Michigan Elder Law Today ©

How do you access a safe deposit box after the owner passes away?  If the deceased owner (the “decedent”) had a safe deposit box, it may be a good idea to gain access to the box as soon as possible.  The Last Will and Testament or Trust and other documents needed to settle the estate can often be found in a safe deposit box.

Under Michigan law, safe deposit boxes jointly owned with another person are not sealed at death. The surviving joint tenant may gain immediate access. While this may be convenient, be careful in who you designate as a joint tenant on a safe deposit box because the joint tenant has the right to enter the box and remove any items in it, at any time.  Designate the wrong person and the jewelry, gold coins, or cash that “everyone in the family knows was in the box” may go missing for good. 

If you have a probate estate, the probate court may appoint a personal representative for your estate.  If the joint tenant is someone other than the personal representative, then both the joint tenant and the personal representative have full access to the box. If the box is jointly leased with someone other than the personal representative, however, the personal representative must open the box in the presence of the safe deposit company’s authorized employee.  Michigan law then requires that a list of items removed by the personal representative must be made and served on the other joint owner within seven days.  

What if the safe deposit box was just registered in the decedent’s name?   Then the law provides that even before a personal representative is appointed, any interested person, as defined in Michigan’s probate laws, may petition the probate court to open a safe deposit box to look for a will or burial plot deed.  However, to utilize this law you need to know the name of the financial institution and location of the branch where the safe deposit box is located and the box number.

The probate judge may issue the order immediately after a $10 fee has been paid. Once the order has been issued, the box may be opened in the presence of an officer or authorized employee of the bank. All those in attendance must sign a certificate stating whether a will or burial deed was found in the box and that no other items were removed. Items contained in the safe deposit box other than the will or burial plot deed may not be removed from the box.

The certificate and any will or burial plot deed found in the box are to be delivered to the probate register. The register issues a receipt for these materials to the bank where the box was found.

What if you are not sure if a deceased person had a safe deposit box?  In order to find out, an estate will have to be opened in probate court and a personal representative appointed.  A personal representative, once appointed, has authority to inquire of a bank if there was a safe deposit box and the bank is authorized to disclose that information to a personal representative.  The personal representative, once appointed, has full access to the box.

In the case of Vincent v. Department of Human Services, an Illinois appeals court found that a trust that prevented the trustee from making distributions if it would interfere with receiving Medicaid benefits is an available asset for Medicaid eligibility purposes. 

Mabel Vincent created an irrevocable trust with her daughter, Janice Reed, as trustee. The trust gave the trustee discretion to determine when to make payments from the trust, but it provided that the trust must not use trust assets if Ms. Vincent qualified for Medicaid. In Michigan, that type of language in a trust would be called "trigger" language, meaning an event (moving to a nursing home), triggers a provision in the trust (language providing the assets are protected). 

Ms. Vincent eventually entered a nursing home and applied for Medicaid. The state denied her application after finding the trust assets were an available asset, and Ms. Vincent appealed. The trial court found that the trust was not available because pursuant to the terms of the trust, no amount was payable to Ms. Vincent if it would interfere with Medicaid, so the trust's principal and interest were exempt from eligibility determinations. The state appealed.

The Illinois Court of Appeals reversed the trial court, holding that, due to the way the trust was drafted, the assets in the trust are available to be spent before Mrs. Vincent qualifies for Medicaid.  

These types of trusts are called by various names including Income Only Trusts and Medicaid Asset Protection Trusts.  In Michigan, a Medicaid Asset Protection Trust can be drafted to protect assets so they do not have to be spent down to the $2,000 level in order to qualify for Medicaid.  However, it is important to avoid including the triggering language that was included in Mrs. Vincent's trust.  The trust can be drafted so that the owner of the assets receives income from them or that the trustee can distribute the assets to a trusted individual, but the trust cannot have a trigger provision that removes access to the assets based on the event of moving to a nursing home.

