Asset protection help

jnmiller324

My mom has early onset (age 62) and is declining rapidly. We are starting to have someone come into her home to help, but she will need a facility soon. 

She has a fair amount of money in her bank account, about 300k in her 401k, plus a pension for an unknown amount right now. I talked to our attorney, but it seems like our only options are to spend down or do a Medicaid annuity which gives our family no money after she passes. Due to her age, she has not withdrawn any of her pension or 401k right now. 

Is there another way to protect her money? Can I put it in a trust for my kids and myself? I am an only child and my dad died more than 20 yrs ago. She will need Medicaid to help pay for her caregiving expenses, but I can’t just let her lose all that money. 

Kibbee

Be very careful.  Most states have a multi-year (usually 3 to 5 years) look back period before a person will be approved to receive Medicaid assistance for long term care.  Meaning the Medicaid authorities will check to see if your Mother gave away / transferred / "gifted" any substantial amounts of money to you during that time.  If they determine this has occurred, they may decline to approve her for Medicaid.  And, since her money went to you, they will require you to pay for her care out of the money you received.  

Having said that, there is an annual amount that can be given as a gift to an individual, (small, maybe $10,000 per year?) and if her transfer of funds to you is within that range then that transfer of money would be OK within the look-back period.

Finally, your mother is not "losing" the money.  It was earned by her, and was saved by her, for her use.  And it will now be used by her to provide the medical and residential care she needs at this point in her life.

dayn2nite2

She needs her money for her care.  Why are you worried about getting money after she dies?

Her money is HERS.  Use it for her care.  There is no inheritance with Alzheimer’s.

jnmiller324

I do worry about protecting her money for the sake of my children’s future. She has them as beneficiaries for their college funds. She was never able to do this for me and she wants to do this for them. I know it is for her care, but I don’t want to get taken advantage of by a facility because she has a little bit of money. I have no idea what the future will bring for her or how long it will last. My grandparents have Medicaid and they are left with $60/month for bills, clothes & toiletries in their facility. My family has to pick up the rest of her monthly costs. I don’t want that for my mom. I want to be able to access her money safely & protect what I can so she doesn’t end up like my grandparents. 

We are in Michigan and unknowingly applied for Medicaid earlier this year when I got her insurance through the marketplace. We thought the paperwork was part of her social security paperwork & no one from the state would call me back. I was told her Medicaid is for health insurance and is only income based, not asset based. She should get Medicare in 1 year.

Kibbee

It is her money, for her needs.  Your children and their needs are not the priority.  They can take out loans and work part time to get through college.  She cannot take out a loan to get through her medical crisis.

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harshedbuzz

jnmiller324 wrote:

I do worry about protecting her money for the sake of my children’s future. She has them as beneficiaries for their college funds. She was never able to do this for me and she wants to do this for them.

Sadly, she didn't execute a plan that would have made that a reality. She could have started 529s for them at birth and made small contributions outside of the 5-year-lock-back or purchased LTC insurance. My dad had planned to be a generous benefactor, but he never took the steps to make it happen as he was convinced I'd "put him in a home". My concern was more about preserving assets in order that my mother would have good care in the likelihood she needed to be in a facility. She has COPD, heart failure and will likely lose her vision but she's cognitively intact and it would break my heart if she had ended up in a dump after dad burned through the money. 

 I know it is for her care, but I don’t want to get taken advantage of by a facility because she has a little bit of money. I have no idea what the future will bring for her or how long it will last.

Having a "little money" is a very good thing. Should she need to go to a MCF, you will have a much better range of options than someone who needs a Medicaid-funded bed from Day 1. Many of the nicer places operate under a business model in which a person will be self-pay for 2-3 years after which they will transfer to a semi-private Medicaid bed in the same facility seamlessly. Her assets will enable to you place her somewhere presumably nicer and closer. 

My grandparents have Medicaid and they are left with $60/month for bills, clothes & toiletries in their facility. My family has to pick up the rest of her monthly costs. I don’t want that for my mom. I want to be able to access her money safely & protect what I can so she doesn’t end up like my grandparents. 

Sadly, this is the reality for many.

I hope the attorney you consulted was a CELA. If not, you may want to find one who is.

jnmiller324

I am doing what she wants with her money. She wants much of it put aside for my kids. She doesn’t want to lose everything in 1-2 years that she’s worked her life for. She wants my kids to have a better start than she could for me. All I’m trying to do it protect some of her money so she doesn’t lose it all.

