The Right Plan for Senior Clients

While there are some aspects of estate planning that feature more prominently when dealing with an older client, it is important to remember that each client is unique and that their needs must be addressed on a case by case basis. There is no one size fits all package of estate planning documents that is right for every client and while there are many proactive strategies that an older client may employ, much of that planning is designed to address specific circumstances which never come to pass.

Edna and Frank were married for many years but never considered estate planning. Frank passed away in his mid-eighties and Edna discovered that many of her preconceived notions about how she and Frank owned property were mistaken. We assisted Edna through the probate process and ensured the transfer of her home and a large savings account from Frank’s name alone to her control and ownership. After consolidating that savings account with her primary bank accounts, we began assisting Edna with her own planning to ensure that her children, Brian and Gail, did not have to deal with the stress and difficulties of probate when Edna passed.

Edna’s financial situation was relatively common for a woman of her age. She owned her home free of any mortgage, she had checking and savings accounts, and she owned a number of CDs. She was receiving Social Security, a pension from her work as a teacher, and a smaller survivor’s pension from Frank’s employer. This income allowed Edna to break even with her yearly expenses, but she and Frank were good savers so when Edna needed additional funds she could dip into the savings account.

At first it made sense, due to her uncomplicated circumstances, to keep Edna’s planning simple. We prepared a basic Will to make certain that in the event any assets needed to pass through Probate the court had clear instructions. We then assisted Edna with naming Brian and Gail as the Transfer on Death Beneficiaries of her bank accounts and prepared a Quit Claim Deed with a Reserved Life Estate (commonly called a Ladybird Deed) that allowed Edna to own her home during her lifetime but automatically pass ownership of the property to Brian and Gail at her death. The goal of the plan was to avoid Probate to the extent possible, but to prepare for unexpected circumstance.

Those unexpected circumstances did arise, though not in the way we anticipated. In the years following our work with Edna, her health took a turn for the worse and she was no longer able to maintain her home or safely live alone. Rather than move into an assisted living community, Edna moved in with Brian and his family. This allowed her the ability to sell her home, which had appreciated nicely, and suddenly Edna found herself to have significantly more assets than she realized.

Not wanting to be a burden on Brian and his family, Edna insisted on paying some amount of room and board. In order to avoid any later question of propriety we prepared a simple Rent Agreement detailing what Edna would pay Brian each month. We also prepared a Care Agreement, supported by a doctor’s recommendation, detailing the care that Gail provided to her mother, in exchange for compensation. This planning is useful in avoiding later arguments and addressing issues related to Medicaid that could arise under similar circumstances.

In addition to these agreements, Edna wanted to use some of the proceeds to the sale of her home to help her grandchildren. While initially Edna considered a more complex plan involving holding assets in trust for each of her five grandchildren until they reached retirement age, through lengthy discussions of the merits of the options Edna eventually invested the funds in §529 plans to assist the grandchildren with college costs.

Edna’s situation is an example of how an estate plan does not need a Living Trust to be successful and gives some insight into how a trust could become part of a simpler plan. Had Edna decided to delay distribution of the gifts for her grandchildren until they retired, it would require the creation of trusts to administer those funds for more than forty years. While this is certainly an option that was available, if Edna wanted to make use of it, the simplicity and more immediate benefit of a §529 plan made more sense under the circumstances.

An estate plan should reflect the client’s circumstances and not take a one-size fits all approach. It should take into account what types of assets the client has, not just net worth, to make a plan that works best for the client and their family. Had Edna owned assets that were more diverse or had other major concerns, different planning would be appropriate, but under the circumstances a Will and proper beneficiary designations served to address her needs. This is the benefit of working with experienced attorneys can provide. They have the knowledge to make recommendations that meet your needs without establishing unnecessary complicated plans.

Matt and Al