Daughter named as a joint tenant won't share.

Dear Len & Rosie,

My mother-in-law passed away recently. She added her daughter, my sister-in-law, to her bank account and mutual funds when she could no longer manage things on her own. After her death, my sister-in-law withdrew all of the money out of the accounts even though her mother had a will splitting her estate fifty-fifty with her children.

Please warn your readers about this happening to them. Our case is in court now, but we have to prove my mother-in-law’s intention that everything was be divided equally. Our case looks really weak, but if at least I can spread the word. You never know what a sibling might do when a death occurs. Parents need to know to be very specific when making out their wills.

Sharon

Dear Sharon,

Experience has lead us to expect the worst from people when a parent or other relative whose estate they have an interest in dies. In most cases, children get along well with one another and are happy to cooperate to make things fair. But more often than we would like to acknowledge, otherwise normal, kind and caring people become crazed and turn on their siblings like wolves fighting over a bone.

It is unfortunate that we cannot assume the good intentions of our children. The best way to make sure our assets are divided the way we want upon our deaths is to create an estate plan, either a revocable trust or a will, that clearly and concisely spells it out. Your mother-in-law did this, but she threw her estate plan out the window when she made the mistake of adding her daughter to her accounts as a joint tenant. Joint tenancy property does not pass through probate, no matter what the will says. Your husband has an uphill battle. To win he has to prove your mother put his sister on the accounts for convenience only.

How could this have been avoided? The easiest way would have been for your mother-in-law to have put both children on her accounts instead of just her daughter. Or, she could have added her daughter to her bank accounts using the bank’s power-of-attorney forms. This would have allowed your sister-in-law to pay her mother’s bills without becoming a joint owner of her mother’s bank accounts. If your mother-in-law owned enough assets that avoiding probate was important to her, then she should have created a trust.

Adding children to your accounts as a joint tenant is a cheap and easy way to avoid probate. But in your case, it backfired. You can be sure that your lawyers will earn more money in this lawsuit than they would have earned in probate fees if the estate had been subject to probate. Its a hard lesson to learn, Sharon, but maybe you’ll get lucky and win in court. Good luck.

Len & Rosie

Medi-cal Recovery

Dear Len & Rosie,

My mother passed away a year ago. She had received Medi-Cal for the last three years of her life while living in a nursing home. The state has not contacted us yet about reimbursement, but we expect they may. We have an IRA worth $10,000 and a small savings account worth another $10,000 in her name and my name.

How long does Medi-Cal have to come back to us looking for her assets? Do I have to keep the money in her accounts and wait for them, or can I disperse them to her surviving children? Or can I “hide” the money somewhere else?

Judy

Dear Judy:

We are glad that you wrote. Most people do not understand how Medi-Cal recovery works. You are obligated to notify the California Department of Health Care Services (DHCS) and provide them with a copy of her Certificate of Death within 90 days of your mother’s death at this address:

Department of Health Care Services 
Estate Recovery Unit, MS 4720 
P.O. Box 997425 
Sacramento, CA 95899-7425 

Don’t waste twenty bucks - send them a photocopy of the Certificate of Death instead of a certified copy. And don’t bother trying to hide. DHCS is very good at sending out estate claim letters even when they are not properly notified of a recipient’s death.

Almost anything your mother owned on her death is subject to the estate claim, but the IRA is not. It is very important to know that retirement accounts and any life insurance policies owned by her that pay out directly to beneficiaries are not subject to the DHCS estate claim. They are subject to the claim only if they have no beneficiaries and pay into your mother’s probate estate. Also, if your mother was survived by a minor, blind, or disabled child, there is no estate claim, even if that child doesn’t actually inherit anything. Also, there’s no claim on benefits paid on her behalf outside of a nursing home before her 55th birthday.

In this case, DHCS likely has a claim against your mother’s $10,000 savings account. They are entitled to this money but only after her funeral and burial or cremation expenses and expenses of administration are paid first.

One last thing - normally your mother couldn’t have more than $2,000 and be on Medi-Cal benefits (the IRA doesn’t count) The fact that she has $10,000 in the bank and was still on Medi-Cal is an anomaly, but it probably won’t change things.

Finally, understand that if your mother owned a home on her death, it’s more likely than not you’ll have to pay the DHCS estate claim in full. However, for those readers who are on Medi-Cal or have loved ones on Medi-Cal, it’s possible to shelter their homes from estate recovery claims by transferring property to an irrevocable trust, but only if you act now, while the recipient is still living.

Len & Rosie