Jewish World Review Feb. 12, 2004 /19 Shevat, 5764
Jan L. Warner & Jan Collins
My aunt profited from grandpa's weak will; foreclosing against senior is best
Q: When my mother died, my grandparents drew up new wills, adding my name to them. All of their property certificates of deposit, bank accounts, etc. was to be divided among my two aunts and I equally. I know this because my grandparents gave me the original will to hold on to. They died last year within three months of one another.
I found out that one of my aunts had persuaded him to put her name on all of his bank accounts. I think this happened on the day my grandmother was buried. So now, that aunt is keeping for herself everything that was to be in my grandfather's estate which is not what either of my grandparents wanted. The lawyer who wrote the new wills and other lawyers have told me that this is a "gray area," and that not much can be done. Why bother getting a will done if it's not worth the paper it's written on?
A: Your situation raises two questions: 1) Was your grandfather so incapacitated or unduly influenced that he didn't know what he was doing when he placed your aunt's name on his bank accounts? 2) If not, in placing your aunt's name on his accounts, did he intend that her name be placed there only as an accommodation to assist him, and not to make her the owner at his death?
Proving incapacity/undue influence could be very difficult, especially if your grandfather was living alone and taking care of himself. Even though he may have been distraught after the death of his wife, it won't be easy to get anyone at the bank to testify that they allowed an incapacitated or unduly influenced individual to make changes to his account.
That leaves the question of your grandfather's intention. Generally, unless your grandfather left written instructions with the bank stating that your aunt's name was placed on the account as an accommodation to assist him and not to give her an ownership interest at his death, the account would belong to your aunt as the surviving joint account holder, not to your grandfather's estate. While the form of this writing may vary from state to state, generally, it must be signed and received by the financial entity during the account owner's lifetime and not be revoked.
Unfortunately, many people make the mistake of placing the names of others on the account, which creates an ownership interest at death, instead of using a power of attorney, which creates a fiduciary relationship. Had your grandfather used a "transfer on death" or "pay on death" beneficiary designation naming the three of you at his death, the result would have been different. The facts as you state them point to an account designation trumping a will with no recourse to you and your remaining aunt. This should be a wake-up call to those of you who choose not to use powers of attorney.
Q: My 82-year-old mother is in an assisted-living facility that accepts Medicaid. Her income is $416 per month. Her home was heavily mortgaged, and she ran up credit card accounts to pay her prescription drugs and other expenses before she entered the home. The loan payoffs exceed the value of her home, which needs a lot of repair. The facility gets her income, and Medicaid pays the balance. I have been trying to pay her debt, because I'm told that if I don't, the amount that is written off as uncollectible will be reported as income to my mother on a 1099, and this will disqualify her for benefits. Should I make arrangements to keep up the payments, which I can't afford to do?
A: No. We would let them foreclose. What "counts" as income for Medicaid purposes is not always the same as what the IRS considers to be income. Here, the "phantom income" they threaten you with is not "real" money going to your mother, and couldn't be used to purchase the food, shelter or clothing that could possibly disqualify her.
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JAN L. WARNER received his A.B. and J.D. degrees from the University of South Carolina and earned a Master of Legal Letters (L.L.M.) in Taxation from the Emory University School of Law in Atlanta, Georgia. He is a frequent lecturer at legal education and public information programs throughout the United States. His articles have been published in national and state legal publications. Jan Collins began co-authoring Flying SoloŽ in 1989. She has more than 27 years of experience as a journalist, writer, and editor. To comment or ask a question, please click here.
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