Posts By: Gene Osofsky

Q.  I have heard friends complain that their parent’s financial Power of Attorney document was not honored by their parent’s own bank. Is there a way to avoid this?
A. Unfortunately, we hear that complaint from time to time. While there may be no way to draft a power of attorney that completely eliminate the risk that it will not be honored at the time of need, here is my short list of steps you can take to  minimize that risk:
Sign the Bank’s Own Forms: Most banks and other financial institutions have their own, short form Power of Attorney with which they are familiar. While the bank’s own forms are more limited and are usually targeted to specific accounts, signing them – in addition to your attorney-drafted document — usually eliminates the risk that your designated agent will have problems at that bank down the road. Be sure that your own, expanded POA expressly permits you to do this, so that both will be honored.
Include Hold Harmless Provisions in Your DPOA: Financial custodians are concerned about their exposure if they mistakenly rely upon a Durable Power Of Attorney (“DPOA”) that appears valid on his face. It sometimes helps if your DPOA includes specific language that a bank or other custodian will be held harmless if it relies, in good faith, upon a DPOA presented to it.
Fully Describe Real Property: Title companies are sometimes reluctant to honor a DPOA that refers, generally, to “all real property”.  Their comfort increases dramatically if the DPOA recites, specifically, the full legal description of each piece of real property covered by the DPOA. This can be handled either in the body of the DPOA or as an attached Exhibit.
Preserve Evidence of Capacity: If you anticipate any question down the road as to whether an elderly signer knew what he was signing at the time the DPOA was executed, consider asking him to secure a letter from his doctor that the elder has full capacity to sign such documents.  That letter can then be kept on file to be shown to any financial institution should such concern later arise. If the DPOA was signed some time ago, consider asking the doctor for a letter as to current capacity and that the DPOA was discussed with the patient.
Keep the DPOA Current: Third parties are often concerned if a DPOA has been signed so long ago so that it is “stale” in their eyes. I recommend re-executing a financial DPOA at least every 3 to 5 years and, if possible, annually.
Offer a § 4305 Affidavit: Custodians are sometimes concerned that the DPOA may have previously been revoked.  To allay that concern, the agent can submit an affidavit to the custodian, made pursuant to section 4305 of the Probate Code, that the DPOA has not been revoked.  Once completed, that affidavit becomes conclusive proof of non-revocation.
Anticipate Language That the Custodian May Prefer: If the DPOA is being created to be used at a specific bank or title company, ask whether it prefers specific language in the DPOA and, if so, consider incorporating that into your own document.
Legal Proceedings to Enforce Acceptance: As a last resort, consider a lawsuit.  The law provides that a third party who refuses to honor a DPOA, after being provided a 4305 affidavit, may be liable for the petitioner’s attorney’s fees incurred in the court proceeding.  Bringing this to the custodian’s attention often generates the desired compliance.

Posts By: Gene Osofsky

Q.  My 90 year old father has a substantial brokerage account and likes to manage it himself.  Yet I worry that he could easily fall victim to financial scams.  Is there anything I can do to protect him?

A.  Yes, there may be.  The Financial Industry Regulatory Authority (“FINRA”), which regulates firms and professionals selling securities in the United States, has activated two new rules to protect senior investors:  One rule now requires member brokers to make reasonable efforts to ask investor clients, age 65 years and older, to designate a Trusted Contact Person” (“TCP”) whom the broker may contact if the broker reasonably believes that financial exploitation has occurred or may be attempted, or where the investor shows signs of dementia or diminished capacity.  Where exploitation is suspected, a companion rule authorizes the broker to place a temporary hold on the disbursements of funds from the customer’s account, pending further investigation.

These two rules are the result of a growing realization that financial exploitation of seniors is a very real problem, not only for the senior investors, but also for the brokerage firms when financial abuse is suspected. Previously, there were issues of privacy which prevented the broker from contacting family members when suspicious activity was detected, and prior FINRA rules prevented brokerage firms from halting suspected transactions without risking liability.  The scope of the problem became apparent to FINRA after it placed into service its Securities Helpline for Seniors in April 2015: during its first two years of its operation, it fielded more than 8,600 calls seeking help and recovered more than $4.3 million for seniors. For Senior Helpline, call 1-844-574-3577.

