Q. My fiancé and I will soon marry. We both have our Wills and Trusts already set up as we wish, as we both have children from prior relationships and we each want our own assets to go to our own kids. Is it still necessary to update our Wills and Trusts?

A. Yes! Unless you update your Wills and Trusts (“testamentary instruments”), California law will, essentially, re-write them for you, and provide your new spouse with a share of your estate! Essentially, the law would presume that you inadvertently omitted your spouse, and would “correct” that omission for you by providing a testamentary share to him or her! This problem and the California “correction” is referred to as the matter of the “pretermitted spouse”.

California law provides that, with the exceptions noted below, if you marry after your Wills and/or Trusts were prepared and without any clear intention expressed as to your whether you intend to leave anything to your fiancé or new spouse, that – your now “omitted spouse” — would, upon your later demise, receive a forced share of your estate measured as follows:

1) one-half of your community property (if any); and

2) a full share of your separate property as would be normally allocated to a surviving spouse under the law of intestacy (i.e., the law controlling the disposition of a decedent’s estate where he or she dies without a Will or Trust).

The law does provide for exceptions to the above, as follows:

  1. a) where your wishes are “intentional and that intention appears from the testamentary instruments”;
  2. b) where you provided for your surviving spouse outside of the estate, and the evidence clearly shows that this was intended by you to be in lieu of a share of your estate;
  3. c) where your surviving spouse made a valid waiver of his/her right to a share of your estate.

Given the above, the best plan is for each of you to update your Wills and Trusts, either before the date of marriage or very soon afterward, and to expressly recite, in those very documents, that it is your respective intentions not to provide for your new spouse.

I am glad you asked that question, as otherwise this problem could –down the road—lead to very hurt feelings and irrevocably fracture relationships.

Q. My mom owned her home for 25 years before she recently passed. Her trust leaves it 50-50 to my brother and me.  I would like to keep the home by purchasing my brother’s interest for cash, and he is okay with that.  Is there a way that we can do this without triggering a property tax reassessment, especially now that Prop 19 has passed?

A. Yes there is! However, the matter must be handled in a special way.

Background: Proposition 13, which California voters passed in the 1970’s to hold the line on property taxes, nevertheless allowed the County Assessor to reassess property whenever there was a “change in ownership”.  Proposition 58, which the voters adopted later, provided that a transfer of a home between parent and child would not be considered a “change in ownership, provided that a Claim for Reassessment Exclusion were timely filed.  Proposition 19, which became law in early 2021, must now also be considered.

Under these Propositions, your purchase of your brother’s 50% interest using your own money would be deemed a “change in ownership” as to that portion, because it would be deemed a non-exempt transfer between siblings, rather than a parent — child transfer.  Your purchase would then trigger a reassessment as to that 50%.

Good news, however!  There is a workaround that has been approved by the California State Board of Equalization (“BOE”).  If — rather than using your own money — the trustee of the trust borrows money from a third-party lender, securing that loan by the home, and then distributes the entire home to you (encumbered by the loan amount) and an equivalent value in cash to your brother, there then may be no change in ownership and no reassessment, assuming that the value of the home is not more than $One Million more than its taxable value when owned by your mother.  You would then be responsible for the loan. Per my recent advice from the BOE, this strategy still works after Prop. 19!

To illustrate how this applies in various fact patterns, consider the following scenarios.  In each case assume that the home has a value of $500,000, that the trust does not prohibit a non-pro rata division of assets, that it permits the trustee to borrow money, that you move into possession and treat the home as your own principal residence, that the value of the home has not increased more than $One Million beyond its taxable value when owned by your mother, and that you file a timely Claim for Reassessment Exclusion is filed:

  • The only asset in the trust is the home. At the conclusion of trust administration, it is allocated by deed 50-50 to you and your brother.  Change in ownership but only as to 50% owned by your non-resident brother.  Reassessment as to 50%.
  • The trust is comprised of the home and $500,000 in cash. The home goes to you and all the cash to your brother.  No reassessment.
  • The only asset in the trust is the home. Trustee borrows $250,000 from a third-party lender, and distributes the home encumbered by the loan to you and the $250,000 in cash to your brother.  No reassessment.
  • The trust is comprised of the home and $100,000 in cash, for a total trust estate of $600,000. Trustee borrows $200,000 from a third-party lender, and distributes the home encumbered by the loan to you and $300,000 in cash to your brother. No reassessment.

