Seniors Real Estate Specialist® (SRES®) Designation Topics

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Continuing last month's episode and conversation about the Seniors Real Estate Specialist® (SRES®) designation topic, today's guest joins Monica to talk about the legal side of things. Barbara will discuss estate planning, probate, trusts, and what you can do as a real estate professional. This episode is full of great information and advice, and it's important to remember that as real estate agents, we may need to recommend an elder care professional to our clients in order to best serve them. Topics discussed offer a great place to start and some ideas to share with our clients, but ultimately people like Barbara will be able to give our clients the best information.

Barbara works at a firm that specializes in Elder Law — the primary focus is helping older people (or the families that care for older people) navigate the healthcare system, estate planning, asset protection, and post-mortem issues. Many people immediately turn to real estate when things change in their life; REALTORS® get called in when sometimes their clients may need to be referred to other professionals first. One of the things they advocate at Barbara's firm is to be proactive as you're approaching older age, and becoming aware of what's in your community. Many things have changed over the last several years and many of them for the better.

Barbara and Monica talk about the importance of planning a will and what estate planning looks like for people. A will is a written declaration of what your wishes are for your assets are at your death. It is good for everyone to have as well, as soon as they have something that's worth protecting (assets, children). When it comes to estate planning, it should be thought of as a process rather than an event. As our lives change, estate plans may change in focus. Estates often include powers of attorney, usually one for healthcare and one for general business purposes, which is what REALTORS® would likely be looking for. There are ordinary and extraordinary powers of attorney, and each one allows different scopes of authority. When dealing with powers of attorney, it's important to understand that every POA is not exactly the same, and understanding the authorities that are allowed.

There are different competencies for POAs and can be effective immediately or effective upon some future, contingent event. As a real estate agent, you may be working with adults that don't have full capacity. Legally, they are competent until they are adjudicated not, but they may have limited capacity depending on what type of decision is being made. This capacity may be something of concern for real estate agents. In this case, agents can go to the client's power of attorney or a family attorney or could go to their closing company attorney. As an agent, if you're unsure about a client's capacity, a respectful approach would be to ask your client if they have a power of attorney, to serve as a sounding board for security measures. That way the POA can protect all parties involved, but the older client can still feel like they are in control of the decision. You could also ask if there's another professional advisor they'd like to run the decision by.

Some other documents that are part of estate planning are HIPAA release, as well as a will substitute, like a trust. Trusts are legal documents that permit you to transfer assets either prior to your death or after. The grantor is the person that sets up the trust, and it's their purpose for having the trust that guides how it's used and what language needs to be in there. The trustee is the manager. The principle is the asset that is titled to the trust; beneficiaries are the persons who are supposed to benefit from the trust in life, as well as remainder beneficiaries that will inherit the asset after the death of the grantor. Some are very wealthy, but you really don't have to be super wealthy to benefit from a trust. A trust is a good way to manage assets of a vulnerable person. The takeaway here for real estate agents is to be able to offer clients the trust without putting children (or someone else) on the deed.

What about probate? Probate is not just about transferring title to a named beneficiary; it is also about cutting off claims of creditors. REALTORS® generally prefer real estate to go through the probate process because they can be assured there aren't outlying, lingering creditors. There are ways of transferring real estate that may avoid probate. Barbara talks about some of the different ways you can own property that would prevent the property from probate. If you die without a will, a judge will say how the assets are going to pass. You may have full probate, or something called muniment of title, which serves the purpose of transferring title (not full probate).

There are many small details that can change the outcome of a transaction. There may be a general answer to a general question, but you may find something out later on that could change the answer. There could be laws or practices that differ from state to state that could change whether you can sell a property under probate. Barbara shares some examples in the state of Tennessee, and how that compares to what she sees in other states. This could play into inheritance tax as well. There is an estate tax on the federal level (the exemption is 11.8 million), and the inheritance tax is a state tax in different states.

One of the things they talk about in the senior specialist designation class is Medicaid. Medicaid is a federal set of laws that is administered on a state level. It's designed as a safety net program for categorical eligible people for medical insurance but also serves as a payer for long-term services and support. A lot of people think that having Medicaid pay for their care at the end of life might be a good idea because they're afraid their assets would be used up having to pay for nursing care. There are several types of mature adult housing before nursing care, and Medicaid does not cover those expenses. Assistance for these types of expenses may differ state to state; Barbara shares how TennCare works in Tennessee.

There are income restrictions that govern whether a person can use Medicaid. You have to look at income versus net worth, and sometimes you can protect your net worth through the use of an irrevocable trust. This requires some planning because there is a 60-month look-back for Medicaid. There is usually a workaround for the trust, but you wouldn't need to address this until the point of application. There are so many ins and outs and they differ from situation to situation. It's important to help your clients find the professionals they need to figure out how they can benefit most.

When people decide they need the help of an elder care attorney, what options do they have? It may seem expensive upfront, but will likely save a client money in the long run. Many people are surprised by what elder care law firms can offer. It's important that other professionals, who have likely worked with adult clients for much of their lives, are aware of elder care law professionals. Fees typically would be 1-2 months of nursing home care, so it's affordable and reasonable value. Elder care law is a growing niche in the US; it seems to resonate with younger people that are looking for a truly meaningful career.

As people are aging, we need more care. The laws continue to change as well, and when you're dealing with so much government regulation, it's important that you're working with someone who is staying on top of the changes. It's always the law that's in place at the time a person passes that will impact a state recovery for Medicaid recipients.

To learn about social security benefits, there is a lot of information on the social security administration website. To get the best information, going to a certified financial planner is the wisest course of action. They should be able to recommend when you should start taking your social security, whether you should draw from your spouse or on your own, and what to do it you're widowed or divorced.

There is a lot of information out there on the topic of elder care. It's important to consider all of your sources, and streamline it down to your options and planning proactively for the future. People should get started early, and know that their estate planning is a process, rather than an event they can check off on their list of things to do.

About Barbara Boone McGinnis, CELA

Barbara is certified as an elder law attorney by the National Elder Law Foundation and as a Certified Elder Law Specialist by the Tennessee Commission on CLE and Specialization. She is also a VA-accredited attorney. Before receiving her license to practice law in Tennessee, Barbara spent more than 20 years as a Registered Nurse and Gerontological Nurse Practitioner.