For now, the new rules only apply to new accounts or to accounts that are updated, but not yet to existing accounts. That said, it is anticipated that the rule will soon apply, as well, to existing accounts even without an update.

These rules protect not only seniors, but also younger persons aged 18 and older whom the broker reasonably believes have a mental or physical impairment which renders such individuals unable to protect their own interest.

I sense from your question that your father might take offense if you asked permission to monitor his accounts. The nice thing about the new FINRA rules is that the request will come from the broker, rather than from you, and to that extent may be more palatable to your father and other senior investors.

Where the brokerage firm suspects financial exploitation, and initiates a hold on disbursements, it must immediately begin an investigation to determine whether the hold may be extended. The initial hold is limited to 15 days, but may be extended an additional 10 days if there is sufficient cause. A hold can be further extended by court order where the facts so warrant.

Another option is to consider elder protection monitoring through services such as EverSafe. This account monitoring service sends alerts when suspicious activity is detected showing unusual withdrawals, deposits, changes in spending patterns, changes in passwords and identity theft. EverSafe also enables subscribers to designate trusted advocates to receive these alerts, and can assist with creating a recovery plan in the event of loss. Monitoring is on a paid subscription basis, and customers of some brokerage firms can qualify for a discount, e.g. Fidelity customers.  For more go to www.EverSafe.com or call 1-888-575-3837.

Posts By: Gene Osofsky

Q. My wife suffered a stroke and is essentially paralyzed. However, her mind is sharp. I need her to sign a Power Of Attorney so that I can take care of our financial affairs. Is there any way to do this?

A.  Yes. Where a person has sufficient mental capacity to understand the nature of the document he or she proposes to sign, and where the only limitation is a physical inability to perform the act of signing, the law provides alternative methods to obtain a legally valid signature:

Signature by Mark: If your wife is unable to sign his or her full name, she might make a mark, such as an “X”, on the desired document. The signing must be witnessed by two disinterested witnesses, each of whom must also sign the document reciting that they watched your wife place  her mark on the document, and one of the witnesses must actually sign her name adjacent to her mark. If she does not have use of her arms, a pen might be placed between her teeth to enable her to mark the legal document. However, care must be taken so that the actual mark or “dot” on the paper is the act of your wife.

Signature by Amanuensis: Where a person is totally paralyzed and would not even be able to clench a pen in his or her teeth, but is able to speak and give instruction, there is another procedure called signing by “amanuensis”.  In legal parlance, an “amanuensis” is an assistant who copies or writes from the dictation of another.  Thus, if your wife is totally immobile, but if her mind is clear and she can speak or otherwise give direction, she could direct someone to sign her own name on a legal document. The actual signer should be a disinterested person, other than yourself, and the signing should occur in your wife’s presence.  It would be best if a notary were also present to notarize the document. Note:  most notaries will be unfamiliar with this procedure, and so you should engage a knowledgeable attorney who can explain the process to the notary and supervise the signing.

Laser Pointer To Give Direction:  In some situations, the paralyzed individual may have also lost the power of speech. Yet, if he or she retains some method of communication, such as by eye movements in response to questions or via a laser pointer she can control with some part of her own body to point to letters or words on a communication board, the process of signing by amanuensis could be modified to accommodate that limitation. It would also be helpful if a doctor wrote a letter affirming her ability to understand and communicate by the eye movements or laser pointer. I would again recommend that an attorney be present to supervise the process, and the signing process be recorded on video. For laser pointers and other solutions to communication, check out this website:  store.lowtechsolutions.org. You might also wish to engage the services of an assistive technology specialist for other ides to facilitate communication, and for that see the following website: resna.org

Blind Signer: If the principal is blind, but otherwise has the use of her limbs, I would recommend that the entire document be read to her, word for word, and her understanding confirmed. A ruler or “cut out” template might be used to guide the placement of her hand so that she signs at the appropriate place on the document. Again, I recommend that the entire process be videoed. A witness might also certify the principal’s understanding and a notary should be present to notarize the document.

In your case, with patience and some thought, your wife’s signature on the Power of Attorney can be legally secured.