Note:  These transactions must be handled very carefully, a suitable lender  engaged and adequate documentation furnished to the County Assessor.  This is not a do-it-yourself project, and it is strongly recommended that these transactions be fully supervised by an attorney familiar with trust administration and Proposition 19.

If handled correctly, preserving a parent’s low property tax base can result in thousands of dollars in savings over time and help make retention of the family home more affordable.

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ReferencesText of Prop 19

CAUTION:  Before undertaking any of the strategies above, consider the effect of Proposition 19, narrowly passed by the electorate on November 3, 2020.Its provisions, making dramatic change to the Parent–Child Exclusion, become effective February 16, 2021. See the following article on topic: “Preservation of Parent’s Low Property Tax Rate Soon To Be More Difficult For Children: Planning Window Closing”. Prop 19 must now be considered before undertaking any of the strategies outlined above, and will be controlling to the extent of any conflict with prior law and prior BOE Letters and opinions, including those referenced below. That said, we have secured informal advice from the BOE that the Non-Pro Rata Distribution discussed herein has not been changed by Proposition 19, provided that other Prop 19 criteria are met as to the home, citing BOE Letter of 02/16/2021 entitled “Intergenerational Transfer Exclusion Guidance. Questions and Answers”, calling attention to Q&A # 25 on page 5 of that Letter. 

Q. My husband is in a nursing home and has qualified  for a Medi-Cal subsidy to help with care expenses. To qualify, I was obliged to take his name off of most of our bank accounts, so that almost everything is in my name now. However, I have my own health problems and I wonder what would happen if I pass away before him, as each of our wills leaves everything to the other. Would he lose his Medi-Cal benefits?  I want to make sure he is protected.

A.  Great question. Under current law, for your husband to keep his Medi-Cal, he cannot have more than $2,000 in his own name, while you may retain up to $130,380 in yours (in 2021).  Since your present plan leaves everything to him, your prior death would pass your savings to him, putting him over his $2,000 resource ceiling and cause him to lose his Medi-Cal subsidy.  He would then need to use these assets to pay for his own ongoing care.   This scenario could deplete your marital estate without providing the reserve for his needs that you desire.

However, with proper planning, his Medi-Cal subsidy can be retained even while preserving funds for his supplemental needs.   To accomplish this, you should revise your will or trust so as avoid leaving your estate to your husband directly, and instead permit him to receive the benefit  “indirectly” should you predecease him.

(1) The “Skip” Plan:  One option is to revise your own will to “skip over” your husband and leave everything to your children, but with the understanding that they will use those funds to pay for such items that your husband might need and which Medi-Cal does not cover. This approach assumes that your children will fully honor your request, have no creditor problems, are not at risk of divorce and have understanding spouses who will support this use of  “their” inheritance.

(2) The Spousal SNT Plan (“S-SNT”):  A better option is to leave your estate to the trustee of a Spousal Special Needs Trust created by your will.  The S-SNT is a very special trust approved by both federal and state law to hold assets for spouses, such as your husband, who receive public benefits. The trustee could be one of your children.  If set up and managed properly, the assets in the S-SNT would not interfere with your husband’s ongoing Medi-Cal subsidy and could, instead, be used to pay for items that Medi-Cal does not cover. Upon your husband’s passing, any remaining assets would go to your heirs,  presumably your children.

Under either strategy,  if your husband’s health later improves so that he can return home or move into a less restrictive environment, the funds thus preserved would be available to pay for his care in the new setting.  Alternatively, even if he remains in the nursing home, you will have preserved a separate fund to supplement his needs and enhance his quality of life.  In either case, changing your own will is an act of love.

To avoid “payback” to Medi-Cal after both of you have passed on, additional steps may be necessary as part of your planning, such as by having a kind of “toggle switch” in your plan, whereby – if you are the survivor –your assets would, instead, be handled via an ordinary  “Living Trust”.