M1

You definitely need expert legal and financial advise.  Unfortunately you are probably not going to like the answer.  She is almost certainly going to have to use her available funds mostly for her own care.

Jo C.

Hello and a very warm welcome to you.  This is a very trying situation for a person who is not well versed on how all of this works and the reality can be a rude awakening.   Elder Law is the specialty that best addresses Elder Law; but they do not have any magic wand to make things perfect and above Michigan law.

Personally, I know of no way you can take her money and place it in a Trust for yourself and your children.  Your attorney would in all probabilty have already addressed that with you.

Your mother wanted things a certain way for after her death; and if all had gone perfectly and dementia had not occurred, then perhaps it would have worked out as to how you have wished it to be; but things did not happen perfectly.

It is shocking to hear and to begin to understand, but your children are not entitled to your mother's assets nor are you entitled to them. Your mother is not "losing" her money; it is there for her in its entirety. She does not have a "little bit of money," she has a lot of money. 

By now, your mother's brain has been affected by the damage dementia brings.  Her logic, her reasoning and her judgment are now compromised. What is in place is what is in place.

The idea that she can now "gift" $10,00 a year to each person is not something that will in all probability be able to be done.  In many states that counts against the five year lookback and as it is, your mother will not have the capacity to do this, thereby bringing into question, financial abuse of the elderly laws of the state.  I would not go there.

Michigan does indeed have a five year "look back" period.  In this, if any money is hidden, transferred, changed, gifted, spent on others, etc.; she will be denied Medicaid.  If this happens, she would be without and if she needs care, the only option would in all probability be for family to pay for the care themselves OR for family to take her into their own home and care for her there.   It would be foolhardy to try and game that five year look back; government computers talk to bank and tax computers, etc.  One also needs to stay far above the statute for "financial abuse" of the elderly by sliding money; laws are strict and carry mighty penalties including up to time in jail .

As others have been informing you, and I understand it is hard for you to hear this; it is HER money.  She does,for her own best interests, need to have her assests applied to her care. Back in the day she could have not foreseen that this dementia would have happened; it is not business as usual whatsoever; things have changed.  By the way, the facilities are NOT taking advantage of you - that is not rational.    There are indeed fees for the cost of care. AND . . . why should the citizens of the state have to pay for someone's care who can well afford to pay for it themselves; that is not ethical nor is law going to permit it in most if not all states.  If everyone did that, there would be nothing left for the truly needy elderly.

Your mother's savings will permit her to have an open choice of faciliites; she will have a higher level of care; she will have more staffing, she will have a better environment with more comforts, etc.because she will be in a private pay facilty which most often will have so much more than most Medicaid facilities; that is a general overview and while there may be a difference in some, this is the way it works most times.

Your mother will have many more choices of facilities being private pay, and be able to be cared for in a much more comfortable and most often better quality facility. It is about her very quality of life.  I will repeat that; it is about her very quality of life.  I am sure you would not want to compromise that just so someone else can use her money for themselves no matter how it is to be used; that would be questionable ethics; and in my thinking, unconscionable.

You mention that your mother's condition is rapidly declining.  In Young Onset, very often the disease is more rapid to the end of life.  You mention she will need placement soon; I so hope that you will not fight her having the assets applied to her care which will probably outlast her; as it is, it appears that there is no getting around that anyway.  Remember; it is about the quality of her life and the quality of her care for the life she has left; that is huge.  

It is a point in which you will soon need to face the unexpected reality.  Her money is not an entitlement for you; nor is it an entitlement for your children. As said, this was an unforeseen situation.  Whatever is left in her accounts when she passes is what will come to you legally and fairly.  My husband and I have our various savings and our 401's with our children as our beneficiearies; BUT it will go to our care needs if it is needed and probably will be, and whatever is left after our deaths will go to the children.  Our children understand that and do not feel entitled.

Reality is reality; some things are just out of our power.   Children will find and have a path to  college no matter what; you will be supporting yourself; and in the meantime the right thing will have been done for your mother and her quality of life needs according to the laws of Michigan and in what is best and ethical.

J.
 

harshedbuzz

jnmiller324 wrote:

I am doing what she wants with her money. She wants much of it put aside for my kids.

She is no longer competent to make that decision as she doesn't understand the Medicaid implications of what she is asking you to do because she has dementia.

My dad dearly wanted me to keep his house in Florida. I was able to rent it for a time, but costs of taxes, insurance, maintenance, agent commission and such made it not worth the money. I never told dad I sold it and he went to his grave believing I would eventually have a place in Florida. 

