Q. My wife and I have 4 sons. Unfortunately, one of them is not deserving of an equal share of our estate when we pass, and we have shared that with him. He now threatens to challenge our trust after we die on the ground that we lacked capacity when we recently created it. We are both in our 80’s, but fully competent. Is there anything we can do now to ensure that our wishes, as expressed in our trust, are honored after we pass?

A. Yes. Here are three suggestions, and you can undertake one or all if you wish:

1) Arrange a Forensic Evaluation Of Your Capacity: Arrange for an evaluation of your capacity by a forensic psychologist or psychiatrist now, while you both are fully competent. The evaluator should be a professional who is well versed in the forensic aspects of evaluating capacity, and should be someone who will be able to testify, if necessary, down the road. You should arrange this through your attorney, who can assist in locating a suitable professional. It is likely that the interview of each of you would be recorded and preserved for possible future reference. The evaluator should inquire fully about your reasons for wanting to treat your one son differently, and would ultimately render an opinion in writing regarding your capacity, the basis for your decision, and other relevant factors. Try to select a professional younger than both of you, who is likely to be alive and available to testify when you have both passed on. In any event, at least the evaluator’s recorded interviews and psychological testing should be preserved for later access by another professional who could then testify.

2) Include a “No Contest” Clause in Your Trust: To make this effective, make sure to leave the one son enough to discourage a contest. If you leave him little or nothing, then he would have nothing to lose by initiating a contest. See this Article for more on this topic.

3) Initiate A Court Proceeding Now to Affirm the Validity of Your Trust: Perhaps the most effective approach would be to formally initiate a court Petition now, during your lifetimes, to confirm the validity of your trust by an Order of Court. You would be available to tell the court why you created your trust as you did. If successful, the resulting court order affirming your trust would then foreclose anyone from later on challenging it, provided that the would-be challenger(s) received notice of the court proceeding and an opportunity to challenge your trust. If any challenger fails to object, or if he objects but the judge rules against him, then he would thereafter be foreclosed from later challenging your trust, under a legal doctrine called “res judicata”, meaning that the matter had “previously been adjudicated” and is now foreclosed from challenge.

The proceeding would be brought under CA Probate Code § 17200 to “determine the existence of the trust”. The fact that there is legal authority to permit you to bring such a Petition during your lifetimes is a matter not well known to even many attorneys, as the common wisdom is that proceedings to challenge a trust can only be brought after the death of the Trustors who created it. Not so. In fact, in addition to the statutory authority, there are interpretive judicial opinions, which embrace the notion that proceedings to affirm the validity of a trust, or an amendment to trust, can be brought before a judge during the lifetime of the Trustor(s).

Of course, how you approach your concern is a matter that you should discuss with your attorney, as there are significant factors to take into account before going forward. For example, initiating a court proceeding during your lifetimes may exacerbate family disharmony, or precipitate unpleasant and expensive litigation. By the same token, even seeking a forensic evaluation of your capacity now might, itself, raise questions as to whether it was motivated by a concern about your very capacity to create the trust.

So, consider these matters carefully with your attorney before undertaking any of these strategies. But, at the same time, know that there are ways to protect your trust against a post-mortem contest.

**************************

References regarding the Court Proceeding: California Probate Code § 17200; Conservatorship of Irvine, 40 Cal. App. 4th 1334, 1342 (1995); Murphy v. Murphy, 164 Cal. App. 4th 376, 398-399 (2008).

Q:  I heard on a radio program that Living Trusts should be HIPAA compliant, but I didn’t quite catch the full comment. Can you shed any light on this?

A. Sure. Most trusts and powers of attorney contain provisions which call for a change in trustee or agent when the maker of these instruments (you) becomes incapable of handling his or her own financial or personal affairs.  These documents typically require that incapacity be proved by the written statement of one or, sometimes, two physicians.  The problem:  these provisions often assume that the physicians will provide the written statements upon the simple request of another family member.  But here’s the catch:  under current law relating to medical privacy, the physicians cannot legally provide the statements unless a “HIPAA Authorization” has been signed in advance by the trust-maker.

HIPAA refers to a federal law designed, in part, to protect the privacy of one’s medical records. It stands for Health Insurance Portability and Accountability Act, and the provisions concerning medical privacy became generally effective in April, 2003.  The law provides stiff fines for doctors, hospitals and other providers who disregard the requirement of written authorization.

