Medicaid Asset Protection Planning

[lsedels]

What is the name of your state (only U.S. NY

My Mom is a widowed Florida resident and is 90 y/o (but healthy and still independent). I am trying to determine how best to plan ahead and protect assets. I obviously cannot get into specifics here, but suffice to say her income will exceed the Medicaid maximum, and her assets (although not in the millions or even high hundred thousands) would still have to be spent down for her to get Medicaid for a nursing home.

Add to this, that if she does require nursing home care, she and I will probably want to move her up to NY where I live. She is also a widow of a WWII veteran, so she is eligible for VA Aid and Attendance, but her current monthly income makes her ineligible (I'm aware that monthly medical expenses can bring that down, but right now she doesn't have any and we have no plans to apply for assisted living in the near future ... not to mention the expense).

We have met with a handful of attorneys. Frankly, I'm not sure I trust some of them to make a recommendation because of a conflict of interest (they stand not to profit if we don't take their recommendation).

We have already paid off her mortgate, so she owns outright (I am not on the deed, but I believe my deceased Dad's name still is - we have been advised against putting me on the deed).

Is there any reason why I cannot just do the following?

1. Have an inexpensive atty draft a Lady Bird deed to protect the condo from probate.
2. Take approx 50% (or more) of her financial assets (yes, there will be a tax implication for me) and transfer them into an account under my name, subject to 5 year lookback? Use those assets only for her needs if she needs them (by transfering back into her account).
3. If it becomes necessary to place her in a nursing home prior to 5 year lookback expiration, spend her transferred assets down or use them to pay for the penalty months? Is there no way to just transfer them back and eradicate the penalty months?

We've been guided to consider a Irrevocable Trust and a Personal Services Contract, but we've also been told by some attys that we don't need these (I am an only child and unmarried so I really question the need for an irrevocable trust and I've been told that under a Personal Services Contract, I must demonstrate a regular number of hours per week of services. And what about the implications of a possible move from FL to NY?

Sorry for the long description. But we have now seen at least half a dozen attys and I'm still confused. Some of them ask very stiff fees (over a thousand for an irrevocable trust and anywhere from 7K-18K for the type of elder planning that would be required for a personal services contract).

Thanks in advance.

L

 

[ajkroy]

What is the name of your state (only U.S. NY

My Mom is a widowed Florida resident and is 90 y/o (but healthy and still independent). I am trying to determine how best to plan ahead and protect assets. I obviously cannot get into specifics here, but suffice to say her income will exceed the Medicaid maximum, and her assets (although not in the millions or even high hundred thousands) would still have to be spent down for her to get Medicaid for a nursing home.

Add to this, that if she does require nursing home care, she and I will probably want to move her up to NY where I live. She is also a widow of a WWII veteran, so she is eligible for VA Aid and Attendance, but her current monthly income makes her ineligible (I'm aware that monthly medical expenses can bring that down, but right now she doesn't have any and we have no plans to apply for assisted living in the near future ... not to mention the expense).

We have met with a handful of attorneys. Frankly, I'm not sure I trust some of them to make a recommendation because of a conflict of interest (they stand not to profit if we don't take their recommendation).

We have already paid off her mortgate, so she owns outright (I am not on the deed, but I believe my deceased Dad's name still is - we have been advised against putting me on the deed).

Is there any reason why I cannot just do the following?

1. Have an inexpensive atty draft a Lady Bird deed to protect the condo from probate.
2. Take approx 50% (or more) of her financial assets (yes, there will be a tax implication for me) and transfer them into an account under my name, subject to 5 year lookback? Use those assets only for her needs if she needs them (by transfering back into her account).
3. If it becomes necessary to place her in a nursing home prior to 5 year lookback expiration, spend her transferred assets down or use them to pay for the penalty months? Is there no way to just transfer them back and eradicate the penalty months?

We've been guided to consider a Irrevocable Trust and a Personal Services Contract, but we've also been told by some attys that we don't need these (I am an only child and unmarried so I really question the need for an irrevocable trust and I've been told that under a Personal Services Contract, I must demonstrate a regular number of hours per week of services. And what about the implications of a possible move from FL to NY?

Sorry for the long description. But we have now seen at least half a dozen attys and I'm still confused. Some of them ask very stiff fees (over a thousand for an irrevocable trust and anywhere from 7K-18K for the type of elder planning that would be required for a personal services contract).

