Will, or Trust, or wait?

[CrazyBizy]

There’s a question coming, bear with me while I get some facts on the table…

I’m the youngest of 3 siblings (by 20 years). My sister and I are Powers of Attorney (I’m primary) for our 97-year old mother who has no will and in Assisted Living. For some reason she put me on the checking account when I was a teen. She’s wheelchair bound, has good and bad days, but does surprisingly well for 97. Her house and most of her furniture was sold. That money (about $50k left), along with her SS and military pension pay for her care. Depending on her spend-down rate, the funds may last until she’s 100, or 18 months if she needs nursing care. Otherwise, incidental pieces of furniture and jewelry, and a few silver coins are all there is (nothing considered of ‘great value’ per an attorney we’ve consulted).

After retiring, our surviving brother spent his money like a sieve. He’s unfortunately suffered 2 strokes and is disabled. Within the next year he’ll likely need to apply for Medicaid and is borderline a candidate for a nursing home.

We’ve been told mom should create a Will & Special Needs Trust to ensure anything she has, that he might receive, doesn’t disqualify him from Medicaid (the limit is $2k).

It seems we’re at a chicken-and-egg situation. If they both continue on, as-is health-wise in the next year, he’ll need to apply for Medicaid and the Trust will be necessary. We’ve consulted with 2 different Elder Care attorneys. The one that does straight-forward and flat-fee work said the Trust brings with it a chance it may not be used and could be an unnecessary expense (he also doesn’t really give us a pro-con in any direction). Two other factors: The longer we wait, the greater the risk of lack of competence for mom to create a will/Trust. And second, when we’ve talked to her about her wishes, she “doesn’t care." So even if a will is attempted, she’ll likely provide no direction to the Attorney and doesn’t understand the impact to our brother. My sister and I are 98% of the time in alignment on things and neither care for any of her money.

I fear we’re at a point where we should press forward with the Will/Trust, assuming it can happen (competence and cooperation), as waiting means mom may be deemed incompetent at some point. The Trust may never come into play, but the spend/risk we’ll have to accept to protect our brother.

Alternatively, I’m not sure what a Will by itself would solve since it’s likely a simple estate to probate (other than quicker clearing and a little less money spent at that time)?

Thoughts or other perspectives for us to consider? I apologize for the length!

[Lee_WSP]

Find one who knows what a testamentary special needs trust is.

That said, it doesn’t look like she has a lot of assets?

[Nutmeg]

Questions:
1. Is your brother married?
2. Is your mother’s potential estate at most $50K, which would be divided among her three children?
3. Is your concern about the expense of the trust related to the expense of setting up the trust, or the expense of maintaining it (which should be minimal if no trustee fee is charged)?
4. Did the attorney quote you his fees for creating a will and creating a trust?

[CrazyBizy]

Questions:
1. Is your brother married?
2. Is your mother’s potential estate at most $50K, which would be divided among her three children?
3. Is your concern about the expense of the trust related to the expense of setting up the trust, or the expense of maintaining it (which should be minimal if no trustee fee is charged)?
4. Did the attorney quote you his fees for creating a will and creating a trust?

1. No.
2. Correct.
3. I feel dense, but looking back over notes, nothing was mentioned aboutd about cost to maintain, and and we hadn't thought of it. Our one attorney thinks it could potentially be an unused expense to setup. But I'm beginning to view it as an 'insurance policy' to avoid potential chaos later.
4. One attorney quoted around $2k; another starting at $1,500.

[Lee_WSP]

But I'm beginning to view it as an 'insurance policy' to avoid potential chaos later.

That's basically where you are at. But it won't be chaos, you'd just be allowing your brother to spend a bit more on himself and have more dignity in his years. Instead of a medicaid forfeiture or an expensive first party trust.

[CrazyBizy]

Find one who knows what a testamentary special needs trust is.

That said, it doesn’t look like she has a lot of assets?

A testamentary special needs trust was an idea I mentioned to one of the attorneys (though not using the terminology). My thought was nothing has to 'kick in' until she passes. But while I think he was on-board, I never recall those words, and it sounds like the legal work to arrange it inside the will still makes it more expensive than a will. I'll have to ask related to that terminology specially.

On the flip-side, I do like the idea of the standard special needs trust, as others could put funds into it at any time. Grrr..!