So, the term “HIPPA Compliant” refers to a trust or other estate planning document which includes, among its provisions, a section expressly authorizing someone — usually the nominee next in line to be trustee or agent — to request competency statements from the trust maker’s physicians. Alternatively, the HIPAA Authorization may be contained in a separate document. But preauthorization, in some form, should be part of the person’s estate plan in order to satisfy the medical release requirement, encourage physicians to provide the needed statements and thereby permit the smooth transfer of management responsibility when incapacity arises.

Many persons with long standing relationships with their physicians assume that their own doctors will comply with a request from the family without the necessity of a release.  However, this approach is risky, because at the time of need you may not be under the care of your own personal physicians: for example, you may be in a critical care hospital or in a nursing home where your care is managed by other physicians who practice only in that care facility. Further, even your own doctors may be reluctant to breach privacy protocols, especially if the request for disclosure arises at a time of family conflict.

A word to the wise: review your trust, powers of attorney and related documents to make sure that you have pre-authorized designated persons to request letters from your physicians when they reasonably believe that you are no longer capable of managing your own financial and personal affairs. Doing so will help smooth the transfer of management responsibility as you originally intended and may avoid the need for court intervention to resolve the issue.

Q,  My wife and I were wondering whether a Power of Attorney that each would give to the other would end upon death? Can you advise?

A. Short answer. Yes! A Financial Power of Attorney (“POA”) generally ends upon the death of the principal, the principal being the one who gives the “powers” to an agent, the latter being a person whom we sometimes call an Attorney-in- Fact (”AIF”). The only exception to this rule is where the agent, in good faith, is not aware that the principal has died, and in good faith exercises the powers granted in the document for the benefit of the principal, even after his or her death.

Where the agent acts in good faith, the law protects him from liability. It also provides a procedure whereby – upon the preparation of a sworn affidavit attesting to the agent’s lack of knowledge of the principal’s death – the agent’s innocent actions under the POA may be affirmed and bind the estate of the principal, just as if he were still alive. Otherwise, upon the death of the principal, the agent is only authorized to take proper steps to return the principal’s property and records of transactions to the proper custodian, and to provide an accounting of the agent’s actions if properly requested.

By the way, another circumstance that would terminate the agent’s authority is if the agent and AIF were husband and wife and their marriage is dissolved or annulled.

For a principal who wishes to have a surrogate continue to manage his property after death, the most appropriate options are to so name the Agent as Executor in a Last Will, or as Successor Trustee in the principal’s Trust.

As to a Healthcare Power Of Attorney, or what is more frequently called an Advance Health Care Directive, the document normally does confer upon the agent limited post-mortem powers even after the principal’s death. Those powers are as follows: to dispose of the principal’s remains, to authorize an autopsy, to donate all or part of the principal’s body for transplant, education, or research purposes, and to inform individuals designated by the principal of his or her death. Of course, the principal may– in the Advance Health Care Directive, itself– restrict even these post-mortem powers if he wishes, but otherwise the Agent would the have powers indicated even after the principal’s death.

I hope this helps.

Gene L. Osofsky is an elder law and estate planning attorney in the East Bay.  Visit his website at www.LawyerForSeniors.com. 

Q. Our 85 year-old mother is frail but wishes to remain at home.  She has limited financial resources, so my sister is living with her and providing care without pay.  Are there any government programs that might help us hire a caregiver and give my sister some relief?

A. Yes. There are a number of programs, but one that may be of special interest is the In-Home Supportive Services Program (“IHSS”).  It is designed for persons of limited financial means who are blind, disabled or over age 65, and who are unable to live safely at home without assistance.  For qualifying individuals, it provides nonmedical services such as meal preparation, cleaning, laundry, bathing, feeding, dressing, grooming, toileting, and monitoring for persons with cognitive impairments who are at risk of injury at home.

 It works like this: The applicant must first qualify for either SSI or Medi-Cal, and then submit an application for the IHSS program.  An in-home assessment is then made by a social worker to determine the number of hours of care needed. This can be up to 195 hours per month for a non-severely impaired applicant and up to 283 hours per month for one who is severely impaired.  Upon approval, the beneficiary then selects and hires a caregiver and the IHSS program pays the worker for the approved number of hours per month, currently at the rate of $18.10 per hour in Alameda County and $16.50 per hour in Contra Costa County (as of January 1, 2023). See this chart for rates in other California counties.

