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Estate Planning Odds n’ Ends

Estate Planning Odds n’ Ends

August 21, 2023

Estate planning is all about the details. Here are some scenarios—wills, gifting, Medicaid, powers of attorney, etc.—that have come up recently in helping our clients work through their estate planning decisions.

Jointly Held Property vs. Will

The day before Christmas, I received a call from a woman who was recently widowed. At the time of her husband’s death, she and her husband owned a house, a car, checking and savings accounts—and a pickup. All of the assets were jointly held (with right of survivorship). Upon her husband’s death, she automatically owned these assets outright.

Her husband also had a will. The will stated that the grandson (from the husband’s prior marriage) received the pickup. The grandchild’s mother (the widow’s stepdaughter) has been harassing the widow, stating that the will gives the pickup to the grandson.

I advised the widow that no assets jointly held passed under the will. It is her pickup; it does not pass to the grandson.

Annual Gifting and the Medicaid 5-Year Lookback Rule

We were giving a presentation about Medicaid (Title 19). A participant was continually trying to get the speaker’s attention. When he was called on, he stated that everyone can give $14,000 per donee per year and then qualify for Medicaid. He heard this from an “elder law” attorney.

Yes, you can give $14,000 per donee per year. However, that is only an exclusion from filing a gift tax return. It is not an exclusion from anything else. For Medicaid (Title 19) purposes, a question on the application is whether there have been gifts within the last 5 years. This is referred to as the 5-year lookback rule. Just because a gift is excluded for gift tax purposes does not mean it is excluded from being counted as a transfer within the last 5 years. It will be counted.

When Should I Update My Will?

A 93-year woman came into my office for estate planning. We did a will and powers of attorney (healthcare and financial), naming her son as Executor and as her agent for the powers of attorney. If her son wasn’t able to serve, her brother was named to serve in his stead. Given her age, that looked like an estate plan that would work until her death.

Her grandson came in last week. His father, the woman’s son, had just died. So that would make her brother the Executor and agent for her powers of attorney. But, surprisingly, 10 years had passed since we did the original estate planning. The woman is now 103 and her brother is 94. It is time to update her will and powers of attorney! Luckily, the woman, who is still living at home, is competent and able to sign new documents.

Powers of Attorney Terminate Upon Death

Powers of attorney reflect a principal-agent relationship. The person making a power of attorney is the principal and the person they name to act on their behalf is the agent. A power of attorney terminates upon death of the principal. That means that if you have been using a power of attorney to act on behalf of the principal in writing checks and paying bills, that ability will terminate immediately upon the death of the principal.

This article references just a few of the unique situations that can arise in modern estate planning. Don’t get caught unaware when an emergency arrives; make sure your wishes will be followed by those you leave behind.

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