No, mom doesn't have a lot of assets. Essentially after dad died, the house was the main asset. Since she couldn't move back into it, we sold it to fund her assisted living care.

[FreddieFIRE]

Would Mom be agreeable to just naming you and DS as 50/50 beneficiaries on her remaining account? That would eliminate any need for a will/trust and allow you and DS to help DB as appropriate (along with paying any final bills that you deem appropriate). This looks like way too little money to mess around with anything more elaborate.

[Nutmeg]

Questions:
1. Is your brother married?
2. Is your mother’s potential estate at most $50K, which would be divided among her three children?
3. Is your concern about the expense of the trust related to the expense of setting up the trust, or the expense of maintaining it (which should be minimal if no trustee fee is charged)?
4. Did the attorney quote you his fees for creating a will and creating a trust?

1. No.
2. Correct.
3. I feel dense, but looking back over notes, nothing was mentioned aboutd about cost to maintain, and and we hadn't thought of it. Our one attorney thinks it could potentially be an unused expense to setup. But I'm beginning to view it as an 'insurance policy' to avoid potential chaos later.
4. One attorney quoted around $2k; another starting at $1,500.

1. Your brother being single removes some complicating factors.
2. You might find that after final expenses, such as final medical bills and funeral expenses, your brother’s third of the inherited assets won’t be substantial and can easily be spent down on items that will benefit him or aren’t included in assets for Medicaid purposes, such as personal belongings and prepaid funeral and burial expenses.
3. I wasn’t trying to make you feel dense; I was just trying to understand your concern. The costs to maintain a small trust are minimal, particularly because you or your other sibling could be the trustee. The other cost would be for annual tax returns.
4. Those seem to be very reasonable charges for a basic will and a special needs trust. It might be worth the cost to have a trust in place. I wouldn’t choose an attorney based in cost, but on knowledge of the field.

I understand from reading on this forum that Medicaid spend-down and transfer rules that would affect your mother might contain exceptions for contributions to a special needs trust, but have no independent knowledge of that.

I have found this website to be very helpful for me to learn about special needs trusts:
https://www.specialneedsalliance.org/

[CrazyBizy]

Would Mom be agreeable to just naming you and DS as 50/50 beneficiaries on her remaining account? That would eliminate any need for a will/trust and allow you and DS to help DB as appropriate (along with paying any final bills that you deem appropriate). This looks like way too little money to mess around with anything more elaborate.

That's an intriguing idea.

The only complication might be that my sister appears to be concerned mom doesn't have at minimum a will. She's of the view probate will be more expensive because of a lack of will. While I agree it technically it will be MORE expensive, and could take longer to clear, the estate isn't substantial and the expenses aren't likely to be extraordinary unless something or someone comes along to gum it all up.

[CrazyBizy]

Questions:
1. Is your brother married?
2. Is your mother’s potential estate at most $50K, which would be divided among her three children?
3. Is your concern about the expense of the trust related to the expense of setting up the trust, or the expense of maintaining it (which should be minimal if no trustee fee is charged)?
4. Did the attorney quote you his fees for creating a will and creating a trust?

1. No.
2. Correct.
3. I feel dense, but looking back over notes, nothing was mentioned aboutd about cost to maintain, and and we hadn't thought of it. Our one attorney thinks it could potentially be an unused expense to setup. But I'm beginning to view it as an 'insurance policy' to avoid potential chaos later.
4. One attorney quoted around $2k; another starting at $1,500.

1. Your brother being single removes some complicating factors.
2. You might find that after final expenses, such as final medical bills and funeral expenses, your brother’s third of the inherited assets won’t be substantial and can easily be spent down on items that will benefit him or aren’t included in assets for Medicaid purposes, such as personal belongings and prepaid funeral and burial expenses.
3. I wasn’t trying to make you feel dense; I was just trying to understand your concern. The costs to maintain a small trust are minimal, particularly because you or your other sibling could be the trustee. The other cost would be for annual tax returns.
4. Those seem to be very reasonable charges for a basic will and a special needs trust. It might be worth the cost to have a trust in place. I wouldn’t choose an attorney based in cost, but on knowledge of the field.

I understand from reading on this forum that Medicaid spend-down and transfer rules that would affect your mother might contain exceptions for contributions to a special needs trust, but have no independent knowledge of that.

