Getting the Facts Straight: Important Legal and Financial Issues

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By Caren R. Nielsen, Esq.

Published in The Valley Social Newspaper, Vol 1, No. 8


Q:   I’m worried I will go broke & be unable to pay for long term care.  What can I do?

A:   Medi-Cal is available for many middle class families.  If someone in your family needs a temporary visit in a nursing home, get proper legal advice to learn if Medi-Cal can help your family save money.

Q:   Should I sell my home to qualify for Medi-Cal?

A:  No, a residence is considered an exempt asset.  Exempt assets, regardless of their value, do not currentlylimit eligibility for Medi-Cal.  However, your residence may be subject to an estate claim by the Department of Health Services after death.

Q:   What is Medicare and does Medicare pay for in-home care or a day program?

A:   Medicare is a federal program administered by the Social Security Administration.  It provides health insurance to persons over age 65 and to some disabled persons.  Medicare pays for some in-home care services.  Medicare does not generally pay for adult day care programs.

Q:   Is it true that I have to wait 5 years after making a gift to qualify for Medi-Cal?

A:   Not today, but it will be true at a future date.  In some situations you can make a gift on Monday and qualify for Medi-Cal on Tuesday, but be sure to get legal advice first because every family is unique; thus the best strategy for one family may not be the right strategy for another family.


Q:   I have a diagnosis of early memory loss but I am still driving.  Are there legal issues with which I should be concerned?

A:   Yes, Physicians are required by law (under Health & Safety Code Section 103900) to report disorders characterized by lapses of consciousness, as well as some levels of cognitive impairment. Also, a neighbor, relative or friend can fill out a Form suggesting they saw a driver operate a vehicle in an unsafe manner.

Q:   Since I have 50 years of driving experience, doesn’t that make me a better driver than someone with only 20 years of driving experience?

A:   No!  Statistics show that drivers over age 70 are five times more likely than others to experience “pedal error”.

Health & Safety Code Sections 13800 & 13801

1.         DMV may conduct an investigation to determine whether one’s license should be suspended or revoked.

2.         DMV may request a Driver Medical Evaluation completed by a physician.

3.         DMV may also require a person to submit to a written test, a drive test, or both.  If the person refuses to take the test, DMV may suspend one’s driving privileges indefinitely until the person takes the test and passes.

Q:   Have any studies been done regarding Alzheimer’s and Driving?

A:   Yes, John Hopkins University conducted a study and concluded that Alzheimer’s patients should not drive.  The study showed that more than 40% of patients had been in at least one accident since their diagnosis, 11% caused an accident even though they were not directly involved, 44% routinely got lost driving and 75% regularly drove below the speed limit.


Q:   What is a Durable Power of Attorney and why do I need one?

A:   A Durable Power of Attorney (“DPA”) is a form signed by a competent indi-vidual (“principal”) designating another person (“agent”) to handle financial trans- actions, such as bill paying & bank deposits.  Everyone should have a DPA.  In case of an emergency or accident, a DPA can keep you out of the court system.

Q:   Can I simply use a DPA found on the internet?

A:   The disadvantage of preprinted forms is that some powers you need may not be included in the form.  For example, DPA’s can be immediate or springing, specific or general and can name one or multiple agents.

Q:   How do I use a DPA when I need it?

A:   Your DPA document should be kept in a safe place in your home where it is accessible in an emergency.  When it becomes necessary, your chosen agent can present your DPA to your financial institution and it will authorize the institution to deal with the agent you’ve appointed.


Q:   What is an Advanced Health Care Directive?

A:   An Advanced Health Care Directive is a legal document containing specific health care wishes, life-support beliefs, and nominations of others (like a son or daughter) to speak to your doctors if you cannot communicate on your own.

More about the Advanced Health Care Directives:

1.         It should have a HIPAA release.

2.         Includes requests regarding burial, organ donation, and life support.  Your written requests in the AHCD are legally binding on others.

3.         You can designate “personal care” choices, such as the desire to always live at home, to spend your money on your health and home care, and to select certain doctors, types of care and even specific music and food choices, if you so desire.

Q:   If I have a Will, do I still need a DPA or Advanced Health Care Directive?

