A: We have a federal transfer tax system in place that provides that a certain amount of property may pass without tax. In 2010, the amount that may pass free of tax is unlimited (at least until Congress acts to change it). However, in 2009, this amount was $3,500,000. In other words, the amount above $3,500,000 was subject to a transfer tax. In 2009, the federal transfer tax rate for property above $3,500,000 started at 37% and hit a maximum rate of 45%. It is anticipated that Congress may re-enact the tax at the same exemption amount and rates for 2010 and beyond. However, if Congress does not act, the federal tax exemption will be $1,000,000 and we will have a maximum tax rate of 55%. Under the system in effect in 2009, there was no transfer tax in California. However, if Congress fails to act, California will receive a portion of the federal transfer tax in 2011.

A: It sounds as if the five siblings are now holding the property as tenants in common, which means they each hold an undivided one-fifth interest in the property. As tenants in common, you can create an tenant in common agreement as to how to manage the rental income. In most circumstances, rent is collected into one account and the expenses of the rental property are paid from the one account and the net profits are then distributed to the co-owners. All expense deductions and rent income should be recognized by each of you as to 1/5th. If you expect this to be a long-term arrangement, you may wish to consult a business attorney to determine if you should have a formal partnership or form a limited liability company.

A: Accounts that have transfer on death or beneficiary designations do not pass through the probate process. They pass to the specific beneficiary of the account upon presentation of the owner's death certificate. However, in order to avoid any dispute over the beneficiary designations, if it is intent to pass those accounts to your children at first death, each spouse should acknowledge that the spouse does not have a claim to the account under the community property laws and sign an approval of the beneficiary designation.

A: I am not licensed under Massachusetts law and am not familiar with their probate rules. In general, however, the terms of the mortgage would control as to whether the co-borrower was jointly and severally liable for the entire debt. In most circumstances, the joint tenant would assume the obligation on the property.

A: I am not licensed in Maryland and am not familiar with their Medicaid recovery program. In general, under federal law, the lookback period for gifts is 36 months. If the property was gifted to your sister 15 years ago, it does not appear it will be subject to a lookback period for recovery.

A: Before taking steps to plan for Medi-Cal, I recommend that your mother consult with an attorney who is a certified specialist in Elder Law so that she understand the nature and consequences of Medi-Cal and can determine if planning for such an event is appropriate for her. Upon her decision, the attorney can recommend which avenue is appropriate for her planning.

A: You do need to file the will and open a probate proceeding. The court will appoint a probate referee that you will use to appraise the home. You will provide notice to Medi-Cal and they will provide you with their claim amount. Upon sale of the home, the expenses of the administration and the claim for Medi-Cal can be paid from the proceeds, along with any other creditors that may exist. Without opening the probate, the sale cannot be completed to pay the outstanding Medi-Cal claim.

A: There is no requirement to update Schedule A. It was intended to take a snapshot of the assets at the time it was signed and will create a tracing mechanism if assets are mistitled later. The important step is for your mother to maintain titling on her accounts in her name as trustee of her trust.

A: To avoid a probate proceeding, the house should be vested in the name of your father as trustee of the trust. The exact wording and whether a new subtrust was created at the time of your mother's death is dependent upon the terms of your parent's trust. You should consult an attorney to find out what steps are required for the administration of the trust at your mother's death. Although a trust avoids a formal probate proceeding and the requirement of supervision of the court, an administration to transfer title and give proper notices is still required with a trust.

A: Medi-Cal is California's name for Medicaid. Medicaid is a federal program that was established for persons who have insufficient resources and income to pay for their own medical care. Part of this program is that to the extent the person has resources at the time of their death, then the Department of Health Services is entitled to recovery to the extent of the Medi-Cal recipient's assets. Since it sounds as if your family member is the owner on the annuity, it is subject to recovery upon her death.

A: Because California is a community property state, your husband has a community property interest in the policy because premiums have most likely been paid from your earnings or other community property assets. Therefore, California law requires that he consent to a distribution of the policy to anyone other than himself. Your agent is correct that you should obtain his consent to change the designation.

A: Deed of Trust is a security instrument filed to secure a promissory note. In answering your question, I assume that your sister was added to the deed to the property so she is a co-owner. If she was added as a tenant in common, then your father's interest in the property would be subject to probate. If your sister was added as a joint tenant (which is more common), then the property would pass to your sister as the surviving joint tenant. She would record an affidavit of death of joint tenant to transfer title and file the necessary parent/child exclusion with the assessor's office to avoid reassessment. In determining if transfer by joint tenancy is appropriate way to transfer at death for your father specifically, you should also review the tax consequences of joint tenancy. For joint tenancy, only the father's share gets an adjustment to fair market value as the tax basis in the asset. Meaning that there may be capital gains tax if your sister sells the property after the death of your father. However, she may have an exclusion from that tax due to her residency in the property. My suggestion would be for your father to have a brief meeting with an attorney to confirm that his titling results in the least cost and taxes upon his death.