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Elderlaw: 08/15/2014

Elderlaw Advocates



Dear Len & Rosie,

My husband and I would like to add my name to the title of our home, which we own free and clear. Presently the home is only in his name. What is the process to add my name?

Nike

Dear Nike,

It’s good that you are dealing with this now. If your husband were to die before you get this taken care of, then the property will be subject to probate. If the home was purchased during the marriage and was paid for with community property (your wage income), then you would inherit the entire home and you could avoid probate with a Spousal Property Petition, which is much cheaper and faster than probate.

But your husband probably first purchased the home before he married you, or he may have inherited it. If that’s the case, then all or a portion of the home is presently your husband’s sole and separate property. If he were to die without a will, then you would inherit only one-half of his separate property interest (if he has no children or only one child) or one-third (if he has more than one child). We point this out so that you and our readers may understand that if you don’t deal with this now, there could be a big mess if your husband dies – you could be pitted in a legal dispute with your own children or stepchildren, or even your husband’s more distant family members.

There are two ways of dealing with this. The cheap and easy way is to hire a lawyer or title insurance company to prepare and record a quitclaim deed conveying the property to the two of you as either “Joint Tenants” or as “husband and wife as Community Property With Right of Survivorship.” Both forms of title will avoid probate on the death of the first of you to die, but the latter is a better way to hold title, because it ensures that the property will be treated as community property on the first death. If the home is community property, then the entire home gets a step-up in cost basis on the first death, instead of only the half owned by the dead spouse.

The best way of dealing with this property is for you and your husband to see a trusts and estates attorney and create a revocable trust that will avoid probate on the second death as well as the first. While you’re at it, make sure that you have a complete estate plan including Durable General Powers of Attorney and Advance Health Care Directives so that you will each be able to make important financial and medical decisions for one another in the event either of you are ever incapacitated.

Len & Rosie

Dear Len & Rosie,

I am the trustee of my recently deceased mother’s trust, which includes a Special Needs Trust for my disabled sister, Judith, who is on Medi-Cal and SSI. Both before and after our mother’s death, my sister has rented a property owned by the trust. As trustee, can I pay off the mortgage on this property and turn it over to my sister while staying in compliance with the terms of the trust?

Ben

Dear Ben,

The Special Needs Trust is a means by which your mother can provide for the care and support of your sister without causing her to lose Medi-Cal, Supplemental Security Income (SSI) or other public benefits. Both Medi-Cal and SSI are “needs-based” programs. Your sister cannot keep her benefits if she has more than $2,000 of non-exempt assets.

For a Special Needs Trust to work, your sister’s inheritance comes with strings attached. The trust includes provisions ensuring that the assets of the trust are not considered as resources available to pay for your sister’s care. For the most part, the trustee has no discretion to give food, clothing, shelter or cash to your sister if such distributions would cause her to lose her benefits. If you had the discretion to give your sister whatever you felt necessary, without restrictions, she would lose her Medi-Cal and SSI.

In general, it is not a good idea to distribute the home outright to your sister. First of all, the Special Needs Trust probably has beneficiaries who are supposed to inherit what’s left after your sister’s death. If you gave the home outright to your sister, the rights of these beneficiaries would be affected, and they could sue you for failing to protect their inheritance.

Also, if your sister dies owning the home, it will be subject to Medi-Cal estate recovery claims after her death, for any benefits paid on behalf of your sister after her 55th birthday, as well as Medi-Cal nursing home benefits paid at any age. If the home is held for your sister’s benefit in the trust, it will avoid Medi-Cal estate claims.

What you should consider doing is to pay off the mortgage and allocate the home into your sister’s share of the trust. As trustee, you can hold the home for your sister’s benefit, allowing her to continue to live there. If she pays no rent, the amount of SSI she receives each month may be reduced by about $200 a month, because free rent is considered by SSI to be “in-kind support.” There will be no reduction in her Medi-Cal benefits. The most important thing for you to do is to review your mother’s trust with an elder law attorney and figure out the best way of setting up your sister’s Special Needs Trust to ensure that she is well provided for in accordance with your mother’s wishes.

Len & Rosie


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