2500 Highland Road, Suite 105

                                 Hermitage, PA 16148

Hartle Elder Law Practice, LLC

The Law Firm Where We Treat You Like Family

Local: 724-962-3606

 

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By Carolyn E. Hartle, Esquire, May 10 2018 06:03PM

During my years of practicing law, I frequently hear that an individual added his/her child’s name onto his/her bank account so that the child could continue to pay bills if something happened to the individual. However, in almost all of these instances, the individual had executed a Power of Attorney, which is a legal document where an Agent is appointed to handle all of the financial matters of the individual if he/she becomes mentally or physically incapacitated.

When an individual has executed a Power of Attorney, there is no need to add another individual’s name onto the account. In fact, it often causes the following problems:

1. Since the individuals whose names are on the account are owners of the account, any of them can withdraw funds from the account without the knowledge or consent of the other individuals. So, this can lead to the individual added to the account withdrawing all of the funds for his/her own use and there is nothing the other owner of the account can do.

2. Upon the death of one of the owners, the balance of the account becomes the property of the surviving owners. For example, a father has four children but only one lives locally. So, the father adds the name of the child who lives locally on his bank account. When the father dies, the bank account becomes owned solely by the child whose name is on the bank account; this child does not have to share the account with his/her three siblings. While the child who now owns the bank account can split it equally with his/her siblings, under the law, he/she is the sole owner and can keep it all for himself/herself.

3. If you add another individual’s name onto your bank account and the individual passes away before you, you must pay Pennsylvania Inheritance Tax on the deceased owner’s share of the account.

4. If another individual’s name is added onto the account and said individual later files for bankruptcy, he/she must disclose to the bankruptcy court this account, which can then become subject to the bankruptcy proceedings.

5. When another individual’s name is added to the bank account and he/she has children in college applying for financial aid, this account is an asset that must be disclosed and may negatively impact the financial aid package.

While adding an individual’s name onto a bank account is a simple procedure, there are many reasons to leave the account in your name alone and simply let your Agent under your Power of Attorney manage your financial matters, when and if, it is necessary to do so.

By Carolyn E. Hartle, Esquire, May 10 2018 05:59PM

When a spouse enters a nursing home, Medicaid will count the married couple’s assets to determine the amount of assets “the community spouse,” who is the spouse living in the community, can retain and have the spouse in the nursing home qualify for Medicaid. The spouse in the nursing home is known as the “institutionalized spouse.” Any and all assets that both or either spouse owns are used in making this determination.

So, if the community spouse transfers all of the assets, such as the investment accounts, bank accounts, and stocks, into his/her name alone, this accomplishes absolutely nothing and they will still count as assets for purposes of the institutionalized spouse qualifying for Medicaid.

In addition, if the community spouse adds a child’s name onto his/her bank accounts, investments, savings bonds, or other liquid assets, this accomplishes absolutely nothing, and they will still count as assets for purposes of the institutionalized spouse qualifying for Medicaid. According to Medicaid’s regulations, bank accounts, savings bonds, investment accounts, and other liquid assets owned by one spouse and another individual, who is not other’s spouse, is deemed to be owned by the Medicaid applicant or his/her spouse, unless the other account owner can prove that he/she deposited his/her own funds into that account. If the other account owner can prove he/she deposited funds into the joint account, then the amount he/she contributed is not considered an asset of the couple for purposes of the spouse qualifying for Medicaid.

These two mistakes can cost the married couple thousands of dollars. When protecting your assets, you cannot afford these costly mistakes or bad advice. In order to avoid these mistakes and others when engaging in nursing home/Medicaid planning, please consult an experienced Elder Law Attorney, who can advise you how to protect your assets and help you navigate the Medicaid Application process.

By Carolyn E. Hartle, Esquire, Apr 19 2018 01:44PM

Many parents want to pass their wealth to their children. These parents need to consider both the Estate planning and Medicaid planning consequences of making gifts. With respect to estate planning, under the new changes in the tax law, an individual can give up to $15,000.00 per year, per person without filing a gift tax return. As a result, a married couple can combine their gifts and together give $30,000.00 per person, per year without filing a gift tax return. This is known as the annual exclusion. By making gifts in this amount every year, an individual can reduce the size of his taxable estate. When an individual makes a gift of more than $15,000.00 in one year to the same person, then a gift tax return needs to be filed. However, only individuals with a federally taxable Estate need to be concerned with paying gift tax.

Unfortunately, if an individual makes a gift of $15,000.00 and later enters a skilled nursing facility and needs to qualify for Medicaid, this gift will make him/her ineligible for Medicaid for 45 days, which means Medicaid will not pay for the nursing home for 45 days due to this gift. (There is a formula used to calculate the penalty.)

While making gifts to children can be prudent and helpful for purposes of Estate planning, as you can see, it can have adverse consequences with respect to Medicaid planning. Due to this complexity, the individual should be aware of the advantages and disadvantages of making yearly gifts and should consult a local Elder Law attorney experienced in this type of planning.

By Carolyn E. Hartle, Esquire, Dec 11 2017 03:33PM

One common misconception I repeatedly encounter is the belief that the Last Will and Testament controls who will inherit the individual’s IRAs, life insurance policies, and annuities. However, this is only true if the individual failed to name a Beneficiary on the IRA, life insurance policy, or annuity because then the Estate becomes the Beneficiary by default. However, this is not what should be done.

In most cases, the owner of these types of assets will complete Beneficiary forms with the company who sold him/her the IRA, life insurance policy, or annuity. Then, upon the death of the owner of these types of assets, the Beneficiary receives these funds quickly and outside of probate. Since the Beneficiary form sets forth who shall receive these funds, the Decedent’s Last Will and Testament is not used.

When designating a Beneficiary on the before-mentioned types of assets, you should name a primary Beneficiary, as well as a contingent Beneficiary. By doing so, you remain in control of who receives these funds. If you name a primary Beneficiary and not a contingent Beneficiary and your primary Beneficiary predeceases you, then your Estate becomes the Beneficiary of these funds.

By Carolyn E. Hartle, Esquire, Dec 11 2017 03:05PM

QUESTION: WHAT ASSETS AVOID PROBATE?

Answer: The following assets are non-probate assets and avoid probate:

 Life insurance policies, annuities, & IRAs;

 Joint bank accounts or investment accounts;

 Assets held in a Revocable or Irrevocable Trust; and

 Bank accounts or investment accounts designated as follows: transfer on death, payable on death, or held “in trust for” an individual.

The assets set forth above either pass to the Beneficiary named on the life insurance policy, annuity, IRA, or to individuals named in the Trust. With respect to the bank accounts, these accounts pass directly to the surviving owners on the joint account or to the individual named as the Beneficiary on accounts owned solely by the Decedent.

However, if an individual fails to name a Beneficiary on life insurance policies, IRAs, & annuities, then the Estate of the Decedent becomes the Beneficiary and these assets will now be distributed via the Decedent’s Last Will and Testament and not avoid probate.