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Risks to Consider in Trying to Avoid Probate

Are you wondering whether you really need to hire a probate, estate planning or elder law lawyer? Think adding someone you trust to your bank account or deed is the answer? It may be, but oftentimes it is not that simple.

A little bit of knowledge, and in particular relying on the well-intentioned advice of family and friends, and even customer relations representatives and managers at your local bank can be very dangerous. Bank representatives routinely give their customers bad advice regarding the titling of accounts. They are not familiar with how different areas of law inter-relate, or the problems their inappropriate can cause.  What is good for one purpose may create a serious problem in another area of law that you haven’t considered because your focus has been on a single issue rather than on trying to address your concern in the context of your broader estate planning needs.

Acquire the Information You Need to Make Good Decisions. Because you don’t know what you don’t know, your first step should be to acquire the basic knowledge you need to make an informed decision. An experienced estate planning or elder law lawyer knows the questions to be asked, knows how to assess the information being presented at the meeting and help you to identify and explain your concerns and needs. Such a lawyer evaluates and offers solutions to these types of problems on a daily basis. Why wouldn’t you invest in hiring this resource to help you to accomplish your objective in the least risky manner?

Adding Someone to Your Bank Account. The joint account is a common source of future problems.  For example, let’s say you add your daughter to your bank account with the intent that when you die the entire account will go directly to your daughter and bypass probate. In a perfect world, that works. Often though, there are unintended consequences. What if you add your daughter to your account for convenience? Again, in a perfect world that can work. However, experience has shown that the risks do not justify the reason for doing this, especially since there is a better way. Read on!

Joint account ownership can be risky business. The same applies to jointly titled deeds. Have you considered and satisfied yourself as to whether any one or more of the following situations could exist or arise in the future that potentially could undermine your financial security and your ultimate plan as to who gets this money? – If the person you have in mind is ever faced with one or more of the following circumstances, – and this list of risk factors is not intended to be exhaustive, your own financial security may be at risk and these funds may end up elsewhere than you intended: – dishonesty, manipulation by a spouse, temptation caused by adversity or greed, divorce, bankruptcy, personal injury liability, criminal problems, alcohol or drug addiction, gambling problem, stress and pressure caused loss of job or spouse and facing foreclosure or other serious financial problem, including huge medical expenses.

Even if you can convince yourself that your family or trusted person would never find himself or herself in such a position, do you believe you can adequately address these potential risks without an attorney?

Risk of Ineligibility For Medicaid Benefits to Pay For Nursing Home Cost of Care. Do you know that if you have to be placed in a nursing home and expect the cost of your nursing home care to be paid by the State Medical Assistance Program (Medicaid), any transfers from your account may subject you to a period of ineligibility to receive Medicaid benefits. This problem is well illustrated by the facts in the recent New York case, Mallery v. Shah (N.Y. Sup. Ct., App. Div. 3rd Dept., No. 513277, March 1, 2012) where a woman was assessed a 19 month penalty during which she was ineligible to receive Medicaid benefits. The cost to her? Well, if a nursing home costs say $8,000 a month x 19 months of ineligibility = $152,000. This amount would have to be privately paid by her or her family before the State would pay a penny towards her cost of nursing home care. A comprehensive legal consultation could have prevented that result and provided practical options.

It is Not the Size of Your Estate That Matters, it is Whether You Have Anything That You Feel is Worth Protecting. Consider whether anything you do now to plan sensibly can make a meaningful difference to the quality of life of someone you care about, – including yourself! Bear in mind that probate planning is a part of estate planning including quality of life planning.

Poor probate avoidance planning for after your death can hurt you while you are alive. You need to plan for a time when you might find yourself physically disabled or mentally incapacitated before pursuing probate avoidance as an end in itself. You don’t want to undermine your financial security and Peace of Mind as a result of misguided priorities.

The purpose of this article is not to discourage efforts to avoid the costs of probate. There are important benefits to probate planning. Rather, it is to illustrate that estate planning is like a blanket woven with many threads and just one loose end can cause the everything to unravel. If asset protection and reducing costs are worth doing then it is worth doing right. Don’t cut costs by trying to cut corners with your estate planning. Can you afford the cost of not doing it right?