Easy fixes to CRISIS-PROOF your retirement plan

One of the most frustrating tasks is showing the trail of money when an account such as a certificate of deposit is closed. When a Medi-Cal application is submitted, Medi-Cal pulls up all of the past three years 1099’s even if you haven’t been filing your tax returns.If a 1099 shows up for an account that hasn’t been disclosed on the Medi-Cal application, Medi-Cal will want to know if the account is still open or if it has been closed. Proof has to be provided.

If an account is closed, they want a closing statement showing a $0 balance. Then Medi-Cal wants to know what happened to the funds and you must show proof of the disposition of the money through deposit receipts or statements. Also frustrating for the uninformed, is that Medi-Cal wants to see all of the pages of your bank, credit union and investment statements. For instance, let’s say that there are four pages in the statement. The pages are numbered 1 of 4, 2 of 4 and so on. The last page is typically blank or has disclosures. Most normal people would throw away the last page to save space in their files.


Medi-Cal wants this page if it is numbered as one of the pages of the statement. So, the moral of the story is “save everything.” Dealing with banks on behalf of a person that is legally incapacitated can be time consuming and frustrating even if you have an attorney-drafted Durable Power of Attorney for Asset Management. This makes planning ahead a smart thing to do.

It is the policy of banks that unless a Power of Attorney card is on file, then the person taking care of the finances for the incapacitated person will not have access to the account(s). Once again, this needs to be done ahead of time, not when a crisis happens.

A very easy solution that doesn’t cost anything except your time is to have the bank account owner and person that is going to handle the bank account(s) get a Limited Power of Attorney card filled out for each bank where there is an account. Both have to go to the branch.

This way the attorney-in-fact has immediate access to the accounts in case of incapacity.
This is a great way for parents to make sure that their kids can take over without them actually being a joint tenant on the account.
As the attorney in fact, if the child gets divorced or sued, the parent’s funds are safe because the child is not a joint owner.
This does not apply to credit unions, investment accounts, life insurance and annuities. These companies will accept your attorney-drafted Power of Attorney.
Another issue that has come up recently is due to a new federal law called the Patriot Act.

Let’s say that you are a widow and have a brokerage account titled in the name of your living trust. Your checking account is titled in your name only. You close your brokerage account. The brokerage company will give you a check made payable to your living trust. Did you know that you wouldn’t be able to deposit this check into your checking account because it is titled in your name only and not in the name of your living trust?

It’s true because of the Patriot Act. In order to deposit the check from the brokerage company titled in the name of your living trust, your checking account would have to also be titled in the name of your living trust.

I call this the “Like to Like” rule.

To take this example a step further, if you wanted to deposit this brokerage check you would have to open a checking account titled in the name of your living trust. This wouldn’t be a problem if you were healthy.

But what if you were incapacitated and in a long-term care facility, couldn’t walk and didn’t have a valid California identification? Your family would be stuck because you wouldn’t be able to open a new bank account to deposit that brokerage check.

This is a very common problem that we see. There are straight forward ways to avoid this problem if you plan ahead.

Your accounts should be titled in your name only if single and joint if married. A Limited Power of Attorney card must be completed so a trusted person can manage these accounts in case of incapacity.

A beneficiary must also be added to the account. The funds would go to the beneficiary without probate in case of death just like a living trust.

If you don’t want to be a burden on your family if a healthcare crisis happens, taking these simple steps now will avoid a lot of heartache in the future.


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