Need advice from financial or insurance expert?

Question

A friend's mother recently entered a nursing home. She was told she would have to spend down her resources before she could go on Medicaid. Her will names her two sons and a grandchild as beneficiaries. She also receives an annuitized pension and an IRA, that pay her a monthly sum for as long as she lives. How can she best protect her assets, or is it too late?

The reason she wants to protect her assets is so her sons and grandchild will have an inheritance. Doesn't a will supersede nursing home liquidation of resources?

Answer 1

One way to protect Assets is by developing a Trust, giving all the assets she owns to the Trust and then assigning the beneficiaries to the Trust. That way, when she dies she won't lose lots of money due to taxation and her children will still receive everything she owns.

Also, ask the annuity agent to add a rider (option) that allows the annuity to keep paying the children after she dies.

Obviously what I just said seems simple, but is really more difficult when done. Feel free to contact me regarding any questions.

Answer 2

The look back period for a transfer of assets to an individual is 3 years and of transfer to a trust is 5 years.

There are some assets that are safe in most states. Her home, home furnishings, a car, a wedding ring and property in an income producing business. Some life insurance and burial plans are safe within certain limits. Depending upon the state she's in the state may place a lien on these properties when she passes, especially the home. They may count the home if she's single to determine eligibility but they probably won't make her sell it.

They count cash, stocks and bonds, investment and retirement plans. Also some cash value in life insurance. They will count the pension as income but will count the IRA.

This is much more involved so my advice would be to consult with an Elder Law Attorney to find out how best to protect her assets.

EDIT FOR ADDITIONAL DETAILS:

No, the will does not protect her assets. She will have to dispose of the assets if she wants Medicaid to pay. She will need to use the assets to pay for her care. When she has used up the value of the assets then Medicaid will step in and pay.

As I said, some states are starting to put a lien on some excluded property, such as her home. IF they do that her estate will need to settle the bill prior to distributing the property according to the will. The state will demand payment of the value of the home and other assets that may be available. You will not have to pay more than the value of the estate, which means her sons will not have to pay anything but they also won't get the property. The states don't do this in every case and in every state but they do have that option.

Sorry, but that's the way Medicaid works. To other people reading this: this is the reason for a long term care insurance policy. Medicare does not pay for long term care and Medicaid only will after you dispose of everything you've accumulated during your life, leaving nothing for heirs.

Answer 3

I am not an expert. Medicaid is run by the states and therefore the rules depend on what state you friend's mother lives in.

My guess is that it is too late. I know with my mother in New Jersey a few years ago they went back three years to determine what assets and expenses she had. If they found gifts to children for example they would just delay the start of the the payment to the nursing home for a few months to account for the money gifted.

The correct person to contact is an elder care attorney that practices in the state of the mother. You could also try that state's medicaid office or web site for what the rules are.

Answer 4

Dave Ramsey, as mentioned by the person above, is the only financial adviser that anyone needs. He will teach you that a perfect credit score is a joke. He calls it the "I Love Debt" score. If you save money and have cash, you can buy whatever you want. For a house, you save a huge amount for the down payment - none of this zero percent down nonsense. Think about how dumb it is that in this world, you are judged financially worthy because you've borrowed a whole lot of money, and then pay it back. Why is a person's credit worthiness not judged by how much they have in savings and investing, and how little debt they have?

Answer 5

Too late to fully protect them. I think that there is a 18 month period prior to going into a nursing home that you are required to move you assets into a trust to give them away to the people you want to have them. I would suggest that your friend call a legal expert. It could vary by states but I'm pretty sure that it has to be done at least a year before she enters the facility and it may be as long as 2 years.

Answer 6

It is way too late to try to shield her assets from Medicaid. The look back period is now 5 years.

She SHOULD have to spend her assets before Medicaid (funded by taxpayers) should pay for her care. Why should the taxpayers pay for her care so her children/grandchildren can have money?

If she wanted her kids to have money, she should have purchased Long Term Care insurance.

Tell you friend to go meet with an Elder Care Attorney.

Answer 7

NO, a will doesn't supercede.

What medicaid is, is WELFARE. That means, in order to qualify, she needs to NOT be able to afford the services herself, which means you and I pay for it, instead, through our payroll taxes. SHE HAS ASSETS.

So, she wants to keep her stuff, and spend it otherwise, so that *I* have to pay for her nursing home care? Sorry, that's NOT fair. It's just not. That's like me wanting YOU to pay MY medical bills, because I want to give the money for that to MY kids.

It's too late. You have to not have transferred your assets within the past 5 years.

The pension and IRA can go straight to the medicaid - likely it won't come CLOSE to paying her monthly charges. And she should just sell the house.

Answer 8

what is she going to protect her assets for?

the purpose of assets is to provide either income or capital to meet your needs when you can't otherwise meet them yourself. being in a nursing home certainly sounds like such a need.

Medicaid is now up to speed on people who give away their assets in order to qualify for free government care. The usual current rule is three years ... if you gave 'em away within the past three years, you aren't eligible.

What she should expect is that she'll spend down her assets until she's either well enough to go home, becomes poor enough to qualify, or passes away.


sad but true