Ambiguous Estate Planning Wishes Create Family Turmoil

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: https://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.