Posts By: Gene Osofsky

Q. My husband was just diagnosed with Alzheimer’s, but still seems to be generally okay. Are there legal steps we should take by way of planning for the future?

A.  Yes. Once you or loved one has been diagnosed with dementia, it is important to take action to get your affairs in order. Here is my short list of suggestions:

  1. Check Your Long-Term Care Insurance Policy. If you are lucky enough to have a long-term care insurance policy in place, check its benefit provisions, especially its “benefit triggers”.  Many policies are triggered by an inability to perform 2 out of 7 activities of daily living, i.e. eating, dressing, bathing, toileting, ambulating, transferring and continence.  Check for waiting periods, cost-of-living adjustments, lifetime caps, and the extent to which the policy covers care in the home.  Some policies also provide an option to increase benefits periodically without new medical examinations and, if so, consider opting for such benefit increases now, or as soon as eligible to do so.
  2. Check Your Life Insurance Policy for Early Benefit Options. Some life insurance policies offer an option to accelerate benefits under certain conditions, such as the need for long-term care. Check with your insurance company to see whether yours offers an Accelerated Death Benefit.
  3. Consider Applying for a Reverse Mortgage Line of Credit. If you or your spouse are over age 62, consider applying for a Reverse Mortgage (“RM”) line of credit to draw upon in the event of future need.  To qualify for a reverse mortgage, it is usually necessary for both spouses to receive counseling and sign numerous loan documents.  It is best to do this when both of you are able to fully participate in the process.  Also, just because you have a RM credit line, does not necessarily mean you have to draw upon it; instead, consider it as a stand-by source of emergency money for care expenses should the need later arise. Another option:  If your children or family members have the means to function as the “bank”, consider offering them a “Private Reverse Mortgage” to fashion a similar benefit for you, without some of the ‘downsides’ associated with conventional RM’s.
  1. Check Availability for Veterans Pension. If you or your spouse is a veteran, check with the VA to determine whether you might qualify for a veteran’s pension to help with care expenses.
  2. Review Beneficiary Designations. Review the beneficiary designations on insurance policies, IRA accounts, annuities, bank and brokerage accounts, and the like, to make sure they still conform to your wishes.  Many people designate beneficiaries when they initially set up their accounts and, over the years, neglect to review and update them as family circumstances change.
  3. Have Your Estate Planning Documents Reviewed. Make sure you have in place good quality estate planning documents, such as Advance Health Care Directives, Living Trust & Wills, and Durable Powers of Attorney. Most importantly, make sure that your documents include Medi-Cal planning powers: such powers may enable you to access a Medi-Cal subsidy to help pay for your husband’s future care expenses without depleting a lifetime of savings.

Note: Sadly, I find that most estate plans that I am asked to review do not contain adequate Medi-Cal planning powers.  I suggest that your documents be reviewed by an elder law attorney with experience in public benefits planning. Revising your documents now to include these powers may help you finance the future cost of your husband’s care without placing your own financial security at risk.

 

Posts By: Gene Osofsky

Q.  My wife and I are considering making large gifts to our two children and three grandchildren, and we would like to do so in a way that is “tax wise”. Do you have any advice for us?

 A. Yes. Many people mistakenly believe that one cannot gift more than $15,000 per year/person without incurring a gift tax. Not so. In fact, an individual can actually currently gift more than $11 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 IRS recently announced an increase in the Annual Exclusion Gift Amount, i.e. the amount that may be gifted to any person without filing a Gift Tax Return. In 2022, it will increase from $15,000 to $16,000 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 recipient.

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 recipient in year 2022, for a total of $160,000 from both of you ($16,000 x 2 donors x 5 recipients), again 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 (2021), you could each gift $15,000 to each of your loved ones ($15K X 5 = $75,000). Then, on or after January 1, 2022, you and your wife could do the same thing once again, albeit at the higher rate of $16,000 for donee, as you would then be in a different tax year, and thereby give away another $80K apiece.  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 $310,000 ($75 x 2 Donors x 5 Recipients=$150K in 2021), plus ($80K x 2 Donors x 5 recipients = $160K) 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 $11.7 million per person for U.S. citizens, but increases to $12.06 million per person next year (2022). 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 gift away $24.12 Million over their two lifetimes without incurring any gift or estate tax.

NOTE:  Absent any change in the federal law regarding Gift Taxes, this large, current Lifetime Exemption is set to ‘sunset’ on December 31, 2025, and to then drop back down to the prior exemption amount as it existed in 2016, i.e.   $5 Million per person, adjusted for inflation, which will result in an exemption amount of roughly $6.6 million in 2026. The good news is that the IRS has recently clarified that making gifts now, before 12/31/2025, will not adversely affect individuals after the law sunsets; their estates will still be entitled to the larger tax credit for gifts made before 12/31/2025.

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 excess gifts during lifetime, then your remaining exemption to apply against estate taxes upon death would be $1 million less.

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 nursing home care in the near future, you should first consult a 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.

Posts By: Gene Osofsky

Q.  My parents are aging and I find that they are in greater need of assistance for care, paying bills, shopping, and the like. The problem is that there are four of us children and we do not always agree on what is best for mom and dad. I am concerned that, as my parents’ needs increase, the potential for family conflict will likewise increase. Do you have any suggestions as to how we might head off family conflict and do what is best for our parents?

