Medicaid CAN and WILL acquire the house if it goes into PROBATE. All States have an Estate Recovery Law to recoup costs of daycare and nursing homes. See an eldercare attorney to ensure nothing goes into probate. Lady Bird Quick deeds will transfer ownership after death without probate. The estate recovery law applies to anybody age 55 and over and on Medicaid.
Life estate never mentioned as it is a non money maker for attorneys. Medicaid can not touch the house and life estate simple process. Must be done prior to look back period which is 5 years in most states. 3 in some.
Bld567 - if you are referring to a “lady bird” type of Deed my understanding is that this type of deed - aka “Enhanced Benefit Deed” - are just in a very few states. The homestead passes outside of probate for LBDs so in theory outside of estate recovery/MERP. I think it’s only 6 states that even do these. TX, FL, MI have them. State legislators can change laws & rules and often do, so they may have to be re-evaluated to be ok for any rewrite of state administrative code. Plus it’s not just automatically done, it will need to be filed for after death and in my not-an-atty opinion that is an issue for attys as family / heirs may not do the follow up to get paperwork done. It’s to me the same reason why Testamentary Trusts aren’t often done. Doing a Trust now, especially an irrevocable Trust, means that’s its done, assets transferred and retitled, so doesn’t matter when they die as the trust is it’s own freestanding legal entity. I think that why attys promote Trusts.
Also remember that the heirs - as per the Lady Bird - have to be able to afford all property costs on the not-in-their name property. Your parent once on LTC Medicaid is required to pay almost all their monthly income less the smallish personal needs allowance to the facility. They will have no-none-nada of their $ to pay any property costs realistically ever again. So taxes, insurance, utilities, maintenance etc are all on you. Horrors if there is still a mortgage! If someone lives in the house, medicaid may want them to pay fmv rent & that rent becomes income for your parent; plus rental income has taxes to deal with. If there are several heirs & if some of them refuse to pay property costs, then the more responsible other(s) will have to pay BUT all benefit as per the terms of the Deed.
Keeping a on Medicaid parents home can be done but families must - in my experience - be able to pay & pay by their future % ownership for whatever property costs are, have $ for any emergencies and be able to deal with the post death whatevers to get property transfer done & deal with estate recovery if need be. Our folks don’t have an expiration date, so it could be 5 mo. or 5 years of property costs that must be paid. There’s been a couple of posters with empty, vacant houses with TX Lady Birds done before Medicaid ever applied for. Thier parent each in NH under Medicaid about 2 years. They had siblings who did not contribute financially, so the dpoa sibling shouldered all costs & paperwork..... yet all benefitted equally in the eventual sale of the home & a home without any Medicaid Estate Recovery needed to be repaid due to the Lady Bird.
Although imo whether it’s useful for most coming to this site is iffy as the suggestions require assets and planning. Most of us, myself included, do not deal with “dads / mom’s situation” till there’s a tipping point or a real crisis and they cannot really move back home...... after his hospitalization from a fall, her wandering, his leaving gas running on the stove.... it’s crisis planning. After being on AC over 5 years now it sadly seem to be that family finds themselves in crisis situation for a over 80 widow or widower parent who own a old home (often with decades of delayed maintenance) and at best lucky to have 50k in savings. The elder flat does not have mid6 figures to do any ahem... creative financials or pay for professionals like estate attorney or Wealth Advisor. Mom or dad is hospitalized and abt to go to NH for rehab OR that rehab ends like manana. It’s a crisis situation. Their income is SS and perhaps maybe another retirement or pension income. There’s no deep savings, stocks or other investments to divest into annuity or trust. Their only significant asset is their home and its not a up to code 400k condo at the beach but rather under - perhaps way, way under - 150k old home that hopefully does NOT still have a traditional mortgage, HELOC or a Reverse mortgage on it. Realistically the choices for this situation are stark.... they legitimately spend down the 50k and sell the house and spend down house sale $ to qualify for Medicaid. If elder wants to keep the old homestead they can as Medicaid allows home to remain exempt asset for their lifetime but family - even if caregiver family - have to assume all property cost$ from day 1 of medicaid. If family / heirs can not afford their elders property costs & for an undetermined period of time, then even thinking about keeping the old homestead is a waste of time & $.
Why did you not mention a Life Estate Deed, which preserves one’s home for their beneficiary? Medicaid can not touch a home in a Life Estate Deed unless the home value exceeds a certain amount. In Colorado I think the threshold is around $500,000. It makes me so angry when lawyers only mention trusts as an option. I met with 3 attorneys and they all wanted to do a trust on my home. None mentioned a life estate deed. I had to do a lot of internet research to discover it was an option. A life estate deed costs a couple hundred dollars, whereas a trust costs thousands. Therein lies the motive. It’s sad when lawyers don’t provide full disclosure to people.
Unless you are a millionaire, you are better off not saving anything. Just keep a few thousand in the bank in case of emergencies. The rest of it blow it on a good time because the government will seize it when you get old. It's a fact.
