My mother will be out of her savings (for assisted living) in about a year. A family member has generously offered to pay her costs when the funds run out for as long as she is living there, so she doesn’t have to apply for Medicaid. Are there any foreseeable problems in doing this? Family member said she could deposit $100,000 into my mother’s checking account so we can draw on it each month. She will add to it as needed. I’m wondering if this is a good thing to proceed with. Family member is very close, so I know she will honor her offer. I feel very fortunate that this can be done for my mother, I just don’t know if there are any tax issues or any other things that can go wrong, or I am not aware of. Thank you for any info you can give me.
I feel like you and the family member should see a tax professional to explore the best possible way to achieve this goal where nobody pays tax penalties. Since this person will add funds as needed, Medicaid down the road is not a concern, thankfully.
If the friend doesn't want to hassle with a monthly payment they can probably set up an ACH transfer monthly or she can set up BillPay through her own bank (where her bank snail mails a bank-generated check automatically every month if it's always the same amount).
Does this friend know how much AL costs per month? This friend should really get guidance from a financial planner about this...
I also would not have the money deposited into the mothers account but have the kind relative pay directly to the facility.
The things I can see, as someone with no legal training:
Any gift over I think $19k will be taxed. And I'm very sorry to say sometimes $100k doesn't go as far as you think. What will happen if and when that money runs out, will your generous relative be unofficially obligated to keep paying?
What is the concern about applying for Medicaid? Will mom have to move out of assisted living? Does she qualify medically for a nursing home?
It is very generous for the family member to do this so your mother doesn't have to apply for Medicaid... however, you need to be prepared for what may happen if that relative dies before your mother. She may need Medicaid at that time and you do not want to have to explain and prove past financial doings that have become complicated when they do the five year look back. Anything that goes into your mom's account and goes out would have to be explained and accounted for or Medicaid may be denied when she needs it most. In our state I don't believe Medicaid will pay for AL but she may need SNF in the future and that is a lot higher.
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