Resource Limits:  The program is designed for persons of very modest resources who are either (1) eligible to receive Supplemental Security Income (“SSI”), or (2) eligible for Medi-Cal.  Medi-Cal eligibility is now easier to achieve as the current resource caps have recently been dramatically expanded. To qualify for Medi-Cal, the applicant can now have up to $130,000 in savings if single, although more is allowed if married.  Note:  for those persons with excess assets, there may be lawful strategies to accelerate eligibility without the need to first spend down the excess.

Income Limits:  For persons with low monthly incomes, the benefit is available without a share of cost (“co-pay”).  However, for persons whose monthly income is above certain levels (currently, above $1,564 for a single person and $2,106 for a married person, as of December 2022), the applicant will have a share of cost that must be paid to the worker(s) before the IHSS program pays the balance.  Thus, the program only works well for persons with low incomes, or persons with great need who are awarded hours close to the maximum.

In many cases, the caregiver may hire a family member, whether a spouse or an adult child.  Also, for the caregiver who works at least 80 hours per month, the program makes healthcare available at a nominal monthly premium, a valuable benefit to the worker.

If your mother qualifies for IHSS, she could hire your sister so she could receive both a modest salary and health insurance.  Also, to give your sister some relief each month, your mother could split care hours, hiring your sister part-time and another caregiver for the balance of approved hours.

To find out more, call the Alameda County Area Agency on Aging at 510-577-1800, or go to www.AlamedaSocialServices.org.

Q.  Last year around this time, you wrote an article on year-end gift planning, but I cannot find the copy I saved. My wife and I are considering making large gifts to our two children to help them remodel their homes, and we would like to do so in a way that is “tax wise”. Can you publish it again, please?

 A.  Sure, and I have actually updated it with the new Gift amounts for this year and next. Many people mistakenly believe that one cannot gift more than $16,000 per year/person without incurring a gift tax. Not so. In fact, an individual can currently gift more than $12 million during lifetime without incurring a gift tax! Here is the way gift taxes work:

Annual Exclusion Gifts: No Gift Tax Return Required:

1) $16,000 Per Year: The federal tax law permits you to make an Annual Exclusion Gift Amount, i.e. the amount that may be gifted to any person without filing a Gift Tax Return. In 2022, it is $16,000 per recipient, and in 2023 it increases to $17,000 per recipient. Such gifts are called Annual Exclusion Amount Gifts (“AEA Gifts”) and you can make such gifts to as many persons as you wish each year, provided that you make only one such annual gift to each gift recipient. No Gift Tax Return is required for these gifts.

2) “Doubling Up”:  If you and your wife are in a position to do so, together you can actually double that amount for each gift recipient. So, together, you could gift a total of $32,000 to each child in year 2022, without the need to file a Gift Tax Return or incur any gift tax.

3) “Year End Straddle”: If you act before the end of this current year (2022), you could each gift $16,000 to each child ($16K X 2 = $32,000). Then, on or after January 1, 2023, you and your wife could do the same thing once again, albeit at the higher rate of $17,000 per child, as you would then be in a different tax year.  So, over the course of a period as short as a calendar week – provided that the week straddles both the last days of this year and the early days of next year — the two of you could, together, gift away a total of $66K ($32K in 2022), plus ($34K in 2023) without the need to file a Gift Tax Return or use any of your lifetime exemptions. I call this strategy the Year-End Gift Straddle.

Gifts Above the Annual Exclusion: Gift Tax Return Required

1) Lifetime Exemption: If you choose to make gifts above the Annual Exclusion Amount (“AEA”), then you can still make them gift tax free by using a portion of your Lifetime Exemption (aka, the “Unified Credit”). That Lifetime Exemption is currently $12.06 million per person for U.S. citizens in 2022, but increases to $12.92 million per person next year (2023). AEA gifts do not count against this exemption, and they can be made in addition to Lifetime Exemption gifts.  Also, by making a timely election after the death of a spouse, the surviving spouse can opt to preserve the deceased spouse’s unused Lifetime Exemption for the survivor’s own later use, thereby effectively doubling it. This is called “portability” and would allow a married couple– beginning next year — to effectively give away $25.84 Million over their two lifetimes without incurring any gift or estate tax. Caution: This generous Lifetime Exemption is now set to “sunset” (end) for those dying after 12/31/2025, and to then return to the prior much lower exemption, unless Congress amends the current rule contained in the Tax Cuts and Jobs Act of 2017.