Healthy Couples: For those healthy couples who wish to plan ahead, these same strategies can be incorporated into their own estate plans, to be “triggered” in the event one spouse someday requires nursing home placement and qualifies for a Medi-Cal subsidy.

Q. Any thoughts for Grandparents Day, which this year is September 12, 2021?

A. Yes. How about this: Archaeological evidence strongly suggests that increasing lifespans, which permitted the creation of an older generation (“grandparents”), played a key role in our evolutionary success. Indeed, this phenomenon may account for why we, as Homo sapiens, replaced archaic humans such as the Neanderthals.

The Fossil Record: Archaeologists have analyzed the fossil records of a handful of sites known to be those of human habitation, yielding fossil evidence to allow them to determine the age of death of our prehistoric ancestors.  The best record of age is dental remains.  For almost all of our prehistory, going back at least 3 million years, analysis shows that individuals rarely lived beyond the age of 30.   However, beginning approximately 30,000 years ago, in a time called the Upper Paleolithic, there was suddenly a fivefold increase in the numbers of individuals living beyond age 30.  This has been called the “Age of Grandparents”, and it had far-reaching effects upon our species. Consider the following:

Food Sharing:  Grandparents help provide food for young ones, helping to ensure their survival.  Even today, there are a few pockets on the globe where hunter gatherer societies still live as they did centuries ago, and we can draw inferences from their current practices .  One such group is the foraging Tsimane people in the Bolivian Amazon.  Notably, food sharing across generations was found to be key in helping Tsimane individuals survive and flourish: while parents gave the most food to their children, grandparents were the next biggest providers.  In essence, the older generation redistributed surplus food down to the younger generation, ensuring their survival success.

Care:  Grandparents also provided care to their grandchildren, further increasing their chance of survival.  Parents could leave their children in their grandparents’ care while foraging for food. Further, with grandparents assisting in the care of young ones, mothers could then have more children, thereby increasing the size of families, clans and tribes.  With increasing numbers came increased survival, as the members of these kinship groups shared their food, protected each other from death due to predation and starvation and developed complex systems of cooperation.

Growing population size also accelerated the pace of evolution as, in these greater numbers, there was more opportunity for advantageous mutations to take hold.

Menopause.  It has been suggested that menopause in modern-day human females is consistent with the grandparent theory.   Unlike other primates, young human juveniles cannot forage for themselves, but need adult care for many years after birth.  If human mothers remained fertile until shortly before they died, their death would likely also result in the death of their late born offspring.  In this sense, Menopause is evolution’s secret to success.  With fertility ending while mothers are still strong and able to provide care, they can continue to look after their young offspring into adulthood and thereby ensure their survival success.

Cultural and Technical Knowledge.  Longevity also allowed for the transmission of cultural and technological knowledge.  Examples:  where to find food in times of drought and how to make weapons.  Longevity also promoted the formation of kinship systems and other social networks which would have made it easier to negotiate the sharing of scarce resources, especially in times of shortages of food and water.

So, here’s to you, grandparents, my own vote for the greatest generation.

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Much of the research referenced above is drawn from the excellent article entitled “The Evolution of Grandparents”, by Rachel Caspari, appearing in “Scientific American”, November 1, 2012.

 

 

 

Q. I would like to name my young grandchildren (ages 3–10 years) as beneficiaries of my estate and my life insurance. Is there anything I should know about this plan?

A. Yes. Your wish to do so is commendable, but it is important to make a plan that does not involve leaving assets directly to them while they are minors, i.e. under the age of 18. Here’s why:

First: Assets cannot be left directly to a minor under California law. If you were to do so, it is likely that a court would need to appoint a guardian to hold and manage their money. The court proceeding, itself, will cost your estate, and the court-appointed guardian may not be someone whom you would want to oversee your grandchildren’s money. Further, the guardian may have to file annual accountings with the court, generating more costs and fees.

Second: Each minor will be entitled to the funds from the guardian when he or she reaches age 18. There would then be no limitations on what the money could then be used for; so while you may have wanted the money to go toward college or a down payment on a house, your grandchild may have other ideas.