A:   Yes, a Will takes effect only after you pass.  A DPA or Advanced Health Care Directive takes effectwhile you are alive.

Q:   What happens if I don’t have a DPA or Advanced Health Care Directive and I do become incapacitated?

A:  A court Conservatorship proceeding may become necessary.


1.         “Conservatorship” involves a court hearing to appoint another person to manage one’s finances (called a conservator of the estate) and/or one’s personal affairs (called a conservator of the person).

2.         Conservators are necessary when a person becomes unable to make medical or financial decisions.  You can designate your choice for a conservator ahead of time in your Power of Attorney or separate document entitled a “Nomination of Conservator.


Q:   What other documents do I need that an attorney can help us prepare?

A:   You should also have a Will or Living Trust. A Will directs who inherits your property at death.  A Trust does the same, however, it also provides for the management of your assets during life if you become incapacitated.  In a Trust, you can provide for your loved ones in whatever manner you feel is best – such as periodic payments to your children at specific ages, on-going gifts or lifetime support.

More about Wills:

1.         Requirements: Formal wills require two witnesses (no notary); holographic wills must be in testator’s handwriting but require no witnesses.

2.         You choose who inherits your property, including your half of the

community property.

3.         Prevents arguments and alleviates burdens among surviving heirs.

4.         May include a trust for minors, a spouse or disabled beneficiaries.

5.         Ability to select who will be in charge after you die, i.e. the executor.

6.         You can avoid a court guardianship over your children’s inheritance by providing for “custodian accounts”.

7.         Even with a will, estates greater than $100,000 must be probated.


1.         To avoid a conservatorship in the event of incapacity.

2.         To avoid probate at death.

3.         To save estate taxes at the death of the surviving spouse.  (A-B Trust)

4.         To minimize the generation skipping transfer tax (“GST” tax).

5.         To prevent one spouse from disinheriting the other spouse’s family.

6.         To keep control over the estate.  (Ex: in a family business or until beneficiaries are mature enough to manage estate)

7.         To maintain privacy.  However, all beneficiaries must receive notice and a copy of the trust once a trust becomes irrevocable, e.g., at death.

8.         IMPORTANT: Transfer assets into the trust before death or disability.  EX: property deeds, pink slips for cars, assignments for partnership interests and brokerage forms.

9.         Definition of a Trust:  An entity created for the benefit of you & your beneficiaries to avoid probate, manage assets, and decrease estate taxes.

Like a will, a trust directs who will inherit property.  However, a trust also provides for lifetime management of assets during incapacity.


Q:   Should I put all my property in Joint Tenancy?

A:   Not without legal advice.  There are many disadvantages to Joint Tenancy as a substitute for a Will or Trust.

More about Joint Tenancy:

1.         Disadvantage: Loss of control.  If one joint tenant becomes incapacitated and unable to sign documents, the other JT may not be able to sell or refinance.

2.         Do not simply put your loved one’s name on the deed to your house (or on your bank accounts) as a way of do-it-yourself estate planning.  Joint tenancy avoids probate but you may lose control of your house.

3.         Never be a joint tenant with a minor.

4.         Disadvantage: Loss of full stepped-up tax basis for capital gains.

5.         Important Tip: Joint tenancy prevails over wills & trusts.

6.         If one joint tenant is sued, has creditors, or gets divorced, the other joint tenant may suffer the consequences too.


Q:   I want to make some gifts to my family now.  Are there any legal issues I should be concerned with?

A.   Yes, there may be tax implications by making a gift.

More about Gifting:

1.         Basic Rule #1:  You may give $12,000 per year to as many people as you want gift tax-free.  (Thus, a mom and dad can give $24,000 per year to each child.)

2.         Basic Rule #2:  You may also give $1 million in tax-free gifts during life.  (No tax due, but reduces the amount you can leave tax-free at death.)

3.       Advantages of Gifts:

– Makes people happy.

– Removes the asset from the donor’s estate for estate tax purpose.

– Removes future appreciation from donor’s estate.

– Removes future income from donor’s estate

4.      Disadvantages of Gifts:

– You no longer can use the property.

– Gifts may disqualify the donor from Medi-Cal.

– Making gifts may increase capital gains taxes to your family, so obtain                                legal advice before gifting.

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