Posts By: Gene Osofsky

Q.  My husband and I are concerned about how to keep our trust up to date in light of changing tax law and changing family circumstances.  What if we are too ill to make changes ourselves when needed. Any thoughts on how we can handle these concerns?                                                

A. Yes. With the ever-changing tax landscape, and changes over time in family circumstances, keeping your trust up-to-date can be challenging. Here are some techniques to incorporate into your estate plan to help deal with change, even where you are unable to do so yourself:

1) Use a Power Of Attorney: delegate authority to a trusted agent to amend your trust as tax laws and family circumstances warrant. Your agent would typically act only if you were unable to do so yourself.   To be valid, this power must be expressly stated in a Durable Power Of Attorney (“DPOA”) and reciprocal provisions must also be in your trust. Unfortunately, this dual requirement is too often overlooked, resulting in an ineffective delegation of authority.

2) Use a Trust Protector: an emerging mechanism involves naming a Trust Protector (“TP”) in your trust in order to update your trust as need requires. The TP would be independent of your trustee, who would handle normal trust administration.  By contrast, the TP would act like a “super trustee”: he or she would have the power to replace the trustee, modify administrative provisions and even change the ultimate disposition of trust assets in order to meet your stated objectives. Unlike the trustee, who would have a fiduciary duty to act according to the existing provisions of the trust, the TP could modify or override those provisions to comply with changing law and your expressed intent. The TP must be someone who is not a beneficiary under your estate plan, but in whom you have a high degree of trust.  Unlike the agent acting under a DPOA, the TP could even make some changes to your trust after your death if necessary to meet your stated goals, e.g. tax avoidance.

3) Include Disclaimer Provisions: a disclaimer is the right to decline a bequest, so that it goes to the next person in line, typically one’s children. Disclaimers can be very effective in postmortem tax planning, especially as a technique to remove future appreciation from one’s taxable estate.   Example: assume that a married couple has a combined community property estate valued at just under the current Federal Estate Tax Exemption amount ($13.61 Million/each for persons dying in 2024), but which is likely to revert to a much lower number after year 2025, when the current exemption ‘sunsets’).  

Upon husband’s death, assume their estate plan directs that all goes to wife as the surviving spouse.  If she reasonably anticipates future appreciation, it is likely that–upon her later demise–the value of her estate will then be above the amount that can escape estate tax.  If, however, upon her husband’s death she makes a timely disclaimer of a portion of her “inheritance”, so that a portion “skips” her and goes immediately to their children, the appreciation attributable to the disclaimed assets will then be owned by their children and will escape estate tax at the wife’s later death. 

In larger estates, this technique can potentially save a significant amount of tax upon the surviving spouse’s later demise. For more modest estates, since the disclaimed assets “skip over” the surviving spouse and pass directly to the children or other designated successor beneficiaries, it can save the time and expense of a second trust administration upon the surviving spouse’s death. Its use can also accelerate the children’s inheritance.

4) Permit Decanting: Decanting is a term borrowed from wine vintners, and in the trust world it refers to modifying an existing trust to get rid of unwanted provisions (i.e., “sediment”, for vintners), by “pouring” the good provisions into a new trust that is free of the unwanted provisions.  In 2019, California became one of a growing number of states to adopt the Uniform Trust Decanting Act, which now allows a trustee to make changes to a trust without initiating a judicial proceeding, upon notice to, and usually with the consent of, the trust beneficiaries. Decanting can be implemented so long as the trust does not expressly prohibit this technique. Changes via decanting can even be made, in many cases, after the death of the original creator(s) of the trust. Here are some examples of its application: to create a Special Needs Trust to hold the share of a beneficiary then on public benefits; to comply with changes in the tax code; to address changes in family circumstances, etc. For more, see articles on our website on this topic.

5) Include a Power of Appointment: A Power of Appointment (“POA”) is a power held by a designated individual, usually the surviving spouse in a couple’s joint trust, to take another look at the plan design and modify it as the power holder feels is then appropriate, typically some time after the death of the first spouse. The survivor can then re-arrange the distribution of trust assets, and add or delete beneficiaries, as he/she feels circumstances then require. It can be very useful when family circumstances have changed since the trust was originally created, for example by deaths, births, divorces or other changes in relationships (whether they be positive or negative).

6) By Court Order: Lastly, one can petition the court for a modification of trust, based upon “changed circumstances”. This is a more involved option, but is available when needed.