2) Gift Tax Return:  To the extent that your gifts exceed the Annual Exclusion Amount, you must file a Gift Tax Return. But no gift tax would be due so long as your cumulative gifts are less than the Lifetime Exemption. Reason: the IRS wants to track your use of your lifetime exemption, so that it knows how much you have left to use upon death. Example: if you used $1 million of your lifetime exemption to make gifts during lifetime, then your remaining exemption to apply against estate taxes upon death would be $1 million less. Remember, though, that gifts within the AEA exclusion do not count in this tally.

3) Rules May Be Different for Non-US Citizens: Note that the rules for persons who are not U.S. Citizens may be different. Consult your tax advisor if you are in this group.

Caution:  Before making large gifts, be sure that you can afford to do so. If there is a possibility that either of you may need to apply for a Medi-Cal subsidy for Long Term Care in the near future, you should first consult an Elder Law Attorney or other professional with special knowledge about the Medi-Cal program, as such gifts may impair your eligibility for a Medi-Cal subsidy unless handled in a very special manner.

Q. Is there any resource on the Internet which has a compilation of benefit programs for seniors, all in one place and that’s easy to use?

A. Yes! You may be unaware that seniors have access to hundreds of federal and state benefits programs that may assist them. Many retirees meet the requirements for these aids, yet do not know they are eligible and miss opportunities to receive assistance. Others can feel overwhelmed by complex application processes.

For this reason, the National Council on Aging (“NCOA”) has created a great resource accessible at www.BenefitsCheckUp.Org. It connects older adults and people with disabilities with federal and state benefits programs that can help pay for their health care, medicine, food, utilities, and more. You can see what’s available in your area by checking out its website and entering your ZIP code.

This online resource helps elders identify those federal and state assistance programs for which they are qualified. The database is free to access, and the National Council on Aging ensures that personal information people enter into the website remains confidential.

The website not only provides older people with individualized reports regarding assistance programs that would benefit them, but by visiting the site you can get a personalized eligibility report detailing the benefits programs for which you may qualify. The personalized report also details the information they may need for each program before applying, including contact information for the agencies administering the assistance.

On the BenefitsCheckUp website, you merely enter your information into the database, starting with your ZIP code. Then select the programs that interest you. These programs offer support for many services, including the following:

Health care and medication
Food and nutrition
Housing and utilities
Aging in place and In-Home Care
Income
Disability services
Long-term care, such as skilled nursing facilities
Discounts and activities
Tax help
Crisis, legal, and general assistance
Veterans’ programs

After the website creates the personalized report, you can save it as a PDF document and email it to yourself or a loved one. This report can be a great resource for other family members and caregivers, who can then use it as a guide to assist you or your loved ones in applying for state or federal benefits for you or other family members.

This easy-to-use resource can help older adults and their families alleviate the stress associated with applying to state and federal benefits programs. Visit the BenefitsCheckUp website to use the tool. Why not give it a try?

Q. My wife and I have missed a few home mortgage payments this year, and we are behind in our property taxes. I heard there is a program that might help us out. Do you know anything about it? We don’t want to lose our home.

A. Yes. In California, the program is called the California Mortgage Relief Program, and it uses federal Homeowner Assistance Funds to help homeowners get caught up on past-due housing payments and property taxes. The great thing about the program is that it is absolutely free to participate, and if you qualify – believe it or not – you do not have to repay the funds! Its purpose is to help homeowners impacted by Covid 19 to catch up on their home related expenses, whether it be mortgage delinquencies or past due property taxes.

For those eligible, it provides grants of up to $80,000 to reinstate past-due mortgages on homes, condos or even permanently affixed manufactured homes, and grants of up to $20,000 to help pay delinquent property taxes.

Eligibility is determined as follows:

1) You must be behind on two or more mortgage payments as of June 30, 2022, and remain delinquent;

2) You must have fallen behind on property taxes before May 31, 2002, and they remain unpaid;

3) Your household combined income for all household members over age 18 must be at or below an amount which is 150% of the Area Media Income. This threshold is actually quite generous: to qualify in Alameda County, a single person household must have annual income that is less than $149,000, and for a two-person household, annual income less than $171,400.

4) You experienced a Qualified Financial Hardship related to COVID-19 after January 21, 2020: the hardship could have begun before that date, if it continued after that date. Hardships would include loss of income, medical expenses increased utility costs, food expenses, etc. The criteria is very broad. Note: documentation is not required to show a hardship. Applicants must verify hardship by signing statement as part of the application, so it is – in a very real sense – self certifying.