I have found this website to be very helpful for me to learn about special needs trusts:
https://www.specialneedsalliance.org/

3. I know you weren't. It's just another one of those things you get frustrated with yourself over, because we sometimes fail to see the obvious 'in the fog of war.' It's no longer enough to run my life, I've got to look after hers and his! Ha.

4. Yeah, in one situation where we consulated an attorney to better understand the path to Medicaid (evaluations, estate/financial qualifications, the many questions we had), we paid a nominal fee to an attorney group vs. our family attorney. He admitted he had no experience in the area, though he volunteered to refer us. I felt strongly we should go with those who did that kind of work repeatedly, and don't regret it. We haven't had to pull the trigger on that yet, but glad we better educated ourselves in case we decide to apply/file on our own without attorney representation.

[CrazyBizy]

All good info, from everyone. Let me ponder this over the weekend. Thanks all!

[bsteiner]

Would Mom be agreeable to just naming you and DS as 50/50 beneficiaries on her remaining account? That would eliminate any need for a will/trust and allow you and DS to help DB as appropriate (along with paying any final bills that you deem appropriate). This looks like way too little money to mess around with anything more elaborate.

That's an intriguing idea.

The only complication might be that my sister appears to be concerned mom doesn't have at minimum a will. She's of the view probate will be more expensive because of a lack of will. While I agree it technically it will be MORE expensive, and could take longer to clear, the estate isn't substantial and the expenses aren't likely to be extraordinary unless something or someone comes along to gum it all up.

You can't probate the Will if there isn't a Will.

Assuming no one contests the Will, the work to probate the Will is about the same as the work to get letters of adminstration in an intestate estate (one where there's no Will). Depending on what state your mother is in, her estate may qualify for the small estate (simplified) procedures. If it doesn't qualify for the small estate procedures, the work to probate the Will or to get letters of administration in an intestate estate is pretty much the same for a $50,000 estate as for a $50 million estate.

If you weren't trying to set up a trust for your brother (which any trusts and estates lawyer could do as a routine matter, though probably at a higher cost than the amounts you mentioned, and a trusts and estates lawyer might not take the matter upon hearing the amount involved), you could get a basic Will done for the amounts you mentioned, or perhaps less than that.

Our clients generally provide for their children in trust (under their Wills) rather than outright. That keeps their inheritances out of their estates for estate tax purposes, and protects their inheritances from their creditors and spouses, and Medicaid. We generally recommend against TOD or POD designations, since they can defeat the estate plan.

But given the amount involved, TOD designations may be the most practical solution. It will avoid having to administer a small trust (mainly having to prepare and file annual fiduciary income tax returns).

There are some risks. You or your sister could precedease your brother, or could have a creditor problem, or get divorced, or outlive your spouse and remarry. One of you might not use the money for your brother, which would create a tension between you and your sister.

[FreddieFIRE]

The only complication might be that my sister appears to be concerned mom doesn't have at minimum a will. She's of the view probate will be more expensive because of a lack of will. While I agree it technically it will be MORE expensive, and could take longer to clear, the estate isn't substantial and the expenses aren't likely to be extraordinary unless something or someone comes along to gum it all up.

I think you and her are overthinking this. If there's $50K (and possibly a lot less) left via POD/TOD, there really isn't anything to do. Even if there were a will, I can't imagine why there would be any value in petitioning the court for letters of appointment and serving as executor. "Do Nothing" is always an option, and in this case it may make a lot of sense. If a creditor wants to be made whole from an estate, they may need to ask the courts to be appointed executor. I believe that this happens in rare cases, but would be highly unlikely in this case. I am not a lawyer.

[bsteiner]

...
... If there's $50K (and possibly a lot less) left via POD/TOD, there really isn't anything to do. Even if there were a will, I can't imagine why there would be any value in petitioning the court for letters of appointment and serving as executor. "Do Nothing" is always an option, and in this case it may make a lot of sense. If a creditor wants to be made whole from an estate, they may need to ask the courts to be appointed executor. I believe that this happens in rare cases, but would be highly unlikely in this case. I am not a lawyer.

Most people pay their bills without making their creditors bring legal proceedings.

