Cal, and other needs based public assistance.  Many of these parents had been told that they could not leave anything to their disabled child and were relieved to discover that they could do so.  I have had several parents who had been told by an attorney  that they had to disinherit their special needs child.  Needless to say, they never went back to that attorney.

How is this done?   Through the use of a special needs trust.  The special needs trust is an incredibly powerful estate planning tool that will allow the donor (typically the parents) to set aside money or other assets for the benefit of a disabled beneficiary (typically a special needs child) in a way that will not interfere with the disabled person's ability to receive public assistance.  A trustee will manage the money on behalf of the disabled beneficiary and, although there are many rules to be aware of, the cardinal rule is to never pay any money from the special needs trust directly to the disabled beneficiary.  Rather, the trustee pays for things the disabled beneficiary needs.

It is even possible for a disabled person to setup their own special needs trust with their own money (received from a personal injury settlement, inheritance, etc.) if they and the special needs trust meet certain requirements set down in Federal law.

As can be seen, the special needs trust is a powerful tool, both for the parents or other loved ones of a disabled beneficiary and for the disabled beneficiary him- or herself.

Gerald Cummings

Gerald W. Cummings is a San Jose, California attorney who helps families find peace of mind.  He is on the web at www.cummingslegal.com and can be reached at (408) 286-2122.

Why do people need estate planning?

People often tell me that they do not need estate planning.  They say they do not have anything, or they do not have kids, or they do not have a spouse.  When someone says this to me, I look at them and tell them that everyone needs some sort of estate plan.  I ask, "Who will make medical decisions for you if you are unable to do so?" or "Who will pay your bills if you are unable to do so due to incapacity?".  This usually gets them thinking that they do, in fact, need estate planning. 

Framed this way, it is clear that everyone needs some sort of estate planning.  With estate planning, you can say who will make your financial and medical decisions for you if you are unable to do so.  With proper estate planning, however, you can do so much more.  You can say where stuff goes when you die, you can say who will raise your minor children, you can provide for a special needs child, you can reduce your taxes, you can provide for a charity, you can make it easier for you or your spouse to qualify for Medi-Cal benefits to pay for skilled nursing care should you need it.  You can even increase your income through proper estate planning.  That is just the tip of the iceberg.  Check back for future discussion of these, and other, topics.

Gerald Cummings

Gerald W. Cummings is a San Jose, California attorney who helps families find peace of mind.  He is on the web at www.cummingslegal.com and can be reached at (408) 286-2122.