It has been said that the only certainties in life are death and taxes.  I would add a third:  change. Make sure that your estate plan includes at least some mechanisms to deal with this “third rail” of estate planning.

Posts By: Gene Osofsky

Q:  I have a Living Trust, prepared some time ago. I recently heard that it was a good idea to also have a Will. However, I thought the Trust took the place of a Will. Can you clarify this?

A. Sure. Attorneys who prepare trusts generally also prepare a backup Will to coordinate with the Trust. The companion Will is designed to “catch” assets that were inadvertently left out of the Trust. The Will then typically directs that these omitted assets be “poured back” into the Trust and be distributed according to the terms of the Trust. Attorneys often refer to these wills as “Pour Over” Wills, which accurately describes their purpose.

Ideally, you would never need to use the “Pour Over” Will, because all assets would be part of your trust.  However, in the real world, we find that clients often neglect to take proper steps to retitle assets into their Trust.  Remember, in order to transfer assets into your Trust, you generally have to sign a formal document, such as a deed in the case of real property, which formally re-titles assets into the name of the trustee of the Trust. By the way, in most cases the trustee is the same person who created the trust (the trustor), but the trustor must still observe the formality of retaking title in his own name “as trustee”.

The assets omitted from the trust and “captured” by the Pour-Over Will still have to go through probate. However, the advantage of having a Pour-Over Will is that the omitted assets will ultimately go to your designated Trust beneficiaries as part of a coordinated plan. Without the Pour-Over Will, the omitted assets would be distributed to your heirs-at-law as identified by statute, which could be different persons from those beneficiaries named in your Trust.

A related topic arises where a trustor has clearly listed assets on a schedule attached to his Trust, but neglects to formally retitle the assets into his name “as trustee”.  This happens fairly frequently. In this situation, the trustor clearly intended to put the described assets into the Trust, but for whatever reason failed to take formal steps to do so. Here, the law provides a quicker remedy, which attorneys often refer to as a “Heggstad Petition”, so named because of the 1993 court decision which approved this remedy.  Thus, where the trustor’s intent to include an asset in his Trust is clear, it is possible to petition the court for an order immediately transferring the assets into the Trust, so that they are not subject to probate and the possibility that they may go to unintended individuals.

For the above reasons, we always recommend that a trust contain a detailed Schedule of Assets, that upon creation of the trust the client take immediate steps to retitle those assets into the trust, and that the trust be accompanied by a companion “Pour-Over Will”. Caution: some assets, such as retirement accounts, should never be re-titled into the name of the trust, as that could trigger an adverse tax result.

Posts By: Gene Osofsky

Q.  My father signed a Power Of Attorney some years ago, naming me as his agent. The POA is effective upon Dad’s incapacity, which I believe has arrived .  Some family members could use some financial help. Would it be legal for me to make gifts to them from his assets using the POA? Can I also include myself as a gift recipient?
A.  Great questions, and I believe many readers would be interested in the answers. Here is the approach that I recommend in order to come up with the answers:
First, to prove that the “triggering event” has occurred to make the POA effective, evidence of your Dad’s incapacity, such as the written opinion of one or two physicians (as the POA may require), must be secured in writing and either attached to the POA and/or presented to any third party, such as a bank, who may be asked to rely upon it when implementing your instructions;
Second, the power to use your Dad’s assets to make gifts must be expressly stated in the Power Of Attorney (“POA”); general powers, no matter how seemingly broad and comprehensive, are not sufficient.
Third, in answer to you further question as to whether you can make gifts to yourself, be advised that the law requires still another recital in the POA, i.e. the recital that you may “self- deal” in exercising the gifting powers and/or an otherwise clear recital that you may do so. This is because you would otherwise have a fiduciary duty to use your dad’s assets only for his benefit, but not for your own personal benefit. Thus, if the POA did not have those recitals and you opted to gift to yourself, you would arguably be breaching that fiduciary duty. However, if there is an express recital in the POA that permits you, as his agent, to include yourself as a gift recipient, then you may rely upon that recital to include yourself as a gift recipient, provided that any other conditions in the POA are satisfied, such as those mentioned below. By the way, many POA’s refer to the designated agent as the “Attorney-In-Fact” (“AIF”), which is the correct legal terminology.
There is another caution to observe. Many POA’s contain a further qualification in order to make gifts, such as that the amount of any gift may not exceed the amount of the Annual Gift Tax Exclusion under federal tax law, or may only be made so long as any such gift does not generate any tax consequence. So, be mindful of these additional requirements before you undertake any gifting. Further, before you make gifts of the father’s assets, be especially sure that he retains sufficient resources to pay for his own expenses, including the expense of long-term care as he ages and becomes more dependent upon others for assistance with daily activities.
Note, also, that there are other acts which are also prohibited, unless the POA expressly authorizes them. They include the following and are set forth in California Probate Code Section 4264:
1) The power to create, modify, revoke, or terminate a trust;
2) The power to designate or change the designation of beneficiaries to receive any             property upon your Dad’s death;
3) The power to make a loan to yourself, as his Attorney-In-Fact.
Note, further, that as his Attorney-Fact you may not, under any circumstances, make, amend or revoke your father’s Will.
Overall, the best plan is to seek the guidance of an attorney familiar with these issues before undertaking significant action under your father’s POA.