Thanks in advance.

L

I don't understand. With the country's finances in the toilet and no money ANYWHERE, why can't your mom pay for her own care? Why must I pay for it instead?

 

[sandyclaus]

What is the name of your state (only U.S. NY

My Mom is a widowed Florida resident and is 90 y/o (but healthy and still independent). I am trying to determine how best to plan ahead and protect assets. I obviously cannot get into specifics here, but suffice to say her income will exceed the Medicaid maximum, and her assets (although not in the millions or even high hundred thousands) would still have to be spent down for her to get Medicaid for a nursing home.

Add to this, that if she does require nursing home care, she and I will probably want to move her up to NY where I live. She is also a widow of a WWII veteran, so she is eligible for VA Aid and Attendance, but her current monthly income makes her ineligible (I'm aware that monthly medical expenses can bring that down, but right now she doesn't have any and we have no plans to apply for assisted living in the near future ... not to mention the expense).

We have met with a handful of attorneys. Frankly, I'm not sure I trust some of them to make a recommendation because of a conflict of interest (they stand not to profit if we don't take their recommendation).

We have already paid off her mortgate, so she owns outright (I am not on the deed, but I believe my deceased Dad's name still is - we have been advised against putting me on the deed).

Is there any reason why I cannot just do the following?

1. Have an inexpensive atty draft a Lady Bird deed to protect the condo from probate.
2. Take approx 50% (or more) of her financial assets (yes, there will be a tax implication for me) and transfer them into an account under my name, subject to 5 year lookback? Use those assets only for her needs if she needs them (by transfering back into her account).
3. If it becomes necessary to place her in a nursing home prior to 5 year lookback expiration, spend her transferred assets down or use them to pay for the penalty months? Is there no way to just transfer them back and eradicate the penalty months?

We've been guided to consider a Irrevocable Trust and a Personal Services Contract, but we've also been told by some attys that we don't need these (I am an only child and unmarried so I really question the need for an irrevocable trust and I've been told that under a Personal Services Contract, I must demonstrate a regular number of hours per week of services. And what about the implications of a possible move from FL to NY?

Sorry for the long description. But we have now seen at least half a dozen attys and I'm still confused. Some of them ask very stiff fees (over a thousand for an irrevocable trust and anywhere from 7K-18K for the type of elder planning that would be required for a personal services contract).

Thanks in advance.

L

You (and others) may call it "Asset Protection Planning", but why don't you just call it what it is - a clear attempt to hide and liquidate assets that Mom owns and which can (and SHOULD) be used to pay for her nursing home care when the need arises.

Also know this - there is a 5-year lookback period for Medicare asset assessments. That means if you DO try to dispose of, or "protect" her assets NOW, you'd better hope that she doesn't need that care in the next 5 years, because Medicare WILL consider your attempt at "asset planning" to be a deliberate attempt to hide assets that SHOULD have been used to pay for her care.

Let's ALSO say what you aren't saying. Your Mom is 90 years young. If she isn't in need of nursing home care NOW, there is very little chance that she will need it before she dies in her old age. This whole "asset planning" is nothing but your own attempt to protect your own inheritance instead of having your Mom spend it on her own nursing care costs before she passes and leaves YOU with nothing.

 

[lsedels]

You (and others) may call it "Asset Protection Planning", but why don't you just call it what it is - a clear attempt to hide and liquidate assets that Mom owns and which can (and SHOULD) be used to pay for her nursing home care when the need arises.

Also know this - there is a 5-year lookback period for Medicare asset assessments. That means if you DO try to dispose of, or "protect" her assets NOW, you'd better hope that she doesn't need that care in the next 5 years, because Medicare WILL consider your attempt at "asset planning" to be a deliberate attempt to hide assets that SHOULD have been used to pay for her care.

Let's ALSO say what you aren't saying. Your Mom is 90 years young. If she isn't in need of nursing home care NOW, there is very little chance that she will need it before she dies in her old age. This whole "asset planning" is nothing but your own attempt to protect your own inheritance instead of having your Mom spend it on her own nursing care costs before she passes and leaves YOU with nothing.

Interesting how many bona fide attorneys we have here responding to legal questions. I know one place where I'm not coming anymore.