She doesn’t want to lose everything in 1-2 years that she’s worked her life for.

She's not going to "lose" it, she is going to spend it on care when she can no longer take care of herself. The system isn't set up for tax payers to fund care in a facility who'd rather spend the money on grandchildren. 

A CELA can talk about strategies to set aside a small amount monthly. I recall mom's CELA explaining that she could "gift" up to $499 a month in the 5 year lookback- that meant she spread her charitable contributions, birthday and Christmas spending across several months to avoid hitting $500.

There is also a loophole that can allow a child who lived with their parent and provided a level of care that kept a parent in their home as opposed to a SNF for 2 full years to inherit the home. A CELA can explain how that might work.

She wants my kids to have a better start than she could for me. All I’m trying to do it protect some of her money so she doesn’t lose it all.

That's a lovely sentiment. But it may not be possible. In your shoes, given that she's already needing help in the home, I would allow her to think that her dream will be realized but keep things legal. I told dad all manner of fiblets about Medicare paying for home health aides and the "fancy rehab" his doctor wanted him to go to (aka a memory care facility). 

I know none of us are telling you what you want to hear. This is just one more way in which dementia sucks. 

HB

jfkoc

A welcome from me too.

Your best best is to seek legal counsel. Check this out to see if you can find one here;

https://www.naela.org/

They will do their best to meet your mother's goals. They can set up all the legal documents for you.

Trusts, 529, DPOA (it may be too late for this) Medicaid etc. All need expert advice.

https://www.misaves.com/

There will in all likely hood not be enough for a live in facility and tuitions. What you will look  for is the best solution but do it with an attorney who specializes in just your kind of situation. 

None of this is pleasant or easy but you can do this!

ladyzetta

I am sorry this is all hitting you so hard. I would have loved to have all the money your Mother has when my DH went into MC. We did not but he qualified for Medicaid. He got real good care but I would have loved for him to be able to get the choices and the quality of care your Mother will be able to get. You Mother deserves the best of care and my DH did as well. Sorry

Cynbar

The only way to safeguard that ,money is to take care of her yourself. That is the sad reality here. If she goes into a facility, she will be eligible for Medicaid when her assets get down to $2000. After that, her income would go to the facility and Medicaid will pay the rest. Medicare when she gets it will not help her, it doesn't cover custodial care.  I wouldn't do the Medicaid annuity, EOAD does sometimes move quickly and it's possible some of the money might be left. I am sorry this is so difficult for you, many of us have faced the reality that money we worked so hard for is not going to be used for college tuition, vacations, or other dreams we have had. As said above, this is just another reason that dementia is such a terrible, soul crushing disease.

Quilting brings calm

$300,000 on investments, which will gain over time. A pension and most likely social security too?  Your Mom can go to an ASL or memory care for years on that.  I might even guess that she won’t ever go on Medicaid. 

I’m sorry but I agree with everyone else, it’s her money to be used for her care not yours. What you are demanding  is that the entire nation of taxpayers contribute towards her care so that she doesn’t have to. So that your kids can go to college  without loans, while the child  on the poor side of  town can’t go to college at all. maybe  even goes without a need because their parent pays more in taxes to take care of your mom.

Medicaid is for people who no longer have  money.  My parents will go on Medicaid after 5 or more  years from now  but only after their care  has been paid for as long as possible.  They have savings of less than 90,000 and a monthly income of $4500.  They are paying their own way in an ASL right now slowly drawing on that savings to supplement their monthly income. 

By the way, I don’t mind my taxes going towards people who need my help, your mom doesn’t need my help. 

towhee

You are experiencing what amounts to a natural disaster and you might not be thinking so clearly right now. It is hard when reality can't meet expectations that we have had for years. Please take a few deep breaths and consider some things.

One- you really need to speak to an attorney who does elder law and who knows the different levels of care and their costs. Go to nelf.org.  Yes, a certified elder law attorney is expensive, and you might have to talk to more than one, but you need someone who knows the area facilities and will talk to you about how things work, as well as medicaid planning. Do not at this point expect any attorney to say you can put things in a trust for your children, they know it would disqualify your mother for medicaid for the next five years. You also need to learn about excluded and non excluded assets.

Two-Your mother is only now needing care in her home, so if she goes into a facility it is going to be assisted living or memory care, not a nursing home. Cost will probably be between 4-5 thousand dollars a month. Her income will probably cover nearly all of that. If she owns a home it can be rented for additional income. Some AL/MC will care for a person all the way thru hospice and it is not impossible, though unlikely, that your mother will never be in a nursing home. 