A. Yours sounds like the ideal situation for family mediation.  Mediation is a voluntary process whereby an experienced mediator helps the parties identify issues, communicate with one another in a respectful manner, develop creative solutions to their concerns and negotiate a lasting agreement that works for everyone.  The mediator does not decide who is right or wrong, but is there to help the parties communicate meaningfully with one another.

The mediator may be a person trained in social work, psychology, or law.  The mediator’s role is to make sure that everyone’s views are put forward and considered, including the views of your parents, and to facilitate respectful discussion to resolve a common problem.

Traditionally, mediation has seen its greatest use in the context of divorce settlements and business disputes, but its application in the elder care context is growing and it has achieved notable success in helping families resolve difficult issues amicably.

Sometimes the issues that are mediated concern suitable living arrangements for parents, allocating responsibility for care, financial and healthcare decisions, the need to make sure that the parents’ bills are paid, a parent’s unwillingness to surrender the keys to the car, and other practical problems of aging. Without a facilitator, anger and resentment may prevent resolution, and old sibling rivalries might surface in a way that is counterproductive to the parents’ best interests. Mediation can help resolve these issues in a manner that preserves the parents’ dignity and family harmony.

The process might take place in one session or, perhaps, over a number of sessions. The hoped-for result is that the parties, with the aid of the mediator, can arrive at an agreement which everyone feels is fair and appropriate. Compliance is voluntary, but a mutually agreed upon solution enjoys a high rate of success. Indeed, the process is often a “win win” for everyone, and can be a great tool in forging family consensus. As we approach the holiday season and a time when families will be together, it might be a great time to begin the process.

To learn more or to search for a trained private mediator visit:  www.mediate.com .  Alternatively, to search for a free or low cost community-based mediation program contact the Seeds Community Resolution Center in Berkeley at (510) 548-2377 or visit its website at www.SeedsCRC.org.

Posts By: Gene Osofsky

Q. Our daughter is going through a divorce. She has a 19 year old son (our Grandson) who has a disability and gets both SSI and Medi-Cal. She plans to seek child support from the father. We worry that the child support will reduce our Grandson’s SSI and possibly eliminate his Medi-Cal. Is there a way around this?

A.  Yes, indeed, and my compliments for asking the question! Very few attorneys or judges are familiar with the work-a-round for this concern, which involves the use of a Special Needs Trusts (“SNT”). As a result, the sad fact is that many persons on SSI and/or Medi-Cal, including adult children, lose their benefits when they (or their parents) divorce. A bit of background:

To qualify for Supplemental Security Income (“SSI”), your Grandson with a disability must meet two financial conditions:  He must (a) have less than $2,000 in non-exempt resources (e.g., savings), and (b) his monthly income must be less than the SSI benefit rate, currently $954.72 per month if living independently or $693.58 if living in his mother’s home (in 2021).  An award of SSI also entitles the beneficiary to Medi-Cal without a co-pay (“share of cost”).

But it gets more complicated in the divorce process.  If he is “incapacitated from earning a living and without sufficient means”, then his parents’ duty to support him continues into adulthood under California law.  However, any court-ordered Child Support (“CS”) that he receives would—unless special arrangements are made as described below — be treated as “unearned income” to him and offset his SSI dollar-for-dollar basis, likely eliminating it entirely, along with his right to Medi-Cal without a share of cost.

The question, then, is whether there is a way to preserve ALL benefits, i.e. his right to SSI, his right No Share of Cost Medi-Cal, AND his right to Child Support.?

Answer:  YES!  Enter the Special Needs Trust (“SNT”).  With professional guidance, your daughter could create a SNT for her adult son and, through her attorney, ask the court to “irrevocably assign” the payment of CS to the SNT. If structured properly, under SSI rules there would then be no offset to his SSI and no change in his Medi-Cal ! Your Grandson would then receive all three benefits: (1) Child Support, (2) SSI without offset, and (3) Medi-Cal without a Share of Cost.

The SNT would be managed by a Trustee, which could be your daughter, who would then handle the funds in a manner compliant with the SSI and Medi-Cal rules. This typically would mean that, as Trustee, she would not disburse funds directly to your Grandson, himself, but instead would use them to pay third party providers directly for goods and services provided to him, such as a tutor, computer, clothing, etc.

To make this option work, it is essential that your daughter engage an Elder Law or Special Needs attorney familiar with the use of the SNT in the divorce context. The SNT attorney would then work with her divorce attorney to create the proper SNT, and might even help educate the judge and opposing counsel to the benefits of this technique. In this regard, our firm has developed a special interest in these cases, and the results have been very rewarding and usually recognized as a “win-win” by all parties before the court.

Posts By: Gene Osofsky

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.

Posts By: Gene Osofsky

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.

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

References:  Text 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. 

Unwinding An Improperly Handled Change in Ownership. In the event the transaction is not handled properly after Prop 19, and the Assessor proposes to Reassess the property after transfer at its much higher current value, there may be a way to “unwind” the transaction with all parties’ agreement, restore them to their status prior to the improvident transaction, and then re-do the transaction properly with the aid of a knowledgeable attorney. This should be completed within a reasonable time following the initial transaction and would involve a formal Rescission of the problem deed.  See, BOE Property Tax Annotation 220.0599, California Civil Code § 1698(a),  BOE Letter No 2021/033 (08/06/2021), and this Notice from the website of the Los Angeles County Assessor:

 

Posts By: Gene Osofsky

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.

Posts By: Gene Osofsky

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.

****

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.

 

 

 

Posts By: Gene Osofsky

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.

 

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 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 Medi-Cal Spousal Impoverishment Laws, contact our office.