Many clients ask the question, “Do I need a Will?” The answer is an unqualified YES, ABSOLUTELY, WITHOUT A DOUBT.  In fact, everyone walking the face of the earth that has assets, no matter how modest, needs a properly drafted and valid Will.  There are numerous reasons that every adult should have a properly drafted Will, and this article addresses one of the primary reasons – transfer of ownership and title to assets on death.  Many clients have told me of their mistaken belief that ownership of assets will transfer upon death to the intended beneficiary, with no legal process, as if by magic.  This belief is fostered by the fact that some assets contain beneficiary designations or survivorship clauses or payable upon death designations and transfer outside of the provisions of a Will.  But, not all assets have such provisions and those distributions should be addressed by a properly drafted Will.

Assets which do not contain any legally enforceable beneficiary designation pass through the estate of a deceased person to the heirs at law. The heirs at law will be determined by the provisions of the deceased party’s Will, or in the absence of a valid Will, by the laws of the State having proper jurisdiction.  Many times clients have an expectation of what those State laws will be, but in many instances the State law is much different than the client expects.  For example, in Alabama, the law of intestate succession (the law that applies when no Will is probated) provides that upon the death of married person who is survived by a spouse and living children, the estate is distributed with the spouse receiving $50,000 plus ½ of the remainder of the estate and the remaining ½ of the estate is distributed to the children.  This is NOT the result that most married couples intend upon the death of a spouse.  A properly drafted Will assures that the directions of a party, as to distribution of assets on death, will be followed as stated, and intended, by the maker of the Will.

Another common issue that is questioned by clients is the need for Probate proceedings. Probate is the legal process through the Probate Court by which the Will of a deceased person is recognized by the Court as the true last Will and testament of the deceased party.  It is this process, and the Orders of Court, by which the distributions stated in the Will are given legal significance.  A Will means nothing and has no legal significance without Probate.  Probate is a process that should not be feared.  In Alabama, it is not unnecessarily cumbersome or overly expensive.

That brings us to the question, “Do I need an attorney to prepare a Will or to Probate a Will.” There is no law that requires a person to have an attorney assist with the preparation of a Will or to represent a party in the Probate process. However, the practical answer is most people do retain the services of a competent attorney in both instances.  A properly drafted Will assures that the family is able to effectively accomplish transfer of assets on death of a family member with a minimum of difficulty and expense.  The services of an attorney in navigating the Probate process  assures the family of an efficient process in dealing with the issues of assets, taxes and debts upon the death of loved one at a very emotional and  stressful time.

Michael E. Brodowski

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances.  No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney.  If you require legal advice, please consult with a competent attorney in your area.

Michael Brodowski, Chris Harper and I will be giving a presentation on November 5, 2015 at 6:00 p.m. at 1892 Restaurant. Our presentation will focus on how to properly create an estate plan for individuals planning to give assets to an individual with a disability. We will focus on the importance of having a Will, Powers of Attorneys and/or Trust, with a particular emphasis on the benefits of Special Needs Trusts. Please let me know if you plan to attend by calling my office at 256-534-4571. Seating is limited.

David McCurry

A frequent question I hear from my clients is “How do I qualify for Medicaid if I need to go to the nursing home?”

To qualify for Alabama Medicaid, an individual’s income must not exceed $2,199.00 per month and an individual’s countable assets must not exceed $2,000.00 (based on 2015 law).  Some examples of non-countable assets include burial items, one automobile, household furnishings, certain life insurance policies and a home.   If a Medicaid recipient owns a home, then Medicaid has the authority, in most cases, to place a lien against that residence and recover the lien when the family sells the house.  If an individual’s assets are over the $2,000.00 limit, then Medicaid requires the individual to spend down his or her assets until they are below the $2,000.00 limit.   Most people don’t like the idea of spending down their assets to qualify for Medicaid and this leads them to ask “Can I give all of my assets away and qualify for Medicaid?”  The short answer is it just depends.

Alabama Medicaid has a five year look back rule that prevents individuals from giving all of their assets away right before they apply for Medicaid.  Any non-exempt transfer of assets within the last five years will result in a penalty against the Medicaid applicant.  The penalty is a period of time that Medicaid denies Medicaid assistance for the applicant and the length of this penalty period depends on the value of the improperly transferred assets.  Any transfer of assets that occurred more than five years ago will not cause a penalty.

A healthy person who does not anticipate the need for nursing home care within the next five years may consider transferring assets out of his or her name if their goal is to eventually qualify for Medicaid should nursing home care becomes necessary.  The next issue to address is who will receive the transferred assets.  Many times my clients tell me they want to transfer the assets to their children.  Children are potential candidates but there are certain risks involved when transferring assets to children.  What if a child dies or becomes incapacitated?   Or what if a child has a lawsuit or divorce filed against him or her?  If any of these events occur then the transferred assets may be owned or controlled by someone who has no desire to assist the parent/transferor if the parent needs financial assistance in the future.  An alternative transferee to consider is a Medicaid Trust.  All of the risks involved in transferring assets to children are reduced or eliminated through the use of a Medicaid Trust.

The challenges of paying for nursing home care are dependent on each client’s particular situation.  Meeting and overcoming those challenges requires careful planning and the advice of an estate planning professional.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances.  No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney.  If you require legal advice, please consult with a competent attorney in your area.