Three-you will have choice of where she is placed. You will be able to choose somewhere reasonably close, so that you can visit and go to the hospital when necessary, without taking too much time off from work, and choose what will meet your other needs.

Four-and very important- you say that your mother has retirement funds from which she now gets no income. You need to check with that lawyer what might happen if she is 65, in a nursing home on medicaid and starts getting income from those accounts.

Five-you say that you want your mother to be able to have a few extras if she ends up in a nursing home. That is understandable. In my state, since your mother is under 65 and on disability, there is a way to do that. There are lawyer fees to set it up, and it is time consuming and expensive to administer, and what is left over is used to pay back medicaid, but only for the amount medicaid has spent on your mother. I do not know if it can be used in Michigan. Talk to that CELA lawyer. Don't get hung up on having to pay back Medicaid. In rare instances it works out that you can be a good ethical citizen and still have a little left over. 

Six-Do what is best for your mom, and the rest will work out.

dayn2nite2

jnmiller324 wrote:

I do worry about protecting her money for the sake of my children’s future. She has them as beneficiaries for their college funds. She was never able to do this for me and she wants to do this for them. I know it is for her care, but I don’t want to get taken advantage of by a facility because she has a little bit of money. I have no idea what the future will bring for her or how long it will last. My grandparents have Medicaid and they are left with $60/month for bills, clothes & toiletries in their facility. My family has to pick up the rest of her monthly costs. I don’t want that for my mom. I want to be able to access her money safely & protect what I can so she doesn’t end up like my grandparents. 

We are in Michigan and unknowingly applied for Medicaid earlier this year when I got her insurance through the marketplace. We thought the paperwork was part of her social security paperwork & no one from the state would call me back. I was told her Medicaid is for health insurance and is only income based, not asset based. She should get Medicare in 1 year.

Too late.  She didn’t protect her money, now it has to be spent down.  Follow attorney instructions.  The only way you can put her money aside is for you to assume the entire cost of her care out of your own pocket.

The decision is not hers or yours to make when you’re eventually asking taxpayers to pick up the tab.  First she exhausts her assets to the required minimum and then the state takes over.

aod326

As others have said, sadly you're not going to hear the news you would like to. The costs of caring for a PWD are huge, and there is no magic safety net. That's shocking, but true. 

In the same way that your mother wanted her money to go to your children, my DH wanted my 401k to be enjoyed by me - not a big chunk of it to be used to pay for his care. 

It's lovely that your mother wanted to help your children, but her rainy day came first.

Good luck.

newbloomer

I don't know about Michigan but you could ask the lawyer about a non-negotiable promissory note and security agreement. It is legal in Indiana.

Cynbar

newbloomer wrote:

I don't know about Michigan but you could ask the lawyer about a non-negotiable promissory note and security agreement. It is legal in Indiana.

What is this? 

The4thOne

I feel you in your 'WTH' moment.  When I started to investigate the whole process for moving Mom to her next level of care, I, too, was angry and frustrated by the counsel that Medicaid was her best bet.  She had insurance, she had savings, a pension.  The idea of 'taking her pension, savings and insurance, was an injustice to me. I felt 'well, they can take the SS check, but I need to protect her pension and insurance policies; she worked hard for the gifts she wanted to leave!'  I sought all kinds of advice, but eventually I fell at, 'well if we were to try to pay for her long term care and on what she had, it would be 3x per month than what she gets, and her savings would be gone in 2 years at best, forgetting having to pay for everything she possible needs from home health care to Depends, would be out of pocket. to a disintegrating health issue. I reconciled that for all of those years that she worked hard for savings and pension, she also paid taxes and into every government tax requirement that funds those programs for more than 60 years. She had invested in her LTC on those payments she HAD to pay.  We easily have her personal expenses covered, (clothes, phone in her room, favorite snacks, etc).  But her professional care, roof, meals, medicine, transportation to and from doctor visits, managed store outings, social outings, behavioral health were all being taken care of and monitored in a safe environment.  The math and logic let me exhale on relinquishing her assets. There were some immediate things I was able to do. but I feel your pain.  It is a process of allowing that all that she had was for a rainy day - well a Cat 4 hurricane is on its way, and you don't know the extent of its damage, nor how long it will last.  And it is going to blow through those 'plans and intentions' like the storm this illness is.  Let them go and get under the Medicaid umbrella.  It's not what you want, I know the feeling, but it has the best option on weathering the time and damage the storm will bring.  The kids will be fine.

newbloomer

https://www.legalzoom.com/articles/when-is-a-promissory-note-negotiable

best description I could find. 