Even folks with reverse mortgages, who are potentially delinquent because they have missed property tax payments, can apply for relief under this program.

You can either apply online by going to the California Mortgage Relief Website, or by calling the Program Contact Center at 1-888-840-2594 for assistance, or for a referral to a HUD certified housing counselor. California is committed to making sure that all qualifying homeowners get full access to this grant program, and it is noteworthy that the application, itself, is available in 6 different languages: English, Spanish, Chinese, Korean, Vietnamese, and Tagalog.

Note: if you previously applied and were denied, you should reapply. Reason: in June, 2022, the Relief Program expanded its eligibility requirements and it now encourages applicants who were previously denied to reapply if they now meet the updated eligibility requirements. Further, there may be more eligibility expansions as of January 1, 2023. So don’t let a previous denial discourage you from reapplying.

Good wishes on accessing the program to catch up on your mortgage and property taxes.

Q. I recently heard the term “Springing” Power of Attorney, but I am not sure what that means. Can you shed any light on this?

A. Sure. Broadly speaking, there are two general categories of financial Powers of Attorney: (1) those that are immediately effective upon signing by the principal, and (2) those that are only effective upon the happening of a future event, typically the incapacity of the principal.  Attorneys generally call the latter a “Springing” Power Of Attorney, because they do not become effective, or “spring into life,” until the happening of that future event. Which form a client might choose will depend upon the client’s circumstances.

Typically, a client who is healthy and younger would usually prefer a power of attorney that only springs into life in the future, when, and if, he or she is no longer able to manage his or her own financial affairs. Until that event, the client – whom we often call the “principal”— calls his own shots and only he, himself, can enter into transactions that legally bind him.

By contrast, a principal who is up in years and/or sees illness or incapacity on the near horizon, may opt to sign a Power of Attorney (“POA”) that is immediately effective, so as to dispense with the procedural requirement and corresponding delay necessary to establish the requisite incapacity that would make the POA effective, and thereby empower the designated Agent to act for the Principal.

How is incapacity determined?  Many Springing POA’s recite that incapacity is determined when two (2) physicians who have examined the principal write a letter reciting that the principal is incapable of managing his or her own financial affairs, usually due to cognitive decline, dementia or similar impairments.  Note: Notwithstanding that common requirement, I prefer to recite in POA’s that I prepare that only one (1) physician need so opine, and here’s why: Very often the need to establish incapacity in this context arises when the principal is residing in a nursing home or other long term care facility.  Typically, in that care setting, only one physician makes the rounds to check on each patient. To secure an evaluation and letter by a second physician in those circumstances can be very difficult and time consuming.

Another option for some clients is to begin with a Springing POA, but as the years pass, and they decide they no longer wish to manage their own financial affairs, to sign a simple form reciting that the POA is now immediately effective. That signed form would then be kept together with the POA and handled as a single document, so that it is apparent to all who review it that the principal has opted to make the POA immediately effective. The other alternative, of course, is to rewrite the POA entirely so as to render it immediately effective going forward. The latter would be the preferred alternative for simplicity, as then all relevant information is in a single document.

Know that, whichever form you choose initially, you are not forever bound by that decision. So long as you are competent, you can always revoke and revise your POA to make it fit your changing life circumstances.

Q. My wife and I are concerned that our adult children might be held financially responsible for our care in the event we run out of our own resources. Our children are good kids, but they have their own financial responsibilities, including putting their own kids through college. Can you shed any light on this?

A. Sure. This topic has generated some discussion in the news, prompted by a court case out of the State of Pennsylvania. In that case, a son was held liable for his mother’s unpaid nursing home bill of about $93,000, even when the mother had an application for Medicaid (which we call “Medi-Cal” in California) pending. The case sent shivers throughout the country, and elder law attorneys have expressed concern that this case could signal a new wave of claims by nursing homes and assisted-living facilities to recover unpaid bills.

For now, the good news is that the statutes in California seem to disfavor claims of this nature. While statutes are on the books which – on their face – would seem to permit children to be held responsible for the costs of their parents’ care, yet California carves out a huge exception to this potential liability: if the parent is an “applicant for” or “a recipient of ” Medi-Cal, SSI, or other public benefits, then no claim of any kind can be made against a parent or other relative to recover the cost of care. Welfare & Institutions Code § 12350. In short, the law in California appears very unlike that in Pennsylvania, which apparently did not include a similar exception.