People with Alzheimer's can live many years and as a caregiver you give up your life and career caring for a feeble, confused and many times combative (when you want them to do basic hygiene like go to the toilet--they will fight you all the way). I tell people put them in a nursing home (unless they are millionaires, which case you can afford to hire around the clock help) because your life will be miserable and you will sacrifice everything..including your retirement. Then your siblings will not even consider what you had to put up with and what you sacrificed and want a piece of the money pie. Siblings don't have to do the work so they think care is easy. Put them in a nursing home and let them have all the assets. It's best for your own peace of mind.
Strategy 3 does not work in all states. E.g., in Massachusetts, the penalty period starts when you would have "otherwise qualified," meaning you are down to your last $2000. In the article's example 3, the mother's penalty period started on the date of the gift of $100,000, and she used the other $100,000 to pay for her care during the penalty period. In Mass. she would have spent the $100,000 on the first 10 months, then she would need another $100,000 to pay for care during the penalty period, which runs from months 11-20. But she gave away that $100,000, so she would need to get it back. Might as well use the $200,000 that mom started with to purchase a 20-month annuity. The annuity advantage is that you get on Medicaid sooner, and Medicaid pays the nursing home a lower rate, so mom's money "could" last longer.
his article and many others that you send are most helpful as my husband's dementia increases and I may face needing more outside care. Thank you so much for the help
I agree with George O. Just to add to that, one has to be very careful and comfortable with giving away assets - you will have no legal right to get them back. Also, if the person quickly takes a turn for the worse, and the five-year look back period comes sooner than one thinks, they will likely end up with no means to pay for their care, as they will be barred for a period of time from Medicaid and will have given away all of their assets. (The person that they gave the assets to could make them available, but that's not a given.) In short, seeking asset protection while also trying to be eligible for Medicaid and making sure that you have adequate care is a very tricky and risky thing. Sometimes it's best to just avoid the altruistic attempts at asset protection and use your assets via a reverse mortgage, etc., clearly qualify for Medicaid and stay in your home or a NH getting the care you need.
If dementia patient is in nursing home with just asset is what she has saved, there should not be any problem with allowing Medicaid taking what is hers. Peace of mind for patient to have housing and medical is what's important. That money is not entitled to anyone else, it's her money. I thank god my mom was Medicaid approved. I don't want her money, it's not mine in the first place.
I am constantly hearing about asset protection strategy on Medicaid. If you go too far on the strategy you could end up with only two beans in your pocket. Not everyone is comfortable with giving funds away and the five year lookback applied can be limiting. Now I don’t claim any expertise on asset protection regarding Medicaid. My only suggestion would be not to rule out all of your options when you plan. For instance, you can use a government insured reverse mortgage to pay off an existing mortgage and free up monthly funds for living. In essence, you have created your own annuity. In addition, a reverse will allow you to create additional access to your home equity without affecting the Medicaid if you do it properly. The key is to establish a credit line for emergencies when you need it as opposed to accessing your home equity and plopping the money in a bank account. If you create an asset outside of your home versus my suggestion of the credit line then you more often than not will have adverse issues with Medicaid. You can always check with your provider and ask the question before considering a reverse mortgage. This is what we have done for many of our clients. The reverse credit line does not interfere in most states and it provides an added level of security and peace of mind. Having said that, If we all know exactly what our needs were going to be and exactly how long we were going to live then we wouldn’t need to have this conversation.
I think it needs to be noted that if a family member is being paid, they will expect them to do it for less than someone else would, if not for free. A number of years ago I had the experience of providing transportation services to a doctor for an adult sibling with a child and they did not reimburse me for the service.
So glad my parents and I went to a legal elder law attorney. I gave up my career and potential retirement to be the sole caregiver. My sibling was doing well financially and was the one to insist I relocate, move into their home to care for them with the understanding he would always be available to come home and help when needed and I get the house for giving up everything. I did not come out of my divorve with much on long term security. Because I lived in their home without financial means to relicate into a jome of my own, I was able to legally purchase their home after 2 years of living there and the 5 year look back of Medicaid was negated. When I did call my sib for help, he was never available to help. The sib arrived after our father passed away and has since commented that the sib now wished there had not been complete agreement I have the house. When our mother twice in a year was in critical care and almost did not pull through, I was tge only one sitting at her bedside with her and caringvfor her 24/7 when she came home. She has dementia now but even as tiring as ot is at times caring for her, I wouldn't give up the precious time I have with my 90 year old mom. Just be sure tobprotect yourself and your heart.
If a house was put into a family trust in 2001 and in 2012 the surviving parent is considered incompetent, is that house was to be sold now would that affect Medicaid?
I found out after several years of caring for my mom that I could have gotten my mom's house because I took care of her several years, including the last 2 that the law would apply to me getting it. We had no contract, I just lived with her and took care of her. Her attorney enlightened me on this law. My siblings would have no part of it. They were so worried I might get one penny. Things got extremely ugly and one controlling rich brother took over. I hope he the "christian" he professes to be, rots in royal hell!
They illegally tried to evict me out of her house-I was smarter than them and the law applied giving me more time to leave. To think that I gave up so many work opportunities and life opportunities helping her, while they went about their lives is kind of sad.. It is tragic that families can be so evil and lacking in civility to their own blood. I could have used the money from her house, but it was never in my intentions when I was helping her. I only found out about the law after she fell and could not return home. She is now in assisted living and in a demented state.
