Grandma Got Run Over by a Reindeer
You know the classic song “Grandma got run over by a reindeer coming home from my house Christmas Eve.” A typical law school exam question would be: what legal issues arise from this tragedy?  Here are the facts. Grandma was taken to the hospital. She is unconscious, bruised and has a broken hip. The doctor says Grandma is not competent. What happens next depends on Grandma’s estate planning. What do you think happened?

Option 1

Grandma doesn’t have a Health Care Power of Attorney, her son, James, is told by the doctor that he can’t bring Grandma home because he doesn’t have the legal authority to make Grandma’s decisions. Instead, James has to go to the probate court to become Grandma’s legal guardian. This process is very time consuming and expensive. Even with an emergency temporary guardianship, Grandma isn’t able to come home for Christmas. It takes several months and costs thousands of dollars to finalize the guardianship and until Grandma can make decisions on her own, the court will have to supervise any decisions made regarding her care.

Since Grandma doesn’t have a Durable Power of Attorney for Property, James can’t take money out of Grandma’s retirement account to pay for her care. He also can’t protect her home from a Medicaid lien if Grandma uses public aid to pay for care. James has to go back to the probate court to get appointed Grandma’s plenary guardian. As Guardian, James has to file a financial plan with the court explaining how he is going to spend Grandma’s money. He has to ask the court for permission to protect Grandma’s money from the high costs of long-term care and for permission to protect his own home from a Medicaid lien. And, James has to buy a bond to ensure that he doesn’t steal Grandma’s money! Overall, the conservatorship and bond costs several thousand more dollars. James has spent over $15,000 in legal and court costs.

Coincidentally, Grandma’s medical bills are really high and James isn’t sure how to pay for care. He decides he has to sue Santa. Grandma wins a judgment of $21,000,000!! After the attorney’s fee, Grandma has $14,000,000! Unfortunately, Grandma dies from the shock of winning so much money!

If only Grandma had put her money in a trust, then when she died, it would pass on to James and the rest of her heirs in trust without any probate. They would get the money quickly and at minimal expense. The Trust could also shelter over $5,000,000 from Federal Estate tax and Illinois Inheritance tax. But Grandma didn’t even have a Will. So, the $14,000,000 had to go through “probate” to get to her heirs and James had to pay an additional bond premium of over $20,000. Probate costs are several thousand dollars more. It takes about a year before the estate is finally settled.  OR

Option 2

Grandma has a Power of Attorney for Health Care Proxy so James is able to make her medical decisions. He gets her checked out of the hospital and brings her home for Christmas. Meanwhile, James is trying to decide whether to sue Santa. James doesn’t want to sue Santa, but Grandma’s medical bills are really high and James isn’t sure how to pay for care. Using Grandma’s Durable Power of Attorney for Property, James is able to take some money out of Grandma’s retirement account to pay for her care. He’s also able to use the Durable Power of Attorney to work with Kennelly & Associates to protect his and Grandma’s assets and still get Grandma’s care paid for by Medicare. Kennelly & Associates, P.C. helps Grandma and James protect their home so that it won’t be lost to a Medicaid lien. James decides he doesn’t need to sue Santa.

I am happy to say that Grandma is alive, well and fully recovered. She and James have an estate plan. Santa has not been sued. Please make sure that you and your family are protected as well.

Plan, don’t wait until it is too late.

Jack Kennelly

 


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