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Ambiguous Estate Planning Can Create Family Turmoil
By
ElderLawAnswers.com
July 24, 2005 - Roy Ayers and his wife, Lorayne,
wanted to protect their money from nursing home costs, but instead of
consulting an elder law professional, they decided to take matters into
their own hands. They ended up causing bigger problems for themselves
and their family.
 The
Ayers deposited $48,000 in a bank account, and added two of their
children to the account. Their daughter, Gail Mitchell, claimed that her
parents did this in order to create a trust. According to her, they
asked her to take charge of their life savings to shelter it from being
counted by Medicaid and provide for their future needs. However, because
they didn't consult with a professional or put anything in writing, it
wasn't clear what they intended to do.
Eventually, Mrs. Ayers passed away, Mr. Ayers's
health began to deteriorate, and Gail and her siblings began fighting
about the proper way to care for him. In an effort to keep the money
from her siblings, Gail moved it into an account where she had sole
control.
Mr. Ayers, who was being cared for by Gail's
brother, demanded that his daughter return the funds, but she refused.
So Mr. Ayers filed suit against her, claiming she did not have the right
to move the funds. Gail argued that when her father deposited the money
in the account, he created an irrevocable trust, and she was the sole
trustee.
The case wound its way through the judicial system
until it reached the Texas Court of Appeals. The court ruled that Mr.
Ayers did not create a trust when he deposited the money in the account
because his name was still on the bank account and he still had control
of the money. The court also noted that even if a valid trust had been
created, the trust was revocable and Mr. Ayers had revoked it. Based on
this ruling, Gail had to return the money to Mr. Ayers.
The Ayers could have avoided this trouble by using
proper estate planning techniques. A trust, created properly, could have
ensured the Ayers were financially cared for and may have shielded their
money from being counted as an asset for Medicaid purposes.
To read the full text of this decision, Ayers v.
Mitchell (Tx. Crt. of App., No. 06-04-00088-CV, July 12, 2005), go to:
http://www.6thcoa.courts.state.tx.us/opinions/HTMLopinion.asp?OpinionID=7773
For more on estate planning,
click here.
For more on Medicaid planning,
click here.
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