The siblings took over in an ugly way, and turned my demented mother against me. I have not seen her now for over 4 months. I hear from her friends she bad mouths me and they report to me that it is repetition from what the sibs have said. I feel sorry for them that they are so down and dirty. They lack soul and conscious. I cannot imagine how they live with themselves. They were like Nazi gangsters sticking together. Not one stood up for me as they were all guilty of not being there.
I have left the country and am enjoying myself and healing from the sadness that my mom turned against me (though I know it is her dementia and brain injury), but as my friends, her friends etc. and I know, in her old self, she knew the truth. And I know with no regrets, that I helped her. Sad to know that if siblings had been decent, I could have been better off financially and rewarded for what I did, but it is what it is, and my regrets are none, except career sacrifices. I am enjoying myself now.
What about having the spouse that dies first having a will that transfers all of his assets to the living spouse in a special needs trust to be managed by a child . this makes the living spouse eligible for medicaid. After the second to die.any remaining funds are transfered int o the family trust to be divided among the children . Supposedly this protects most of the funds that had originally been in a family trust to go back into it and preserves the funds for the children. Have you ever heard of this way to keep some funds from the nursing home?
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Top 5 Strategies for Protecting Your Money From Medicaid
Also remember that the heirs - as per the Lady Bird - have to be able to afford all property costs on the not-in-their name property. Your parent once on LTC Medicaid is required to pay almost all their monthly income less the smallish personal needs allowance to the facility. They will have no-none-nada of their $ to pay any property costs realistically ever again. So taxes, insurance, utilities, maintenance etc are all on you. Horrors if there is still a mortgage! If someone lives in the house, medicaid may want them to pay fmv rent & that rent becomes income for your parent; plus rental income has taxes to deal with. If there are several heirs & if some of them refuse to pay property costs, then the more responsible other(s) will have to pay BUT all benefit as per the terms of the Deed.
Keeping a on Medicaid parents home can be done but families must - in my experience - be able to pay & pay by their future % ownership for whatever property costs are, have $ for any emergencies and be able to deal with the post death whatevers to get property transfer done & deal with estate recovery if need be. Our folks don’t have an expiration date, so it could be 5 mo. or 5 years of property costs that must be paid. There’s been a couple of posters with empty, vacant houses with TX Lady Birds done before Medicaid ever applied for. Thier parent each in NH under Medicaid about 2 years. They had siblings who did not contribute financially, so the dpoa sibling shouldered all costs & paperwork..... yet all benefitted equally in the eventual sale of the home & a home without any Medicaid Estate Recovery needed to be repaid due to the Lady Bird.
After being on AC over 5 years now it sadly seem to be that family finds themselves in crisis situation for a over 80 widow or widower parent who own a old home (often with decades of delayed maintenance) and at best lucky to have 50k in savings. The elder flat does not have mid6 figures to do any ahem... creative financials or pay for professionals like estate attorney or Wealth Advisor. Mom or dad is hospitalized and abt to go to NH for rehab OR that rehab ends like manana. It’s a crisis situation. Their income is SS and perhaps maybe another retirement or pension income. There’s no deep savings, stocks or other investments to divest into annuity or trust. Their only significant asset is their home and its not a up to code 400k condo at the beach but rather under - perhaps way, way under - 150k old home that hopefully does NOT still have a traditional mortgage, HELOC or a Reverse mortgage on it. Realistically the choices for this situation are stark.... they legitimately spend down the 50k and sell the house and spend down house sale $ to qualify for Medicaid.
If elder wants to keep the old homestead they can as Medicaid allows home to remain exempt asset for their lifetime but family - even if caregiver family - have to assume all property cost$ from day 1 of medicaid. If family / heirs can not afford their elders property costs & for an undetermined period of time, then even thinking about keeping the old homestead is a waste of time & $.
They illegally tried to evict me out of her house-I was smarter than them and the law applied giving me more time to leave. To think that I gave up so many work opportunities and life opportunities helping her, while they went about their lives is kind of sad.. It is tragic that families can be so evil and lacking in civility to their own blood. I could have used the money from her house, but it was never in my intentions when I was helping her. I only found out about the law after she fell and could not return home. She is now in assisted living and in a demented state.
The siblings took over in an ugly way, and turned my demented mother against me. I have not seen her now for over 4 months. I hear from her friends she bad mouths me and they report to me that it is repetition from what the sibs have said. I feel sorry for them that they are so down and dirty. They lack soul and conscious. I cannot imagine how they live with themselves. They were like Nazi gangsters sticking together. Not one stood up for me as they were all guilty of not being there.
I have left the country and am enjoying myself and healing from the sadness that my mom turned against me (though I know it is her dementia and brain injury), but as my friends, her friends etc. and I know, in her old self, she knew the truth. And I know with no regrets, that I helped her. Sad to know that if siblings had been decent, I could have been better off financially and rewarded for what I did, but it is what it is, and my regrets are none, except career sacrifices. I am enjoying myself now.