Life Insurance Policies

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What should I do if my mom refuses to sign papers to have her assets in life insurance spent down in order to qualify for Medicaid?

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3930 helpful answers
Do you have Power Of Attorney? Someone should have. This person can sign the papers for your mom. Otherwise, have a third party - financial person, spiritual leader, good friend - someone explain to her that this is the only way to keep her safe and that signing these papers is a legal matter that must be done.

Third party help is more effective in many issues, as it takes away the family dynamics.

Good luck,
Carol
I asked if my sister, who is her guardian as of November 20, 2009, could sign and they said no, she has to personally sign a letter stating she wants to surrender the policy (have a check written for the cash value of the policy), which would cancel the policy in most cases (except for one for her funeral and another that may be irrevocable that the compnay is doing some research on). I can't even stop the automatic amounts coming out of her checking account without having her sign a written statement. I am planning to have her sit down with me and the social worker at the nursing home to explain to her what needs to be done for her to be on Medicaid when the social worker gets back from vacation.
The social worker will know what to do if she needs to be placed in a nursing home as I was informed while starting the process for medicaide you have no choice or even if she is going to have medicaide for home care she has to give up her assests if a spouse in involved their life insurance is also cond sidered an assest for the one remaining at home it is not fair but medicaide do not care how poor they leave the remaining spouse they feel your savings and assests are for your old age and it is what it is the person get madicaide is now allowed to prepay their funeral which was not the case when my MIL was on mecicaide-but take if from me have the social worker or an elder lawyer paid for by your mother do the legwork for medicaide they will try to get you to do it and they can do it very easily while if you do it it is very hard and can be impossible since she probably did not keep papers necessary like 3 yrs of bank statements and if you refuse after she spends down they will do it very fast so they can get every penny out of her they did with my MIL without us lifting a finger they have all the resourses available a lawyer can do it in 5 hrs. and nursing homes have plenty of lawyers-while I was starting the process the social workers demanded so much for me to do -I had a meltdown and she took over-my husband died shortly after starting the process.
Like carol stated if you have the Durable power of attorney and are listed in the insurance policies and even in some states you don not have to be, you can call the insurance company up and they will send you a form. You will need to make a copy of the Power of Attorney and either a notary or bank stamp on the paper work. When my mom first was placed in a nursing hom in New York, I was in Florida. I had to leave my job because I found out about the Alzheimers/Dementia and I wanted her with my. However she had a house in New York . This nursing home placed a lien on the house, and I was also advised that in a couple of years some states where going to look into insurance policies. I had to sell the house the nursing home was charging over $12,00.00 a month plus a deposit of $20,000.00. She wass there for almost two years. All her bank accounts were closed and I open a legal rep account after being sworn in by social security. The most important thing that needs to be done is to try and get any assets placed in a safe place doing everything legal. If there a safe depoist box check that out also. look for policies that may have stock attached.. It takes time you have to look all over. You can also apply the money from the insurance policy for pre paid funeral plan. One thing to remember that I did not know that these State social workers do not help like you think they will. watch out. Good luck. There are so many people going through things that you can not even think can happen. stay with this web site I have even after my dear mom just passed. patrica61
429 helpful answers
Another idea is to convince your mom you want to buy the policy from her. Then she can feel that she's kept the policy in force, but it would no longer be a Medicaid asset once it's transferred to you (you would then become the owner, your mom the insured). In exchange, you give her cash, which can then be spent down (or, preferably, converted to a non-countable asset like a car or pre-paid funeral/burial, etc.). If you don't have the cash to pay her, you could borrow against your mom's cash value in the policy.
394 helpful answers
There are a couple of possibilities.
First, make sure that she is indeed the owner of the policy.
Do you have a Power of Attorney that names you and gives you the power to conduct this transaction on her behalf?
If your mom's objection is that she will "lose the money", and depending on the amount of cash value in question, here is another idea: Via a 1035 tax-free exchange (presuming she has a gain in the policy) surrender the policy for a Medicaid compliant immediate annuity that will pay out during her life expectancy or less. This will provide a monthly check which will be included in her income but will allow her to qualify for Medicaid immediately.
It may also be possible, depending on the face amount, to gift this policy to an irrevocable life insurance trust. Most states limit the trust value to $6,000.
Don't forget that she is also allowed to keep $2,000 in cash and a burial fund of $2,500.
And lastly, again depending on the size of the policy, the proceeds could be gifted to a supplemental needs pooled trust which would, once she on Medicaid, permit the funds to be expended on her health, maintenance, and welfare.
If you are in Florida and would like more information please visit www.RalphRobbins.com
Hmmmmmm. Wish I'd had the expert advice of Mr. Heiser when we had to spend down assets, and cashed 4 policies (mom's, dad's, mine and my sister's that dad owned for years). But can a transfer of assets be considered legal, without a lookback?

As Guardian/Conservator, I was able to do everything. All their assets were cashed in and paid for legitimate debts, and then dad qualified for Medicaid. Reliable guidance was difficult to come by at the time we were scrambling to help dad. Fortunately things worked out OK.

Question for Mr. Heiser, what about annuities that are joint, but only going to dad's nursing home. Hoping you can answer that one... Thank you.
394 helpful answers
There are a couple of possibilities.
First, make sure that she is indeed the owner of the policy.
Do you have a Power of Attorney that names you and gives you the power to conduct this transaction on her behalf?
If your mom's objection is that she will "lose the money", and depending on the amount of cash value in question, here is another idea: Via a 1035 tax-free exchange (presuming she has a gain in the policy) surrender the policy for a Medicaid compliant immediate annuity that will pay out during her life expectancy or less. This will provide a monthly check which will be included in her income but will allow her to qualify for Medicaid immediately.
It may also be possible, depending on the face amount, to gift this policy to an irrevocable life insurance trust. Most states limit the trust value to $6,000.
Don't forget that she is also allowed to keep $2,000 in cash and a burial fund of $2,500.
And lastly, again depending on the size of the policy, the proceeds could be gifted to a supplemental needs pooled trust which would, once she on Medicaid, permit the funds to be expended on her health, maintenance, and welfare.
429 helpful answers
Rsrobbins makes some good points! Swapping the policy for a Medicaid-compliant annuity can be a good choice, in the right circumstance.

I do note that in most states there is no official limit on the amount that may be protected in a pre-paid funeral/burial policy. So long as the money is permanently and irrevocably set aside for your funeral and burial, and is so used, then the state will permit it. Purchase of such a pre-paid policy is not a gift, so there's no penalty attached to such purchase.

I'm not sure I understand secretsister's question: how is the joint annuity titled and whom are the payments going to?
Thank you. I was able to set aside approximately $11,000.00 for each in irrevokable funeral contracts.

Mr. Heiser, concerning the annuity question: dad is on Medicaid, and mom is not. She is a "community spouse," with house, but living in govt. subsidized housing. For some reason, the annuities all go to the nursing home payments, and none to her. But they are joint annuities. I want to know why mom doesn't get half? They were giving her a "house/heat/whatever allowance, but recently took away 1/2 the annuity money that was going to her for that, and increased dad's patient pay amount. I'm thinking I need to have a redetermination, or do something different with their annuities, etc. What do you suggest?

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