 

[sandyclaus]

Interesting how many bona fide attorneys we have here responding to legal questions. I know one place where I'm not coming anymore.

Interesting how you think that we're all attorneys and are willing to give you our advice for free.

Clearly you didn't bother to read our site disclaimer:

The FreeAdvice Forums are intended to enable consumers to benefit from the experience of other consumers who have faced similar legal issues. FreeAdvice does NOT vouch for or warrant the accuracy, completeness or usefulness of any posting on the Forums or the identity or qualifications of any person asking questions or responding on the Forums.

You are certainly welcome to go with one of those other attorneys you consulted, and who want to charge you thousands of dollars to do the "estate planning". Of course, you could just save that money and use it for Mom instead if/when she ends up needing the services of a nursing home instead of expecting to profit from her death and making us taxpayers pay for her care.

 

[LdiJ]

What is the name of your state (only U.S. NY

My Mom is a widowed Florida resident and is 90 y/o (but healthy and still independent). I am trying to determine how best to plan ahead and protect assets. I obviously cannot get into specifics here, but suffice to say her income will exceed the Medicaid maximum, and her assets (although not in the millions or even high hundred thousands) would still have to be spent down for her to get Medicaid for a nursing home.

Add to this, that if she does require nursing home care, she and I will probably want to move her up to NY where I live. She is also a widow of a WWII veteran, so she is eligible for VA Aid and Attendance, but her current monthly income makes her ineligible (I'm aware that monthly medical expenses can bring that down, but right now she doesn't have any and we have no plans to apply for assisted living in the near future ... not to mention the expense).

We have met with a handful of attorneys. Frankly, I'm not sure I trust some of them to make a recommendation because of a conflict of interest (they stand not to profit if we don't take their recommendation).

We have already paid off her mortgate, so she owns outright (I am not on the deed, but I believe my deceased Dad's name still is - we have been advised against putting me on the deed).

Is there any reason why I cannot just do the following?

1. Have an inexpensive atty draft a Lady Bird deed to protect the condo from probate.
2. Take approx 50% (or more) of her financial assets (yes, there will be a tax implication for me) and transfer them into an account under my name, subject to 5 year lookback? Use those assets only for her needs if she needs them (by transfering back into her account).
3. If it becomes necessary to place her in a nursing home prior to 5 year lookback expiration, spend her transferred assets down or use them to pay for the penalty months? Is there no way to just transfer them back and eradicate the penalty months?

We've been guided to consider a Irrevocable Trust and a Personal Services Contract, but we've also been told by some attys that we don't need these (I am an only child and unmarried so I really question the need for an irrevocable trust and I've been told that under a Personal Services Contract, I must demonstrate a regular number of hours per week of services. And what about the implications of a possible move from FL to NY?

Sorry for the long description. But we have now seen at least half a dozen attys and I'm still confused. Some of them ask very stiff fees (over a thousand for an irrevocable trust and anywhere from 7K-18K for the type of elder planning that would be required for a personal services contract).

Thanks in advance.

L

What is the realistic probability that your mother is EVER going to require nursing home care? You state that she is 90 and still independent. If she ever does require nursing home care, what is the realistic probability that it would last long enough to seriously deplete her assets? Should the even remote possibility exist that she would need nursing home care for long enough to seriously deplete her assets, where would you rather see her? In a self pay facility where you control her care, or in a facility that caters to Medicaid patients where you would have no control at all?

Seriously, If your mother is still independent at 90 the odds that she would ever need nursing home care for more than a few months are slim to none. If she has enough regular income to cover the majority of the cost of nursing home care then protecting her assets is irrelevant. I think that you have possibly bought into the whole "estate planning" issue regarding your mother when no estate planning is actually needed.

If she is 90 and still independent then the serious issues that might arise with some elderly parents are not something that you are going to have to deal with. She is not going to develop Alzheimers and need 5 to 20 years of nursing home care.

 

[commentator]

Why not use this money to pay for her care IF she needs it instead of trying to smart figure and pay and asset plan. They're taking advantage of your gullibility. What if your mother suddenly falls over and passes away in one day? Think how much money you would have wasted in the pursuit of guarantees that "Medicaid" won't GET everything she has. At her age, she'll probably never see the inside of a long term nursing care facility, and if she does it won't be for a long time.