[FreddieFIRE]

...
... If there's $50K (and possibly a lot less) left via POD/TOD, there really isn't anything to do. Even if there were a will, I can't imagine why there would be any value in petitioning the court for letters of appointment and serving as executor. "Do Nothing" is always an option, and in this case it may make a lot of sense. If a creditor wants to be made whole from an estate, they may need to ask the courts to be appointed executor. I believe that this happens in rare cases, but would be highly unlikely in this case. I am not a lawyer.

Most people pay their bills without making their creditors bring legal proceedings.

Of course. I never meant to suggest otherwise, which I reinforced in my earlier post:

That would eliminate any need for a will/trust and allow you and DS to help DB as appropriate (along with paying any final bills that you deem appropriate).

[celia]

Would Mom be agreeable to just naming you and DS as 50/50 beneficiaries on her remaining account? That would eliminate any need for a will/trust and allow you and DS to help DB as appropriate (along with paying any final bills that you deem appropriate). This looks like way too little money to mess around with anything more elaborate.

My first reaction while reading the original post was to have only a will with OP and the sister as the only beneficiaries, knowing they would use what little money is left on the brother. But Freddie’s suggestion is better since listed beneficiaries would avoid probate, avoid spending money on a short-lived will creation, and avoid irritating mom, although some creditors might not be paid.

OP, what did you mean by “she [mom] put me on the checking account”? Are you a co-owner or a beneficiary? Is your sister a co-owner or beneficiary? It seems like you would own the checking account either way after your mom dies. If your sister is not listed similarly, you can add her as a co-owner after mom dies. So, there’s no need to do anything!

But if there are other financial accounts, how are they titled and are beneficiaries listed?

You also need to understand Medicaid (and other programs) for the state(s) each lives in so you don’t disqualify either person from their benefits. One important consideration is that they need to report their spending each year while showing they never averaged more than $2,000 [state-dependent value] in their checking account. If someone doesn’t file the report timely, they could be dropped for ineligibility. You could probably continue using mom’s checking account for hers. Brother will need to use a different checking account. Keep monthly bank statements and receipts for each of them.

[CrazyBizy]

Would Mom be agreeable to just naming you and DS as 50/50 beneficiaries on her remaining account? That would eliminate any need for a will/trust and allow you and DS to help DB as appropriate (along with paying any final bills that you deem appropriate). This looks like way too little money to mess around with anything more elaborate.

OP, what did you mean by “she [mom] put me on the checking account”? Are you a co-owner or a beneficiary? Is your sister a co-owner or beneficiary? It seems like you would own the checking account either way after your mom dies. If your sister is not listed similarly, you can add her as a co-owner after mom dies. So, there’s no need to do anything!

But if there are other financial accounts, how are they titled and are beneficiaries listed?

You also need to understand Medicaid (and other programs) for the state(s) each lives in so you don’t disqualify either person from their benefits. One important consideration is that they need to report their spending each year while showing they never averaged more than $2,000 [state-dependent value] in their checking account. If someone doesn’t file the report timely, they could be dropped for ineligibility. You could probably continue using mom’s checking account for hers. Brother will need to use a different checking account. Keep monthly bank statements and receipts for each of them.

My name is on her primary checking account and checks. Who knows why. But it saved us when mom first became sick and there wasn't a POA. I could still pay bills and keep her house going without having to pay out of my own pocket. As to it's implications, this is where I've received conflicting info. On one hand I was told any remaining funds, after clearing debts, would go to me and avoid probate. However, the bank states that is not the case, as has an Elder attorney (mom is in TN). And both my sister and I have no desires for any of mom's remaining resources. We both would rather see my brother as the beneficiary as we can take care of ourselves and he is in much worse financial shape. In his case, the concern is potential Medicaid disqualification.

There is another checking account, in her name only, with no beneficiary. We put some of her money into a CD, and when it was later redeemed, the Bank created the second account as they refused to put it back into the original checking account with both our names on it, even though that's where the money originally sourced from. I understand the Bank's goal. And despite all the bad in the world, I don't have diabolic intent. We've shuffled money from the 2nd account to the first, to draw it down, and pay her expenses. The Bank was ok with this and actually suggested it. Very little remains inside it.

And to the point about Medicaid... I feel I understand the basics there, regarding financial qualifications, disqualifications and limits. The first concern was mom not having a will, and second - that any monies that my brother might receive if mom passes first, could propel him over the $2k limit and disqualify him from assistance (once he gets on it). I'm not worried about the inverse. Mom is in better financial shape. Should my brother should pass first, there'd be so little left after burial that I don't see an impact to her.

[bsteiner]

...
My name is on her primary checking account and checks. Who knows why. But it saved us when mom first became sick and there wasn't a POA. I could still pay bills and keep her house going without having to pay out of my own pocket. As to it's implications, this is where I've received conflicting info. On one hand I was told any remaining funds, after clearing debts, would go to me and avoid probate. However, the bank states that is not the case, as has an Elder attorney (mom is in TN). And both my sister and I have no desires for any of mom's remaining resources. We both would rather see my brother as the beneficiary as we can take care of ourselves and he is in much worse financial shape. In his case, the concern is potential Medicaid disqualification.

There is another checking account, in her name only, with no beneficiary. We put some of her money into a CD, and when it was later redeemed, the Bank created the second account as they refused to put it back into the original checking account with both our names on it, even though that's where the money originally sourced from. I understand the Bank's goal. And despite all the bad in the world, I don't have diabolic intent. We've shuffled money from the 2nd account to the first, to draw it down, and pay her expenses. The Bank was ok with this and actually suggested it. Very little remains inside it.

And to the point about Medicaid... I feel I understand the basics there, regarding financial qualifications, disqualifications and limits. The first concern was mom not having a will, and second - that any monies that my brother might receive if mom passes first, could propel him over the $2k limit and disqualify him from assistance (once he gets on it). ...

A lawyer in Tennessee told me some time ago that probating a Will isn't difficult in Tennessee. But the work to probate a Will is the same for a $50,000 estate as for a $50 million estate. While joint accounts and TOD accounts often cause problems, for $50,000 they may be the simplest solution if you all get along and are confident that the others will do the right thing.

If you're a joint owner of her primary checking account, then it will be yours by operation of law upon her death. But if you're merely an authorized signatory (whether under a general power of attorney, or under the bank's form giving you authority over that particular account), your authority will end upon her death, and the account will be a part of your estate. She should confirm that status of the account.

Alternatively, if you and your sister want to be certain that the money will go for your brother but want to protect against Medicaid, your mother could revoke any beneficiary designations, remove any joint owners (assuming she was the one who contributed the money to the joint accounts), and leave her estate in trust for your brother. However, that would necessitate administering a $50,000 estate and then administeriung a $50,000 trust.

[Lee_WSP]

And to the point about Medicaid... I feel I understand the basics there, regarding financial qualifications, disqualifications and limits. The first concern was mom not having a will, and second - that any monies that my brother might receive if mom passes first, could propel him over the $2k limit and disqualify him from assistance (once he gets on it).

Is he legally competent? He could just disclaim his share if it comes to that. Alternatively, there are vehicles which allow the beneficiary to remain on government benefits, but receive a large sum (think insurance settlement or inheritance). Your brother inheriting a third of what’s left is most certainly not fatal to his government benefits qualifications. It happens quite often. There are ways to deal with it if it does occur.

Personally, I would not worry about it too much, but if you want true peace of mind, I would pay for a benefits consultant or elder law attorney to walk you through the scenarios.

[FreddieFIRE]

Personally, I would not worry about it too much, but if you want true peace of mind, I would pay for a benefits consultant or elder law attorney to walk you through the scenarios.

According to the OP, we're talking about $0 - $17k here. Do you really think that paid professional guidance is called for?

[Lee_WSP]

Personally, I would not worry about it too much, but if you want true peace of mind, I would pay for a benefits consultant or elder law attorney to walk you through the scenarios.

According to the OP, we're talking about $0 - $17k here. Do you really think that paid professional guidance is called for?

No, I personally don't think the cost benefit is worth it, but I'm not the op.

[celia]

OP, what did you mean by “she [mom] put me on the checking account”? Are you a co-owner or a beneficiary? Is your sister a co-owner or beneficiary?

My name is on her primary checking account and checks.

This still wasn’t answered. If you are a co-owner, you already own half of the account. Who knows why? Most likely, it is because many elderly think it will make it easier for the person who will need to help them. But this is only true if they are honest and trying to do the best for the elder, as in your case.