Posts By: Gene Osofsky

Q.  What is the difference between a will and a trust? Some of my friends seem to use the terms to mean the same thing?

A. Yes, many people do use the terms interchangeably, but in reality they are quite different, although they often work together to form a complete estate plan.

A will is a document that directs who will receive your property at your death and only goes into effect upon your death and then only in the context of a court proceeding, called a probate.  By contrast, a trust takes effect as soon as you create it and usually does not require court supervision.

A trust is a legal arrangement by which one person, called a “trustee”, holds legal title to property for the benefit of another person (initially, for yourself, and later for your beneficiaries). The initial trustees would typically be you and your spouse, and the successors would typically be the survivor of the two of you, and then your child(ren) in the order you designate. However, you could designate others, such as a trusted friend or a Professional Fiduciary to serve after you.  As initial “trustees”, you and your spouse would continue to control and manage your assets as before, albeit as “trustees” of your own trust.

A trust usually has two types of beneficiaries: you and your spouse during your lifetimes, and your children or other designated beneficiaries after your deaths.

A will only directs the disposition of assets that are in your name when you die.  A trust, on the other hand, typically serves a “dual role”, in that it controls the use and disposition of assets both during your lifetime, as well as upon your demise.  This difference can be very significant if you are, for any reason, unable to manage your financial affairs during your lifetime, due – for example – to declining cognitive ability.

Note:  a trust only administers assets property that have been transferred into the trust, usually by re-titling assets into the names of the trustee(s), such as by a new deed.  Example: Your home might be transferred via a Deed from John & Mary Jones, husband and wife, to John & Mary Jones, Trustees of the Jones Family Trust.

A will typically requires a formal probate proceeding, which is a court proceeding wherein the administration of your estate is overseen by a judge who approves actions taken or proposed by your Executor.  By comparison, a trust administration following the demise of the Trustors is usually handled outside of court, by your designated Successor Trustee, and is typically a less expensive, speedier and private process than probate.

Note:  Neither a will nor a trust control assets held in joint tenancy, insurance policies payable to individual beneficiaries, nor financial accounts designated as “Pay on Death” or “Transfer on Death” Accounts. Those assets go to the surviving joint tenant or to the designated beneficiaries, and are usually not controlled by either a will or a trust.

Typically, trust administration would be handled with the assistance of an attorney, but the legal fees would usually be much less than in a formal probate.

Finally, a will becomes part of the public record and is therefore available for anyone to view, while a trust usually remains private.

Wills and trusts each have their advantages and disadvantages.  For example, a will allows you to name a guardian for minor children and to specify funeral arrangements, while a trust does not.  On the other hand, a trust can be used to plan for disability during your lifetime, for asset management by your successor trustees if doing so becomes too burdensome for you, and can be useful if you need to apply for a Medi-Cal subsidy to help with long term care expenses.

Unfortunately, many people who set up trusts neglect to transfer all of their assets into the trust.  That is where a companion will can help: the companion will, often called a “pour over” will, can direct that assets inadvertently left out of the trust be transferred into the trust in order to achieve a coordinated plan of disposition.