That said, there are basically two ways to do this properly under California law:

1) Name a Custodian for the Minor under CUTMA: Under the law in California, and many other states as well, you can leave a gift to a minor by using the California Uniform Transfer to Minors Act (“CUTMA”). You would do so by expressly reciting that the gift is made pursuant to CUTMA with appropriate recitals to that effect, and name an adult Custodian for the minor(s). The recitals are in the form of a simple Declaration, and banks and brokerage houses usually have forms for this purpose readily available for use. The key portion of those declarations would recite the name of the Custodian (and/or alternate custodian, if desired), the name of the minor beneficiary, and the key words,

“I hereby transfer to [name of adult] as custodian for [name of minor] under the California Uniform Transfer to Minors Act, the following …[description of custodial property].

You would then sign and date the form. Note that under CUTMA, you cannot defer the actual ownership of the gift beyond the minor’s age 21, as you could if you opted to leave your bequests in trust.

2) Leave the Gifts in Trust: You could leave the gifts to your minor beneficiaries by creating (or modifying ) a trust, and designating the Trustee to hold and manage the gifts until each of your grandchildren reaches the age at which you would like them to have full access. Unlike a gift using CUTMA, in your trust you can be creative as to when each grandchild receives their gift. Examples: it could be all in one lump sum at, say, age 25, or it could be in stages to correspond with their anticipated needs as they begin their own careers, e.g. 1/3 at age 21, another portion at age 25, and the balance at age 30.

If you do create a trust, remember to name the trust as beneficiary of any life insurance or retirement plans. If you forget to take that step, the money may be distributed directly to the minors, negating the work of creating the trust.

To create (or modify) a trust to accomplish your wishes, consult with your attorney.

 

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 savings and 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 some of these other resources on line:   National PACE Association ; California Advocates for Nursing Home Reform article   

OnLOK website; Kaiser Health News; Disability Rights California; California State Medi-Cal site. California ZIP codes eligible for PACE participation: see top of page 6 for Alameda and related counties

To learn more about protecting assets under the Spousal Impoverishment Laws, contact an Elder Law Attorney.

 

Q.  My wife and I own a vacation cottage, and we were wondering whether there would be any problem if we left it to our descendants in perpetuity, in our trust?

A. Yes, there would be a problem, at least if your cottage is located in California or in most (but not all) of the other states in the union. The reason: The Rule Against Perpetuities (“RAP”).

The RAP is a legal rule which comes down to us from old English common law, where it originated in the 17th century. It was designed to prevent the tying up of large, landed estates over many generations, as England moved from an agrarian  economy into a more mercantile economy.  Its purpose:  1) to facilitate the buying and selling of property by future generations, unencumbered by claims of antecedent ownership by a distant family of origin, (2) to avoid the “dead hand” of the original owner(s) from controlling ownership and use by future generations, and (3) to prevent large estates from being divided up and applied to their highest and best use as that appeared over time.  In effect, it was designed to facilitate economic growth as the basic economy changed.

If a gift of an interest in property—whether made in trust or otherwise– were deemed to violate the RAP, then the gift would be deemed void, and would then devolve to the recipient(s) with a present income interest in the property.  The RAP has been stated in its most pristine form by legal scholar, John Chapman Gray, in his 1886 treatise, as follows:

“No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest”.

Those few words, seemingly simple at first reading, are one of the most difficult concepts encountered by students in law school, because of the many layers of complexity buried therein. I, myself, recall spending no less than six (6) weeks in one class studying the meaning of those few words.  The RAP in application is, in fact, so complex that the California Supreme Court, in 1961, actually ruled that it is not legal malpractice for an attorney to inadvertently violate the rule!

Nonetheless, most attorneys—at least in California—always include in their trusts a “savings provision”, such as the following”

“Notwithstanding any other provision of this instrument, every trust created by this instrument shall terminate no later than twenty-one (21) years after the death of the last survivor of the settlor’s issue who are alive at the creation of the trust”.

You might wonder where the age of 21 years comes from?  We may remember that that used to be the age of majority in California and many other states, but my bet is that few, if any, readers would know where that number comes from.  Here’s my answer: many years ago I learned that it came from old English common law as the age at which a young man were deemed to be big and strong enough to bear armor!  Try that one on your friends at the next meet-up.