When would an individual create a Medicaid Asset Protection Trust?  One instance when this trust would be a good idea is if you have an older person who is single and has some savings they want to protect.  For this example, assume we have an older widow with $60,000 in savings.  If the widow required nursing home care and no crisis long-term care planning were done, she would not qualify for Medicaid benefits until the $60,000 was spent down to $2,000.  However, if the widow had created a properly drafted Medicaid Asset Protection Trust in advance of needing nursing home care, the funds in the trust will be protected from the costs of the nursing home five years after creating the trust and registering the assets in the trust ("funding the trust").  In our example, the widow may have decided to register $20,000 of her $60,000 into the Medicaid Asset Protection Trust.  That way, she would still have $40,000 of funds in her name and direct control, but the other $20,000 would be protected from Medicaid.  If she later required nursing home care, she would not have to worry about spending the $20,000 in the trust before qualifying for Medicaid.  This is a much better result for the widow if she requires long-term care in the nursing home, in that she would qualify for Medicaid and could retain $2,000 in her name plus the $20,000 in her trust.  Upon her death, the assets remaining in the trust could be distributed to children or others as directed by the widow, without probate court involvement.

There are other situations when a properly drafted Medicaid Asset Protection Trust would be recommended in Michigan; the above is just one example.

Many people are willing to voluntarily care for a parent or loved one without any promise of compensation. Even so, a growing number of people in Michigan are entering into caregiver contracts (also called personal service or personal care agreements) with their family members. Having such a contract has many benefits. It rewards the family member doing the work.  For the older person, it may enable them to be cared for at home instead of in a facility.  It can help alleviate tension between family members by making sure the work is fairly compensated. In addition, it can be a be a key part of Medicaid planning, helping to spend down savings so that the elder might more easily be able to qualify for Medicaid long-term care coverage, if necessary. Care contracts are also an important part of Veteran's benefits planning, as amounts paid under a care contract can be considered an "unreimbursed medical expense" that may help the Veteran or their widow qualify for Improved Pension benefits (Housebound pension and Aid and Attendance).

The following are some things to keep in mind when drafting a caregiver contract:

Meet with an Elder Law attorney. It is important to get an attorney's help in drafting the contract, especially if qualifying for Medicaid or Veteran's benefits is a goal. For instance, Michigan’s nursing home Medicaid regulations prohibit the use of care contracts if an elder has already moved to a nursing home.  Also, the contract must be in writing, must be signed and notarized in a specific manner, and certain medical evidence must be documented as proof of the need for the care being provided under the contract.  The failure to follow the Medicaid regulations could result in the payment being considered a gift or divestment if the elder ever moves to a nursing home and needs to qualify for Medicaid.  The effect of a payment being considered a divestment is that Medicaid will not pay for an elder’s care in the nursing home for a period of time.

Caregiver's duties. The contract should set out the caregiver's duties, which can be anything from driving to doctor's appointments and attending doctor's meetings to grocery shopping to help with paying bills. The length of the term of the contract is usually for the elder's lifetime, so it is important to cover all possibilities, even if they are not currently needed.

Payment. Payment to the caregiver can be made in weekly or monthly installments. For Medicaid purposes, it is very important that the pay not be excessive. Excessive pay could be viewed as a gift for Medicaid eligibility purposes. The pay should be similar to what other caregivers in the area are making, or less. Also, prepaid, lump-sum contracts are considered a “divestment” under Michigan’s Medicaid program.

Taxes. Keep in mind that there are tax consequences. The caregiver will have to pay taxes on the income he or she receives.

Other sources for payment. If the elder does not have enough money to pay his or her caregiver, there may be other sources of payment. A long-term care insurance policy may cover family caregivers, for example.

A properly drafted caregiver contract is very useful in the right circumstances.

In Michigan, a decedent’s heirs are determined by applying the rules of intestate succession. If the decedent died intestate, these rules determine who will ultimately receive the residue of the decedent’s estate. There are several general rules of intestate succession that are used to identify heirs in all Michigan probate court proceedings.

