Smart Money: Moral question exists when giving away assets

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Bruce Williams is a national radio talk show host and syndicated columnist.|ret||ret||tab|

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Dear Bruce: I am a widow and wonder if it would be wise to put my property in my girls' names, thus keeping it out of the hands of nursing homes and the government. I would insist that they give me life rights and that they pay the taxes. M.M., Saint Charles, Mich.|ret||ret||tab|

Dear M.M.: What you are considering doing is not at all unusual. We've addressed this problem many times. There is a 2-1/2 year look-back period that you must meet. In other words, if you gift the home to your kids, and you need government assistance right away, the gift to them will not obviate the government from getting a lien on the property. If you survive the look-back period, then you've accomplished leaving your estate to your children. The question is, "Should the rest of the public pay for your nursing home, if one is required, so that you would have something to leave to your children?" |ret||ret||tab|

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Dear Bruce: Before placing him in a nursing home, my elderly sister-in-law's husband ran up a huge bill on Medicaid. After he died, nursing home officials told her she had to continue paying the bill. She has a very limited income ($779 from Social Security), and lives in an old mobile home parked on her son's property. Trying to make the $25 monthly payments has been a hardship. Does she have to continue? N.O., Las Vegas.|ret||ret||tab|

Dear N.O.: Under the circumstances, I believe that she can appeal. Since her husband passed away without assets that should be the end of the story. Her Social Security entitlement is not attachable. It is perfectly proper for states and grantors of service to expect payment from the estate of someone who has received these services if there is an estate. Ask your sister-in-law to contact her local social services office to help her handle this.|ret||ret||tab|

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Dear Bruce: My stepmother died and my 89-year-old father didn't know her system for handling the finances. He found a bill from an insurance company. I am trying to help him sort through these things, since my father does not have all his faculties. The insurance company won't tell me what kind of insurance policy it is life or accident, who knows? She didn't tell Dad everything, and I need to help him figure out what is being paid for. How do I manage this? Mike, via e-mail|ret||ret||tab|

Dear Mike: The likelihood is you will have to go to court and be appointed your father's guardian. Once that is accomplished, then you will have standing and the insurance company will then deal with you. Unless your dad previously executed a power of attorney (which all of us should do, granting a trusted person absolute power of attorney or durable power of attorney that kicks in when a physician determines you are no longer able to handle your affairs), you have no standing. Without such standing, the insurance company is going to cite privacy rules.|ret||ret||tab|

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Dear Bruce: My brother, as the executor, went behind our backs, broke a trust, and had my 98-year-old mother sign away her biggest asset to him. Originally, we all had equal shares. He is an attorney and, worse, a judge. J.L.|ret||ret||tab|

Dear J.L.: It's great having relatives. What you didn't say is whether your mom is still alive? The executor has no standing until your mother passes away. The fact that he's an attorney and a judge doesn't speak well for him. It sounds to me that we are talking about a home that he somehow had transferred to himself. If it's of decent value, then you and the other kids might want to seek counsel. Your brother, the attorney, has to walk very, very carefully. If he has done anything that is improper he can be putting his job and his license at risk. Be certain that you get all of your facts straight before you approach him. The words "executor," "trust" and "wills" are not interchangeable and have specific meanings, which he will know. You want to be sure that your ducks are all in a row before any accusations are made.|ret||ret||tab|

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Dear Bruce: My 81-year-old father is showing interest in a living trust. He and my mother already have properly drawn wills. His only assets are $50,000 in investments plus $75,000 in real estate. Is a living trust a necessity, and does it eliminate probate and attorney fees? There are five children who would be the beneficiaries. K.J., via e-mail|ret||ret||tab|

Dear K.J.: I don't believe a living trust is a necessity, but it does eliminate probate fees. The probate fees, however, will be relatively modest. It would seem to me that the important thing is that the will spells out that the properties, without regard to the beneficiaries' needs, be sold and turned into cash. The last thing you want to do as the executor of an estate is to title all of the real estate in all five names. You can see that this can be a legal nightmare. I cannot see any justification for it or necessity for a trust.|ret||ret||tab|

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Dear Bruce: Can you tell me the difference between a will, a living trust and a revocable trust? Do they all need an executor? It is my understanding that a trust does not need to be probated, that the estate automatically goes to the heirs. Is this correct? What are the pros and cons? F.W., via e-mail|ret||ret||tab|

Dear F.W.: A will and a trust are two entirely different animals. While everyone does not need a trust, everyone does need a will. Only the will has an executor. This is the person who's named in the will to carry out the wishes of the decedent in accordance with the law in the state where the deceased lived. These are essentially to pay all legal obligations and distribute the remainder of the money. A will must be probated, which means it must be examined by the surrogate in open court. Then it becomes a public document. |ret||ret||tab|

A trust is private and does not have to go through the court system. This is the obvious advantage for many people, the expediency and the privacy. In most complicated estates, trusts can serve a useful purpose. In a very simple estate, just the cost of setting up a trust makes it hard to justify. The complexity of your affairs, your need or desire for privacy, and tax laws all have a bearing on whether or not a trust is appropriate for you. Bear in mind that many attorneys who are recommending trusts do have an agenda, which may not be obvious, and that is the fee generated by creating a trust. Bear in mind that there may be a hidden agenda. |ret||ret||tab|

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