Article by John C. Lincoln

Happenstance and the Law

The following article is provided as a courtesy by its author. It is provided for informational purposes only, and should not be taken as legal advice. You SHOULD in every case act or rely only upon the advice of an attorney who practices extensively in this area of the law. You SHOULD NOT in any case act or rely upon written materials of a general nature, such as the following article.

America is a nation founded on ideals. One of these ideals is that the law should apply to everyone equally. Like most ideals, the reality often does not live up to the ideal. The law does not operate in a vacuum. Laws have meaning only as they apply to facts. Because facts are laid across the breadth of human experience, the same laws will, of necessity, apply differently from one case to another. We educate some citizens in the law that they may inform other citizens of the law. We call these citizens who are educated in the law attorneys. We impose upon them duties to those they serve. One of those duties is to help to ensure that the laws will be applied equally. Because, however, the same law applied to different facts will produce different results, there are inconsistencies in the application of the law. These inconsistencies may exist even though differences in the facts may appear to be inconsequential.

One of the purposes, therefore, of legal advice is to even out the inconsistencies in the application of the laws. Even consistent laws often have very inconsistent results when applied to similar situations. It is common, in fact it is the norm, for similarly situated individuals to experience vastly different results from the application of the same laws. Indeed, the outcome of life, the result of existence, often seems to be the result of no grander plan than happenstance. A major part of every attorney's work is to reduce the effect of happenstance in the law.

In the practice of elder law, this can be illustrated rather dramatically by an example of two families similarly situated. Let us suppose that we have two couples, each of whom has one child. Let us further suppose that the husband in each couple has been in a nursing home for the last month. Each couple owns a very modest home free and clear. The home is worth about $90,000 in each case. Each couple has about $90,000 in the bank. The husband in each case no longer has mental capacity to sign legal documents. Mr. and Mrs. Unfortunate have their house titled in both of their names. Mr. and Mrs. Lucky have their house titled in a Living Trust, of which they are the trustees.

Both couples want to ask the Arizona Long Term Care System (ALTCS) to take over the nursing home bills for the husband. In each case, the wife is fearful that she will not have enough money left to maintain herself. The husband's nursing home in each case is costing $4,500 per month.

The situation of each couple is virtually identical. However, the result of the application for ALTCS benefits is dramatically different in the two cases. Mrs. Unfortunate will be able to keep $45,000 of the $90,000. However, she will have to "spend down" the other $45,000. It may be possible for her, with the advice of her attorney, to spend the money productively. She will, however, at the very least have to incur substantial legal expenses. On the other hand, Mrs. Lucky, with the proper legal advice, will be able to keep the entire $90,000 nest egg, and her husband will still be able to qualify for ALTCS to pay his nursing home bills. In each case, the wife will be able to keep the house, at least during her lifetime.

This is but one of many examples of how the application of the law to particular cases has purely accidental, and often dramatically different, results. This uneven application of the law is one of the major justifications for long term care planning. Why should individuals who are similarly situated have dramatically different legal results? These disparate results cause disrespect for the law. We have a system of law in which that which is not forbidden is permitted. Long term care planning is not only permitted, it furthers one of the underlying purposes of law, which is that the application of the law should be consistent.

What will be the best course of action in a given case cannot be determined by examples. These examples are only useful to illustrate some of the commonly recurring inconsistencies in the application of the law to long term care planning. As with any other area of the law, the best course of action in a particular case can only be determined by an experienced attorney with a full knowledge of the facts. The example given above ended up being very beneficial for Mrs. Lucky because her "Community Spouse Resource Allowance" increased to the point where her husband was immediately eligible for the payment of his nursing home bills by ALTCS. If Mrs. Lucky does not consult an experienced elder law attorney, her good fortune can become disaster. Let us suppose that Mrs. Lucky never does consult an elder law attorney. Now she must spend the entire $90,000 instead of saving the entire $90,000. In addition, if she passes away before her institutionalized husband, the house may eventually also be lost to the nursing home expenses. Instead of saving the entire $180,000 worth of house and bank accounts, the family can lose them entirely.

People often do not consult attorneys when they should, and to the extent that they do not, the grossly inconsistent application of the laws to similar situations is highly regrettable, but perhaps unavoidable. However, it is simply not defensible to say that proper legal advice should not be to attempt to obtain all of the benefits to which an individual is entitled under the law. Put another way, an attorney is not only permitted, an attorney is required, to make sure that Mrs. Unfortunate stands in as good situation as Mrs. Lucky. Life may be partly about good luck. The law should be less about good luck and more about like outcomes in like cases.

Another example of this haphazard nature of elder law when long term care planning has not been done occurs with joint tenancies with right of survivorship. Let us suppose the same couples, but instead of the Luckys' having placed their house in a Trust, they placed their daughter's name on their deed as a joint tenant with right of survivorship four years ago. The Unfortunates still own their home in their own names, without their daughter's name being on the title. After both Mr. and Mrs. Unfortunate have passed on, the State will be able to recover all of the amounts it paid out for Mr. Unfortunate's nursing home care from the house. After both Mr. and Mrs. Lucky have passed away, the house will go to their daughter, free of any claim by the State for her father's nursing home care. Once again, the facts are identical except for the happenstance that Mr. and Mrs. Lucky happened to put their daughter on their deed as a joint tenant with right of survivorship four years before the application for benefits from ALTCS. This particular example illustrates the fact that Mr. and Mrs. Lucky cannot know whether this was indeed a good idea or not by themselves. Under the fact scenario discussed, the result was very favorable in terms of what they would have wanted. Under a different fact scenario, the result could have been disastrous. Mr. and Mrs. Lucky put their daughter on the deed to their house as a joint tenant because they wanted their daughter to get the house without having to go through probate. They never thought of what effect it would have had on long term care.

If we change the fact scenario slightly, however, the result of Mr. and Mrs. Lucky's decision to put their daughter on the deed as a joint tenant could be disastrous. For instance, let us suppose that Mr. and Mrs. Lucky had two children, so they put both children on the deed as joint tenants. They also had four grandchildren, two by each of their children. Now, one of their children dies before them. Mr. and Mrs. Lucky's Will provides that if either one of the children is gone before them, the two grandchildren by that child get their parent's share. However, under the joint tenancy, the house is not controlled by the Will and goes directly to the surviving child. The grandchildren by the deceased child are cut out of their share of the house. The house at that point is the only thing left, so one set of grandchildren is cut out entirely. This is clearly not what Mr. and Mrs. Lucky intended. Nevertheless, it has happened. Had Mr. and Mrs. Lucky consulted an elder law attorney in time, it would not have happened.

In summary, life, for whatever reason, is a product of happenstance to some degree. One of the underlying purposes of the law, and elder law in particular, is to reduce this effect, at least regarding the application of the law. In this regard, long term care planning is a shield against uncertainty, and the uneven application of the laws to similar situations. We do not like to see Mr. and Mrs. Unfortunate when it is too late to achieve a fair result. Mr. and Mrs. Lucky do not need us. The people that we really want to see in our offices are Mr. and Mrs. Wise, who know that good legal advice is a necessity, not a luxury.