Yet Another Real Estate Problem (Part 1)
I wrote a few months ago about a real estate sale that hit a snag when it was discovered that one of the record owners had died many years ago (as well as the sole heir to that owners estate and the sole heir to the sole heir’s estate). With our help, the home was sold after several months of delays. Unpaid taxes going back 12 years still need to be paid before the estate administration process can be completed and funds disbursed. That case illustrates how a failure to administer an estate until many years later can cause lengthy delays and a more difficult and costly process. Another estate sale of real property has come to our office which, likewise has hit a roadblock. These issues tend to arise once a buyer is found and a title search is done for the purpose of issuing a title policy to the buyer to protect his/her interest. Does each person offering the property for sale actually own it or are there other parties who may have an interest? In this case, our client is the Executor of the estate of the Decedent who owned a 100% interest in his home - at least that’s what the most recent
A Celebrity Estate Plan Lesson (Part 2)
In my post last week I wrote about the trial in the matter of Aretha Franklin’s estate to determine which of two handwritten wills would be admitted as her last will. The case illustrates the reasons why everyone should have a will executed in accordance with state law and preferably typewritten and prepared by an attorney familiar with trust and estate law and the estate administration process. Having a will prepared by an experienced attorney will greatly reduce the risk of a court battle which can be costly in terms of legal fees but also family harmony. In Aretha Franklin’s case, it pitted 2 of her sons on one side against a third son. That’s because the two handwritten wills that were discovered in her home differed in their terms. For one thing, her Michigan home was left to one son and her grandchildren in her 2014 which was not the case in her 2010 will. For another her 2010 will stipulated that her sons were required to obtain a business degree or certificate before receiving their inheritance whereas the 2014 will had no such requirement. While the court did resolve the issue of which will controls, there are indications that the family may be back in
A Celebrity Estate Plan Lesson (Part 1)
Over the years I have written a number of blog posts about the reasons everyone should have a will and more specifically a formal one. Too many adults don’t and high profile celebrities are no different than the general population. I wrote 10 years ago about the litigation surrounding James Gandolfini’s estate because he didn’t leave a will. Aretha Franklin is another celebrity example. Franklin died in 2018 but only this month a trial settled - at least for the moment - the issue of what document should be considered to be her last wishes with regard to the assets that comprise her estate. That’s because she didn’t leave a formal will prepared an attorney. Instead she left what is known as a holographic will - one that she hand wrote and signed rather than one typewritten and witnessed and notarized in accordance with state law. In fact she left two holographic wills. Both were discovered in her home. A 2010 will was found in a locked cabinet and a 2014 will was found in the couch cushions in her living room. Both were handwritten and signed by Franklin but differed as to their terms. This led to a predicable legal dispute amongst 3 of her sons as to which
The Home and Not Much Else (Part 3)
In this week’s post, I continue to discuss a common fact pattern we see in our office. The case involves someone who needs long term care, doesn’t have enough to pay for it but does have a house. As I explained last week, the available government benefit programs don’t always cover the entire cost of care. In particular, if you want to be cared for at home, there isn’t a program that is guaranteed to cover all of what you need. Tapping into the equity can fill that gap but it must be done carefully. That’s because while the equity in your home is a non countable asset as long as you or your spouse is living it, once you draw out the equity in the form of cash by way of a mortgage and put it in your bank account, it becomes a countable asset. That additional amount may then cause you to lose Medicaid benefits if the balance exceeds the countable asset limit. So how do you navigate through the process so that the mortgage amount supplements the Medicaid benefit but doesn’t cause you to lose it? The type of mortgage is key. Taking a lump sum and depositing it in your bank account won’t work
The Home and Not Much Else (Part 2)
In last week’s post I laid out a common fact pattern we see in our office. In short, it’s a case where long term care is needed and there is not much in the way of liquid assets to pay for it but there is a house which the senior owns - usually with a small or no mortgage. In general, there are 3 ways to pay for care - using your own funds (referred to as private pay), long term care insurance and government benefits - maybe a VA benefit but more often Medicaid. Both these benefits are needs based. Because the home is an exempt asset if the applicant or a spouse is living in it as a primary residence, it is possible to qualify for these programs without selling the home - assuming the other eligibility requirements are met (eg. no transfers were made that would cause a waiting period for benefits). Just because one can qualify, however, doesn’t mean that will completely solve the long term care financing problem. That’s because these programs may not cover the entire cost of care. For example, the VA Aid and Attendance pension will max out at about $2200 per month for a married couple and somewhat
The Home and Not Much Else (Part 1)
In this week’s post, I address a common problem we see often in our office. An elderly client owns a home but very few other liquid assets. Income from Social Security and pensions is enough to meet monthly expenses - but then things change. Long term care becomes necessary. That’s when the status quo no longer works. Expenses will far outstrip income. So what are the options? There are a number of choices. Which ones work best depends on the type and amount of care needed and where it is administered. In making a decision it is important to be as realistic as possible about the situation and to recognize that change may be necessary with very little notice. Navigating the long term care journey can be a roller coaster ride. Care needs will typically increase over time as a person’s health deteriorates. This is typically gradual but it could also be sudden. Consideration should be given whenever possible to implementing a plan that has flexibility to enable a shift in care if and when it is needed. The available options will involve tapping into the home’s equity. That could be done by selling the home or borrowing against that equity. In some cases, the equity may not be needed at all. I’ll get into the details