 

[tranquility]

I didn't really want to get into all the facts as I think the OP needs an elder law attorney for best planning other than what one can find in general publications on the internet.

I am, however, disappointed by the naysayers here regarding planning over how much to give the government. While related to taxes, I think the quote applies here too:
"There are two systems of taxation in our country; one for the informed and one for the uninformed."
--Judge Learned Hand

It is not illegal to follow the law to gain benefit for yourself and your family. As to the morality...I can think of a LOT of laws I'd have a much greater problem with.

So, all those who don't take the exemption for themselves or dependents or any write-offs like mortgage interest or business expenses, feel free to complain. I have no problem with the rest of us being informed.

 

[Zigner]

Why doesn't mom use the money to go on a few cruises? Let HER spend down HER money.

 

[Mass_Shyster]

I don't understand. With the country's finances in the toilet and no money ANYWHERE, why can't your mom pay for her own care? Why must I pay for it instead?

Probably for the same reason that I take all the allowable deductions on my tax return - because the law says I can, so why should I pay more than I'm required to?

 

[Zigner]

Probably for the same reason that I take all the allowable deductions on my tax return - because the law says I can, so why should I pay more than I'm required to?

Yes, it allows you to. But does it allow you to take your mom's deductions?

 

[tranquility]

Yes, it allows you to. But does it allow you to take your mom's deductions?

It allows mom to give a gift to her child if she so desires and the child to not report that gift as income. 100% deduction, baby! Or, would you prefer the government to tell mom what she can and cannot do with the money she has earned?

Should mom be able to buy a house and still get medicaid? How about buy a car? How about buy a burial plot? Can she give her grandchild a toy for Christmas? Can she bake a cake for the church bake sale? What things will eliminate the ability to get medicaid at some point? That is the question and the law tries to make it most fair for most people.

 

[FlyingRon]

Bona fide attorneys generally expect to get paid for giving advice. If you bothered to read the disclaimer that is all over this site, you're just getting very knowledgable lay people answering here (though we do have a couple of lawyers).

This is not something you want to screw up as already pointed out. If you make a fraudulent transfer, you can end up disqualifying your mother for services she would need. There are definite medicaid strategies but wholesale hiding the money is not one of them. The idea of saving money for the heirs is not something that's planned for. As stated, the government expects her to use her assets to pay for her care rather than leaving them for the ungrateful children.

There are things that can be done that can decrease expenses that might be recovered by the government or end up having to be paid by the estate heir. Many aspects of her life, not limited to things like prepaying funeral arrangements, etc.. can be done now. Frankly, she should be talking to an elder law advisor anyhow. If she doesn't have them yet, there are many things that will assure her wishes respected and take a lot of pressure off the rest of the family: wills, advance medical directives, medical powers of attorney, general powers of attorney, .. that are easily done when she is of sound mind and that again is something that can be paid for now.

 

[TigerD]

I am, however, disappointed by the naysayers here regarding planning over how much to give the government. While related to taxes, I think the quote applies here too:
"There are two systems of taxation in our country; one for the informed and one for the uninformed."
--Judge Learned Hand

It is not illegal to follow the law to gain benefit for yourself and your family. As to the morality...I can think of a LOT of laws I'd have a much greater problem with.

Quoted so it can be liked again.

DC

 

[ajkroy]

I am, however, disappointed by the naysayers here regarding planning over how much to give the government. While related to taxes, I think the quote applies here too:
"There are two systems of taxation in our country; one for the informed and one for the uninformed."
--Judge Learned Hand

It is not illegal to follow the law to gain benefit for yourself and your family. As to the morality...I can think of a LOT of laws I'd have a much greater problem with.

So, all those who don't take the exemption for themselves or dependents or any write-offs like mortgage interest or business expenses, feel free to complain. I have no problem with the rest of us being informed.

See, I don't see this as how deciding how much the OP (and OP's mom) needs to give the government. This isn't inheritance tax. I actually see this as the opposite; how much can the OP milk FROM the government without paying for mom's care, and keep as much of that for himself. With the state of our economy as it is now, I don't think that those who have the means to care for themselves should be depending upon the taxpayers to pay for them. Period.

Tranquility, I respect your opinion in all matters, I just see this one situation differently than you do.