Since a parent in need would most likely “apply” for some kind of public benefit and would thereby become an “applicant” and thus protected by the statute cited above, it would be an unlikely scenario where a child would have financial responsibility for his parent’s care. Indeed, I could not find any reported case decision in California which imposed such liability, absent egregious fact patterns involving extreme neglect of a parent amounting to elder abuse. Note that the statute refers to the parent being an “applicant” for public benefits, and does not seem to require that the parent actually “qualify” for same. Still, the law is developing in this area and specific fact patterns have yet to be adjudicated by courts.

For best protection, the best way to ensure that your children do not find themselves on the financial hook is to ensure that you and your wife have a plan in place to pay for your own long-term care. That plan might include setting aside sufficient assets to cover that cost, relying upon long-term care insurance (if you qualify and can afford it), or by making a timely application for a Medi-Cal subsidy when appropriate. In this regard, you may know from one of my recent articles that Medi-Cal has recently relaxed the resource caps, so that persons of more middle class means may now qualify for benefits: Under these recent changes, the “Ill Spouse” is now permitted to have up to $130,000 in savings or other resources, while the “At-Home Spouse” is allowed another $137,400 of his/her own savings and resources, for the new combined resource allowance of $267,400 for a married couple (in 2022).

Further, for those with even more savings or other countable resources, know that there are lawful strategies to accelerate Medi-Cal eligibility while still preserving assets, but these require strict compliance with Medi-Cal rules. In this regard, Medi-Cal planning is similar to tax planning in which the wealthy engage. However, these strategies should only be employed under the supervision of an elder law attorney with special expertise in Medi-Cal planning, or they could backfire. For example: gifts to children — if handled incorrectly — could actually prevent a parent from qualifying for a Medi-Cal long term care subsidy.

Q.  My wife and I hold title to her home as joint tenants, and most of our cash assets are in the form of two large IRA accounts and one big annuity. We have basic wills which leaves everything to the other and then on to our children. Our son suggested that our wills may not control what happens to our assets when one of us dies. Should we be concerned?

A. Perhaps, in the sense that you wills will not control what happens to your assets when one of you dies. Rather, the form of title will control as to your home, and the beneficiary designations on your IRA’s and annuity will control what happens to those assets. Here is the way it works:

Your Home: Since you and your wife hold title to your home in joint tenancy, when one of you dies the other will automatically become the owner by right of survivorship. The right of survivorship is the primary feature of joint tenancy.  In essence, the form of title overrides your wills.  It is only when the survivor later dies that his or her will may control who ultimately gets the home. While many couples in California do hold their home in joint tenancy, it is often not the best form of co-ownership. One principal reason:  it does not optimize the tax benefits that go along with holding title as ”community property” where the home has appreciated significantly in value since the time of purchase. Often, holding your home in a “Living Trust” may be the best option.

Your IRA Accounts: Each of your IRA accounts will, upon the death of the IRA owner, go to the primary beneficiary named in the account agreement signed when you created your IRA’s.  Presumably, the primary beneficiary for each of you is the other spouse and, if deceased, your children. However, the pattern of distribution very much depends upon who you designated as primary and contingent beneficiaries when you created your accounts. It is always wise to periodically review these designations and retain in your permanent file a copy of the documentation you signed when you created your accounts. As a lawyer, I have been involved in at least one case where the IRA custodian, a large brokerage firm, lost the paperwork on a very large IRA account, almost costing the designated beneficiary a six-figure tax bill because of the resulting delay in distribution. The IRS has strict rules about inherited IRA accounts, and these must be observed on a timely basis to avoid unnecessary tax. In particular, the rules have changed as to how long your beneficiaries may “stretch” their receipt of distributions.

Your Annuity: the person or persons to receive your annuity would, just like the IRA, depend upon who was named as the primary beneficiary and contingent beneficiaries on the annuity contract, itself.  The same would be true if you owned any other insurance products or policies. Where you have designated named individuals to be primary or contingent beneficiaries, the contract or policy controls and not your will or trust.

In view of the above, whenever clients come in to see us for estate planning, we always urge a review of all beneficiary designations associated with IRA and other retirement accounts, as well as annuities and other insurance products.  Where appropriate, the beneficiary designations can then be modified, so that the plan design accomplishes the clients’ goals and everything works together.  In many cases, the clients choose to name their Living Trust as the contingent beneficiary of these contracts and policies, so that the plan of distribution integrates with that created in their trust.