First, a surviving spouse is given preferential status over the decedent’s other surviving relatives.  If there are no surviving descendants or parents of the decedent, the decedent’s spouse is the sole heir, even though the decedent may have left surviving brothers and sisters or other relatives. A surviving spouse is also given a dollar and share preference over the decedent’s descendants and parents, as follows:

If a decedent leaves no descendant but leaves a surviving parent, the surviving spouse is entitled to the first $204,000 of the decedent’s intestate estate. The surviving spouse then receives three-quarters of the balance and the surviving parent(s) receive one-quarter.

If any of the decedent’s descendants are also the surviving spouse’s descendants, then the surviving spouse is entitled to receive the first $204,000 of the decedent’s intestate estate and shares the balance equally with the decedent’s descendants.  This means that if Dad dies, Mom inherits the first $204,000 and has to split the rest with the kids.

If none of the decedent’s descendants are descendants of the surviving spouse (they are the surviving spouse's stepchildren), then the surviving spouse is entitled to receive the first $136,000 of the decedent’s estate and shares the balance equally with the decedent’s descendants.

If the decedent leaves no surviving descendant or parent, then the surviving spouse is entitled to receive the entire intestate estate.

The above amounts must be indexed annually for cost-of-living adjustments. MCL 700.1210.  Note that there is no distinction based on the gender of the surviving spouse. In other words, there are no preferences given to widows over widowers with respect to intestate shares.

If there is no surviving spouse, the entire estate passes to the following individuals who survive the decedent in this order:

1. The decedent’s descendants.
2. If there are no surviving descendants, the decedent’s parents.
3. If there are no surviving descendants or parents, the descendants of the decedent’s parents, i.e., brothers and sisters, then nieces and nephews.
4. If there are none of the above, half goes to the decedent’s maternal grandparents or their descendants and half goes to the decedent’s paternal grandparents or their descendants. If there is no one to take on one side of the family, the entire estate passes to the relatives on the other side.

A nonspouse intestate heir takes his or her share by representation. This distribution scheme is also called per capita at each generation. The estate or part of the estate is divided into as many equal shares as the total of the surviving descendants in the generation nearest to the decedent that contains one or more surviving descendants and the deceased descendants in the same generation who left surviving descendants, if any. Each surviving descendant in the nearest generation is allocated one share. The remaining shares, if any, are combined and then divided in the same manner among the surviving descendants of the deceased descendants as if the surviving descendants who were allocated a share and their surviving descendants had predeceased the decedent.

Michigan's Estates and Protected Individuals Code (EPIC) contains two key exclusionary rules to bar the decedent’s distant relatives from inheriting an intestate share. These more distant relatives are not considered heirs of the decedent under the following principles:

Any distant relative of the decedent who is not a descendant of the decedent’s grandparents (either maternal or paternal) is excluded from any share of the decedent’s intestate estate. Any such relative is not an heir of the deceased.

When tracing lineage through the decedent’s grandparents, if descendants are located in more than one generation relative to the decedent, the descendants in the more remote generation take by representation only.

As a corollary to this rule, if no descendants of either of the decedent’s grandparents can be located, the decedent’s intestate estate will escheat to the State of Michigan. Under EPIC, the state is considered an heir of the decedent if no relative can be found to take. In such cases, the Attorney General is an interested person in the estate.

Any heir of the decedent must survive the decedent for 120 hours. If a presumptive heir of a decedent dies within 120 hours following the death of the decedent, then that heir is deemed to have predeceased the decedent, the presumptive heir is not considered an heir, and he or she is not entitled to any share of the decedent’s intestate estate.

The rules of intestate succession apply in the same way regardless of whether the property in the estate is real property or personal property. Under many states’ law, distinctions were made between who was entitled to receive real estate and who was entitled to receive personal property.

Note that an adopted individual is the child of his or her adoptive parents and not of his or her natural parents for the purposes of intestate succession (except in the case of a stepparent adoption, in which case the adopted individual continues to be considered the child of the stepparent’s spouse). A child born out of wedlock can be an heir and take by intestate succession when the man completed an acknowledgment of parentage, the man joined the mother in correcting the birth certificate, the man and child established a mutually acknowledged relationship of parent and child before the child was 18 that continued until terminated by the death of either, or an order of filiation establishing paternity was entered during the man’s life. A child who is not conceived or born during a marriage will be considered to be “born in wedlock” if the parents marry after the child’s conception or birth.