So, sorry that you won’t be able to restrict ownership of your California vacation cottage down through the generations, but know that, in being thus restricted, you are furthering the interest of the law and our economy by not tying up enjoyment of your property for more than, approximately, two (2) generations.

References: CA Probate Code re: RAP Rules

Q. I hear there has been a change in the state Homestead Law. Can you comment?

A. Yes, indeed. A new Homestead Exemption went into effect at the beginning of 2021, and it is good news for California homeowners. But first, a bit of background for those readers who might not be familiar with the “Homestead”.

The Homestead is the amount of protection available for home equity as to homeowners who might be faced with claims by unsecured creditors seeking to enforce payment of an unpaid debt. Unless the homeowner’s equity in his or her home is greater than the amount of the applicable exemption, the creditor cannot force a sale of the home to collect that debt. Similar protection is available to homeowners who file Bankruptcy.  This protection is called the “Homestead Exemption”.

Until January of this year, the homestead exemption was quite low: $75,000 for an unmarried individual, $100,000 for a married couple, or $175,000 for the disabled or those over age 65. Now, under AB 1885, signed by Governor Gavin Newsom on September 18, 2020, it has been increased dramatically, as follows: the new minimum is now $300,000, but this may rise to as much as $600,000 in your own county, based upon the countywide median sale price for a single-family home in the prior calendar year in which you claim the exemption.

While the new law does not specify the index from which to ascertain the median sale price, one might do a simple internet search and pull up the data from any local association of realtors.  I just did this and, from at least one data base, the median sale price for homes in Alameda County as of December, 2020, was $1,174,488.  Thus, it is clear that, at least in Alameda County, the exemption would clearly be available at the current maximum of $600,000. One can pull up the same information for other California counties.  Further, this $600,000 upper limit will be further adjusted each year by an inflation index, i.e. the California Consumer Price Index for All Urban Consumers,  published by the Department of Industrial Relations.

So, in California Counties with high home values, the current exemption is as high as $600,000, and this cap will be adjusted annually for inflation in subsequent years.

There are two ways to claim a Homestead Exemption: (a) via an Undeclared, sometimes called an ‘automatic’, exemption, or (b) by a recorded or “Declared” Homestead Exemption. The difference is that the latter will protect you for six months after you sell, so as to protect your home sale proceeds and allow you to transition into the purchase of another home, where you can then also claim the exemption.  Thus, the better plan for folks concerned about this protection in the event of sale is to record a Declared Homestead in the county in which your existing home is located; upon sale, promptly record it again for the new home.

There are some items to note:

1) This new Exemption will not protect against forced sale by secured creditors, e.g. the lender who gave you a loan to help you buy or refinance your house, or a lender for whom you put up your home as collateral for a loan.

2) An undeclared Homestead won’t protect you if you choose to voluntarily sell your house. The protection only applies in the case of a forced sale, i.e. by judicial foreclosure. But a Declared Homestead will give you 6 months of protection, as noted above;

3) This new state exemption will not protect you from federal actions, e.g. by IRS efforts to collect back taxes owed.

I hope this helps.

References: AB 1885

Q.  My wife and I would like to set up a basic estate plan. What are the essentials?

A. Many people believe that if they have a will, their estate planning is complete. But, actually, there is much more to a good estate plan. A good plan should be designed to avoid probate, minimize estate taxes, protect assets if you need to move into a nursing home, and appoint someone whom you trust to act for you if you become disabled.  Here is a list of the basics:

(1) Will: The most basic document is a will. A will directs who will receive your property upon your death and who will be your executor to see that your wishes are honored.  If you have minor children, it may also nominate guardians for them. But a will usually requires a probate proceeding, and only controls property that is part of your probate estate. Indeed, many people own assets which are not part of their probate estate, such as joint tenancy assets, life insurance policies, retirement plans, IRA’s, 401K’s, and annuities. The disposition of these non-probate assets is controlled by the form of title or by the associated beneficiary designation, and not by your will.  For example, property held in joint tenancy goes to the surviving joint tenant, regardless of what the will says.

(2) Durable Power Of Attorney (“DPOA”): In a DPOA you designate a person to act in your place for financial matters when you are unable to act for yourself.  The DPOA is usually considered a better alternative than a court supervised conservatorship, which can be cumbersome, public, and expensive. A DPOA can, if properly drawn, also authorize long-term care planning on your behalf.  But the DPOA ceases to exist upon your death, and therefore cannot function as a will-substitute.

(3) Advance Healthcare Directive: By this directive, you nominate someone to make health care decisions for you in the event you are unable to do so yourself. It usually also expresses your wishes about end-of-life matters, burial and autopsy, and will authorize your agent to access your medical records and select physicians for you.

(4) Trust.  If you have a home or other significant assets, you should also consider creating a trust. Unlike a will, a trust is designed to avoid probate and, upon your death, pass your trust  assets to your beneficiaries in a manner which is usually speedier and less costly than a probate proceeding. Also, if you become incapacitated, a trust typically appoints a successor trustee to step in to handle your financial affairs during your lifetime. Unlike the DPOA, a trust does not suddenly cease to exist upon your death, but remains in effect long enough to distribute your trust assets as you have directed.  In larger estates, trusts may also include provisions to minimize estate tax.

(5) Beneficiary Designations.  At the same time that you create an estate plan, you should also review all beneficiary designations on assets such as insurance policies, retirement plans,  annuities, and bank and brokerage accounts. This is because these beneficiary designations override your will or trust, and you should make sure that they reflect your wishes and are current. Example: a Pay-On-Death (“POD”) designation on a bank account will, upon your demise, distribute the funds therein to the POD beneficiaries, without probate or trust administration.

A good estate plan should also be customized to your particular circumstances.  For example, if you are concerned about future long-term care expenses, you may wish to integrate long-term care planning into your estate plan, so that you or your spouse may access available government benefits (e.g., Medi-Cal) to help pay for that care without depleting a lifetime of savings or impoverishing the survivor.

Q. Our grandson is graduating college and we would like to get him a gift which recognizes the beginning of his adult life and career. We thought of something of a “legal” nature and wondered if you have any ideas?

A.  Great thought and indeed I do. Why not arrange through your attorney to provide him a basic estate planning package, which would include an Advance Health Care Directive, a Durable Power Of Attorney and a Simple Will.  The message, of course, is that he has now formally entered the world of adulthood and needs to take prudent steps to protect himself and his loved ones from the unexpected.  He would also learn that these essential “life planning documents” need to be kept up-to-date as circumstances change, e.g. when he marries, has a child, purchases a home or acquires wealth.

Understandably, his focus will most likely be upon other things, such as deciding where he will live, beginning a new career, and perhaps finding a life partner.  But your thoughtfulness can also teach him that these new adventures come with a certain responsibility.  What if, for example, he were in an accident or suffered serious illness and became unable to manage his own affairs or direct his medical treatment.  This happens!

In our own family, while our son was away at college, he suddenly had to undergo emergency surgery.  I can assure you it was quite unsettling to have to scurry around to prepare and arrange the remote signing of an Advance Health Care Directive while, at the same time, make emergency travel plans to be with him.  Fortunately, everything turned out fine, but one never knows.

While your grandson’s own parents may feel that, should anything happen, they can always make decisions for him, they may be surprised to learn that the law does not agree.  Once he  turned 18, he became an adult in the eyes of the law, and his parents no longer had the legal right to make decisions for him or direct his medical care.  Instead, if suitable legal documents were not in place, they could only acquire that legal authority through a court ordered conservatorship, a public, cumbersome, time-consuming and expensive legal proceeding.

Your grandson need not worry that his parents will take over management of his life.  The Advance Health Care Directive and the Durable Power Of Attorney can be “springing powers”.  This means they would only spring to life and become operational when and if he became incapacitated and could not make those decisions for himself.  Also, he need not feel obliged to name his parents as his agents.  Instead, he could name whomever he wishes, such as his siblings or even a very good friend to serve as his agent or successor agent.

One of the other benefits of this gift would be his introduction to a professional with whom he might build a relationship, and who might be able to assist him over the years as he matures.  You might also consider introducing him to your banker or stockbroker, help him establish a contributory IRA and discover the wonders of compound interest.  Indeed, you might be able to show him how– with regular contributions– he could be a millionaire by the time he is your age.