Legal Fiction?

Because you have been reading this blog, and then running to review your estate plan  immediately, you may have noticed that there are a lot of phrases or segments that seem irrelevant to you or your situation.  Some may actually be irrelevant and unnecessary; however, most are the product of “legal fictions” or victorious cases that at first glance seemed frivolous.  One of the most popular legal fictions is the “fertile octogenarian,” or an 80 year old who parents a child.

Although perhaps not as fictional as it once was, the idea of the fertile octogenarian conjures up another important point: people are living longer.  At some point, it was considered rare to reach the age of eighty.  Now, it is practically considered life expectancy.  With increased age comes a number of important considerations.
Generally, we talk about “end of life care,” which includes planning for health concerns that will require levels up to skilled nursing.  Because end of life care has the potential to deplete the estates of most people to nothing, we encourage planning for this expensive form of care.  Medi-Cal planning might include a QMap Trust, gifting, or irrevocable trusts in order to meet the qualifications without depriving your heirs.  Similarly, planning for the VA Aid & Attendance Non Service Connected Disability benefits through QVap Trusts and other strategies is helpful in the event you require nursing care.  Finally, long-term care insurance may provide a solution to paying the high costs of healthcare.

That said, we hardly ever talk about planning to be the fertile octogenarian.  Effective estate planning is about striking the balance between both scenarios.  It is important to remember that even if you are ill, you could become well and live far into your later years.  Although the following anecdote has been changed slightly to protect the confidentiality of the client, recently, a man came into my office concerned about his long-term girlfriend.

He was a widower in his late middle-age and the couple decided that getting married would simply complicate their lives since they each had children from different marriages.  Several years later, he suffered some serious health problems.  He owned two houses, his primary residence and a rental that he wanted to give to her.  When he was hospitalized and told to basically say his goodbyes and be sure his affairs were in order, they put the houses in joint tenancy and he gave much of his money away.

Fortunately, he got better.  Now, it is nearly 5 years later, he is in his eighties, and his girlfriend has lost her capacity and has had a stroke.  His most ardent concern is that she receives good health care and comfort in the end of her life.  Unfortunately, he gave away most of his assets and he can’t sell or mortgage either house in order to gain some cash without going to court.  Because of their preconceived notion that he would die first while she was healthy, he impoverished himself without proper estate planning.  Once he pulled through, they still did not plan for financial powers of attorney, a trust, or similar documents that could allow their assets to flow between them as necessary.  Now he is looking forward to many healthy years, the majority of his assets are in limbo.

Hopefully, this story will remind you that you never know if you will become ill, stay well, die suddenly, or require care.  It is important to take a balanced approach to your estate plan in order to ensure that you are protected in all instances.

And, in case you are wondering what to spend your money on if you are lucky enough to be healthy in your old age, consider this story about the parasailing 100 year old lady.
Or this one about how wrong one can be.

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