Does this seem complicated?  It is.  These laws have been refined by the Michigan legislature and courts over the years to respond to the many different personal situations that occur when someone never gets around to making a Last Will & Testament or Trust.   You can simplify this process by making a Will and/or Trust to override Michigan's default intestacy laws.  That way, your estate will pass as you decide. 

Siblings do not always receive equal shares of a parent's estate. Sometimes the inequality is intentional and sometimes it is accidental. Regardless of how it happens, it can cause arguments among the children. However, there are some steps parents can take to promote family harmony.

If you intend to leave your children equal shares of your estate, don't forget to consider any money or property held jointly with a child. Property in a joint account passes outside of your estate. If you add a caregiver child to one of your bank accounts out of convenience, the account will pass to that child alone when you die. This is also true for any property held in joint tenancy or any property in a POD (Pay on Death) account. If you don't intend for that child to receive a bigger share of your estate, you can add a provision in estate planning documents stating that any property passing through joint tenancy to a beneficiary will be treated as an advancement of that beneficiary's share.

On the other hand, you may intend to leave one child a different share of your estate than your other children. For example, you may want to reward a caregiver child or you may feel that a child with a disability needs a bigger share. If you do decide to favor one child over another, you should explain in detail your reasoning in your estate planning document. This may help your children understand your decision. You also need to make it clear that it is your decision and not the influence of the favored child. If your children are unhappy with how much they have received, they may try to challenge your will.

In either case, Michigan has a well-developed body of case law regarding the precise language to use in a Last Will and Testament or Trust so that your intent is clear.  This can help you ensure your estate is divided the way you intend.

Andrew Byers is an Elder Law Attorney in Auburn Hills, Michigan.  Preparing clear Last Wills and Testaments and Revocable Living Trusts are part of his Elder Law practice.

 The basic premium for Medicare Part B will be $115.40 a month in 2011, up from $110.50 in 2010 (a 4.4 percent increase). But because there will be no cost of living benefit increase for Social Security recipients for 2011, most beneficiaries will be exempted from paying this increase and will instead pay the same $96.40 premium amount they have paid since 2008.

A "hold-harmless" provision in the Medicare law prohibits Part B premiums from rising more than that year's cost of living increase in Social Security benefits. Since there is no Social Security increase, most beneficiaries -- about 73 percent -- will not have to pay any increased Part B premiums because of the hold-harmless provision. Those covered by the provision will continue to pay Part B premiums of $96.40 per month in 2011.

But this hold-harmless protection does not apply to the other 27 percent of beneficiaries -- about 12 million in all -- who either:

• do not have their Part B premiums withheld from their Social Security checks, or
• pay a higher Part B premium surcharge based on high income (see below), or
• are newly enrolled in Part B.

All Medicare beneficiaries will be subject to the new deductibles and co-payments, as outlined below. Medicare Part B covers physician services as well as qualifying out-patient hospital care, durable medical equipment, and certain home health services, among other services.

Following are all the new Medicare figures for 2011:

• Basic Part B premium: $115.40/month

• Part B deductible: $162 (was $155)

• Part A deductible: $1,132 (was $1,100)

• Co-payment for hospital stay days 61-90: $283/day (was $275)

• Co-payment for hospital stay days 91 and beyond: $566/day (was $550)

• Skilled nursing facility co-payment, days 21-100: $141.50/day (was $137.50)

As directed by the 2003 Medicare law, higher-income beneficiaries will pay higher Part B premiums. Following are those amounts for 2011:

• Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $161.50.

• Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $230.70.

• Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $299.90.

• Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $369.10.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

• Those with incomes between $85,000 and $129,000 will pay a monthly premium of $299.90.

• Those with incomes greater than $129,000 will pay a monthly premium of $369.10.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary's premiums. So the income reported on a beneficiary's 2009 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2011. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary's MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium.