I've been feeling compelled to once again urge folks to update their basic estate planning documents and take steps to protect themselves and their hard-earned assets because I have seen a significant increase in crisis cases over the past few months. One panicked daughter could not find out if her mother had been admitted to a psychiatric hospital as she suspected because mom’s Health Care Proxy did not have HIPAA (the health privacy law) release language in it. The hospital would not speak with the daughter even though she was the named Health Care Agent because the Health Care Proxy is only effective when the principal is deemed incapacitated by a doctor.
Then I received a call from Margaret to schedule an appointment for her mom (Betty), as her dad (Joe) was hospitalized and would need nursing home care when discharged. After my meeting with Margaret and Betty, I knew I had to focus on this topic once again. You see, this family represents the typical readers and, in fact, the typical clients. Margaret has two siblings, and all of the children have been urging Betty to see an attorney. They had actually cut my ad out of the SSSN a year ago for mom, who carried it in a folder with some other important information. Whether Betty was in denial of her husband’s decline, too overwhelmed to deal with the issues, or just resigned that it was too late to do any thing to protect the estate, she didn’t make the call. Margaret and her siblings did not want to overstep their boundaries and respected Mom’s independence.
So, there we were, faced with crisis planning to ensure that Joe receives quality care while preserving as much of the estate as possible for Betty’s security. There are more options available with advance planning, for sure, but we could still protect most of the estate with crisis strategies. Joe and Betty own four pieces of real estate and have other assets valued at approximately $519,000. Joe may not have more than $2,000 in his name and Betty is only allowed to retain about $109,000. The primary residence is non-countable by MassHealth in this case. Therefore, our plan needed to address the three additional properties and other “excess assets” of about $410,000. We could protect two of the properties by utilizing exemptions in the MassHealth regulations to convey them out of Joe and Betty’s names. One property would need to be sold, and we could take all of the excess assets (including the proceeds of the sale of the fourth property) and purchase an annuity that will pay a significant monthly income to Betty. By converting the countable excess assets to an income stream for the community spouse, we could protect the estate. Not bad for a crisis plan, right? Not so fast … while we were able to develop a fantastic plan to protect nearly the entire estate, we can’t implement it!!Not yet at least.
In order to implement this fantastic plan, we need Joe to sign the Deeds to convey all of the properties out of his name and to transfer all other assets to Betty. If Joe had executed a comprehensive Durable Power of Attorney that provided Betty with the authority to sign such documents on Joe’s behalf, we could implement the plan using the DPOA. But he didn’t. As I tried to explain the problem to Betty and Margaret, Betty reassuringly said, “But he can still sign his name…” I wish it was that easy, but it is not. Due to Joe’s dementia, he would not understand what he was signing and I could not, therefore, notarize his signature on the Deeds. While this plan could have been implemented within a week or two with a proper DPOA, we were instead required to seek the authority of the Court. We filed a Petition asking the Court to appoint Betty and Margaret as co-guardians of Joe. Since a guardian (even if it is the spouse) may not convey property of the Ward without Court approval, we must also file a Petition for Authority to Establish an Estate Plan, along with a number of emergency motions to try to get the approval as quickly as possible. Betty must pay privately for Joe’s nursing home care until we obtain the Court’s approval to do the transfers under the guardianship and obtain MassHealth eligibility.
I am reminded on a daily basis that the message of the importance of advance planning warrants repeating – over and over and over again. Don’t be caught carrying an ad a year from now – take steps today to protect yourself. Update your documents while you can still (knowingly) sign your name! Schedule a Legal Check Up to get started at http://www.thelegalcheckup.com/contact-us/