Posts By: Gene Osofsky

Q. My father recently died, leaving his home in a Living Trust. He also left several bank and brokerage accounts. Our problem: these financial accounts were never formally transferred into his trust. Is there a way to deal with them now without going through a full probate?

A. Yes, there may very well be a way! And, by the way, your question suggests that you know that a probate is a court proceeding supervised by a judge. It usually requires the assistance of an attorney, involves lots of paper-work and compliance with procedural rules, and typically takes more than a year to complete even where everything proceeds smoothly. In our experience, most families prefer to avoid a probate proceeding whenever possible.

So, in your situation, there may be two options to settle your father’s estate as to the omitted assets without a full probate:

1) Petition Court to Transfer Assets To Trust: One approach would depend upon whether there is written proof that he intended to make these omitted assets part of his trust, but just never got around to doing it. Example:  he may have listed these accounts in his description of assets appended to his trust, but perhaps never formally re-titled them into the trust. Some judges may even deem it sufficient if his Last Will, which is usually prepared as a companion document to the “Living Trust”, directs the remaining “residue of his estate” to his Trust, as most such companion Wills actually do.

If so, then it might be possible to Petition the Superior Court for an order transferring them into his trust now, so that they can then be handled – like the home—as part of the administration of his trust and without need for a full probate. The judge hearing this petition would likely make a ruling in one short court hearing. This is sometimes called a “Heggstad” Petition, so named because of the leading court case approving this procedure.  However, even this Petition would involve a court proceeding, and require that you engage an attorney to prepare a written petition to the court.  So, at best it would involve what I call a “mini- probate”. On the good side, there is no “cap” on the value of assets that may be subject to this Heggstad Petition.

(2) Affidavit Procedure for Accounts Under $184,500: If your father had only omitted from his trust certain bank and brokerage accounts, and if you discover that their combined value does not exceed $184,500 (in year 2024), then you might proceed via the even simpler “Small Estate Affidavit” procedure.

This affidavit procedure, set out in California Probate Code § 13100, requires only the completion of an affidavit by the Successor(s)-In-Interest of your father, setting out the nature of the assets sought to be collected, the right of the Successor(s) to receive them, and certain other recitals. That affidavit would then be delivered to each bank and brokerage firm holding an account for your father, with the request that it comply with the law and turn over the account funds under each custodian’s control to the signer(s). Some banks even have forms for this purpose.

Here, the successor(s) would typically be the named beneficiaries in your father’s Last Will (if he had one), which could very well be the designated Successor Trustee of his Trust. Alternatively, –if there were no Will – then the successors would be his family members who would inherit his estate under the California law of Intestate Succession, i.e. the law which determines rights of inheritance where someone dies without a will. This law designates family members in a certain order of preference.

Of special note is that the values of certain kinds of assets are excluded from the valuation cap when determining whether this Small Estate Affidavit procedure may be used, sometimes making it easier to qualify to use this Affidavit procedure. Also, note that this value cap is adjusted every 3 years based upon inflation. The next adjustment is due in April, 2025.

So, there are, indeed, options for you to avoid a full probate, and you should discuss these with your attorney.

Posts By: Gene Osofsky

Q: My friends and I were recently discussing our estate plans, and the subject of Powers of Attorney came up. It seems that we have different understandings as to what they look like and how they can be used. Can you provide me with a short lesson which I can share with my friends?

A.  Sure. Powers of attorney are very important legal documents. In their basic structure you (the principal) delegate to someone whom you trust (your agent or “attorney-in-fact”) the power to engage in financial transactions in your name, using your assets and with the same legal effect as if you had signed the transaction documents yourself.  But all powers of attorney (“POA”) are not the same. Here is a short list of some variations:

Is It Durable?  Unless the document expressly so provides, a POA expires when the principal loses mental capacity.  However, this feature may be overcome if the document provides that it is “durable,” meaning that it survives the principal’s incapacity. In almost every case, you will want a power of attorney to recite that it is durable, as that is usually when it is needed most.

Is It a “Springing” Power?  A POA can either be immediately effective, or it can be effective only upon the occurrence of a future event, such as incapacity. If triggered by a future event, we refer to this as a “springing power,” because it does not spring into life until the occurrence of that future event.  Many POA’s are designed to only spring into life when a physician certifies that the principal has lost mental capacity.