Cynbar

Thanks, I did read it but still have no idea how this applies to facility placement and safeguarding assets. Can you just give a brief overview?

harshedbuzz

newbloomer wrote:

https://www.legalzoom.com/articles/when-is-a-promissory-note-negotiable

best description I could find. 

Could you expand on how a loan instrument relates to paying for long term care?

Also, Legal Zoom is not substitute for a CELA practicing in your specific state.

Quilting brings calm

I also do not understand what a promissory note ( negotiable or not) has to do with paying for long term care or being eligible for Medicaid. 

I have the impression that someone thinks a promissory note could be made from the grandmother to the grandsons agreeing to pay for their college and that that promise would somehow  keep the money for the grandkids instead of going to the grandmothers care. So that Medicaid would  pay. 

My thoughts are that Medicaid  would still consider this a gift.  Grandma is not legally liable to to pay for anyone’s college and a promissory note isn’t going to make it any different.  

My thoughts also are the same as a post I made earlier and then deleted because I hadn’t been tactful.  Medicaid isn’t for people with money to pay for their own care. It’s for those who have no more money to pay for that care.  Medicaid is funded by taxpayers. Taxpayers who give up luxuries ( or wants or even needs) to pay for the nations’ necessities. I do not begrudge my tax money going to Medicaid. My parents will be on it someday if they live long enough. Right now their money is going for their expenses, including assisted living. That’s as it should be.  I don’t expect to inherit a dime and I don’t resent anyone for that.  

What we are doing for our children is paying  the premiums for our long term care insurance and managing our investments so that we have money to pay for our care when the time comes.  If we die before it’s all gone, then the kids get it. If not, then they could feel comforted  knowing we were well taken care  if in facilities for as long as the money lasted and then on Medicaid afterwards. I do not want either of our sons to have to take us into their home.  That’s my gift to them.  They are expected to take care of their own children. 

star26

The promissory note arrangement, sometimes part of an irrevocable trust, can protect assets from being counted in a Medicaid asset determination and ensure the money goes to the beneficiary and no one else BUT it has to be arranged prior to the Medicaid look back period and the asset owner has to be competent to make such an arrangement. Neither applies to this situation. 

newbloomer

RE: legalzoom.com

I only got that information off that site because someone wanted an explanation.  I paid big bucks to a lawyer that advised me and even said Medicaid makes the rules. It is legal.  I did not take advantage of taxpayers. I am also a taxpayer. I suggest if anyone wants more information they should contact their lawyer for answers.

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OutsideLookingIn

jnmiller324 writes: We are in Michigan and unknowingly applied for Medicaid earlier this year when I got her insurance through the marketplace. We thought the paperwork was part of her social security paperwork & no one from the state would call me back. I was told her Medicaid is for health insurance and is only income based, not asset based. She should get Medicare in 1 year.  

I'm wondering if you are confusing Medicaid and Medicare (easy to do as they sound a lot alike).  Medicare is health care insurance for those eligible for Social Security and generally starts at age 65 (even if SS benefits haven't), unless the person is declared disabled before that age.  It is usually just one rate, although if income is over a certain amount (which it doesn't sound like is your mother's situation), there is a higher rate.  Your mother would definitely qualify for disability, so the only reason to wait a year is if you are waiting to receive full benefits if she isn't 65 yet.

Medicaid, on the other hand, is health care insurance for persons of any age with limited income and, in some situations, limited assets. It is federally funded, but states determine eligibility and coverage.  As has been previously stated, there is definitely a maximum amount of money a person may have (states vary) and the 3-5 year lookback at spending.

Medicare does not cover memory care or caretakers coming into the home.  Not sure about Medicaid.

As for your children's college education, unless she has funded a 529 account, those funds are not considered your children's.  If there is a 529 account, those funds are the children's already (can only be spent on education) and don't figure into your mother's assets (as far as I know).

An experience attorney in elder law (certified is preferable, but they are hard to find IME) is really who can help walk you through this.  Will cost something, but may save you more in the long run.

Best wishes to you.  This is NOT easy in any aspect.  Sorry you find yourself in our club.

OLI

Jenflex

"Millions for [legal] defense; not one cent for XXXtributeXXX caretaking."