Is It Limited Or General in Scope? A POA can either be limited in scope (e.g. authorizing an agent to sign a deed and other documents to close a specific sale escrow) or be limited in time with a fixed expiration date, or it can be very general and comprehensive in nature.

Does It Permit Modification of Trust? If you have complete confidence in your agent, you may wish to authorize your agent to create a “Living Trust” for you and/or to make future modifications to your existing “Living Trust” if you have one. Modifications may be necessary in order to address changes in family circumstances, changes in tax law and/or to engage in public benefits planning on your behalf should you later need long term care.  But in order for these powers to be effective, there must also be reciprocal provisions in your Trust, a legal requirement often overlooked. However, your agent may not make a Will for you.

Does it Permit Gifting and/or Long-Term Care Benefits Planning? By California law, an agent cannot use the principal’s assets to make gifts, unless that power is expressly granted in the POA.  Further, even if this power is expressly granted, the agent cannot make gifts to himself unless the right to “Self-Deal” is also expressly stated.  Sometimes the power to make gifts can be very important, such as for tax planning or planning for government benefits under the Medi-Cal or Veterans Pension programs in order to help with long term care expenses.  Example: sometimes a home transfer to another family member, or to a Living Trust, is necessary to protect the home from Medi-Cal estate recovery following your demise, if you have received Medi-Cal benefits during life.  Unfortunately, we find that very few POA’s contain these important powers or impose limits upon exercise which reduce the planning opportunities available to the agent.

In every case, the POA can only be created when the principal has mental capacity to understand what he or she is signing and all POA’s expire upon the death of the principal.  Lastly, a POA for financial matters cannot authorize health care decisions: for that another document is necessary,  which is usually called an Advance Healthcare Directive.

Posts By: Gene Osofsky

Q.  My husband has become frail, and his doctor says he may need to go into a nursing home. However, neither of us is happy with that plan. I want to keep him home. Is there a program that might help us?

A. Yes. The “Program for All Inclusive Care for the Elderly” (“PACE”) may be just the ticket. The PACE program has been designed to help frail elders live independently as long as possible in their own home, which is exactly what both of you desire. It is designed for those elders who would otherwise be at risk of nursing home placement.   Here’s how it works:  several times each week PACE would pick him up at home in a specially designed van and transport him to a local community health center where he would receive all medical care, rehabilitation therapy, social services, recreation, socialization and hot meals with other seniors. At the end of the day, he would be transported back home to be with you.  It would also provide some in home care services to assist him with his needs at home, and thus help relieve the burden upon you.

To be eligible for the program, one must be at least 55 years of age, have medical problems which require ongoing care, but yet be able to live at home safely (perhaps, with a spouse or other care person to assist), as determined by the evaluation team. The level of care is designed to be comparable to the care received in a nursing facility. The senior must also live in a service area covered by the PACE program and, fortunately, you probably do if you reside in the Bay Area.  Once your husband joins the PACE program, all medical care will be provided by the PACE program, which unfortunately means that he will have to give up his own physicians and, instead, begin seeing the physicians at the PACE facility. However, the good news is that the PACE program provides a team of doctors, nurses, social workers, personal care attendants and dietitians who would be responsible for all of his care, and all of that care would be centralized at the PACE Center and supplemented by in-home and referral services.  In the event your husband needed hospitalization, even expensive surgery, PACE would pay for that without additional cost.

PACE is primarily paid for by Medi-Cal and Medicare, and most participants are covered by one or both programs and have either a modest flat monthly co-pay, or none at all.  The PACE program would also work if one or both of you lived in an Assisted-Living Facility, although it would then only cover medical costs but not room and board.  Also, if one of you needed PACE services and the other did not, the good news is that the Medi-Cal law — which includes provisions designed to avoid Spousal Impoverishment — would help protect household income for the “well spouse”.  PACE enrollment can also work for a single senior, as the in-home services include personal care as well as some housekeeping, shopping, meals, and the like.

To learn more about PACE, contact the Center for Elder’s Independence at 844-319-1150 or visit on line www.cei.elders.org.  To learn more about protecting assets under the Medi-Cal Spousal Impoverishment Laws, contact our office.

 

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