Grandfather is losing the VA pension due to inheritance - questions?

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I have been caring for my grandfather since my mother died a year ago. When Mom was alive, Grandpa qualified for this VA aid and assistance pension. He then received an inheritance from his sister, which knocked him off the benefit. He was obsessed with keeping this benefit, although the inheritance was quite a lot. We met with lawyers, some of whom recommended an irrevocable trust to hide his assets, keep the benefit, and keep Grandpa qualified for Medicaid. In the end, he didn't go down this path. His son (who doesn't do any caregiving) convinced him to simply drop the whole thing, take the money he was inheriting, and lose his benefit. The entire episode was ridiculously stressful for me, as I was accused of somehow trying to keep Grandpa's inheritance for myself through this irrevocable trust. I was investigating his options and learned a lot (which many of you already know I'm sure) about Medicaid and using irrevocable trusts to protect assets. It all seemed to make sense, but I was seen as a schemer.

So I am actually just wondering if others have had experience using these kinds of trusts to help divest elders of assets on paper. My uncle was convinced this was a horrible idea and a scam. Yet three reputable attorneys recommended this to us. In the end, my grandfather trusted his son's opinion. I really have no idea what is best.

On the one hand, it seems like my duty to my grandfather is to help him protect his assets. But his son has this philosophy that elderly people should simply spend all their money in their lifetime. I can certainly understand that.

There was a day that perhaps some of you can relate to. I was cleaning up Grandpa's poop off the floor after an accident (he takes off the disposable underwear and tends to leave little trails). At that moment, Grandpa started telling me all about his son's opinion of the financial situation. And also that the son thinks we need to get a maid--so why didn't I just call a maid and leave the poop on the floor? It was infuriating, because the son never visits, but of course his opinion is just gold. I went into a depression that lasted several days after that. I just couldn't believe this son was being believed when he has helped in no other way, and the son's opinion of me is so bad, when I do all the work.

However, I am really curious if he is right in this case. Perhaps we just keep the money liquid and hope for the best. If Grandpa has to go into a nursing home, he'll potentially use up the money and end up on Medicaid. That's essentially where the situation is now. He lives with my family and his expenses are covered by social security, an annuity, and the interest he will earn from his investments. But soon his expenses will outstrip his income.

He is 91. We don't know how long he has--no one does, I guess. But I get nervous thinking about all of his funds being drained. On the other hand, I can understand my uncle's point that this is what the money is for, and we shouldn't try to qualify for government benefits we do not need yet.

Thanks and I would appreciate your thoughts.

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Linda5 I am sorry about your mother, but I was not saying they were hiding assets, but meant be careful when dealing with a governemtn entity. As a 24 year retired veteran I have dealt with how the Veteran's Administration works. My comment was not meant to be cruel, but your comeback to me was somewhat harsh. My comment was more about VA Pensions and VA Aid and Attendence.
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Irrevocable trusts really are sort of hiding money, but they're legal. My uncle has a real problem with this. I understand that viewpoint.

I should probably start a separate topic about this, but my feeling is this. My grandfather paid into the system his entire life. He fought in WWII. He worked hard. Many seniors are like this. I don't think it's right that they have to spend every penny, down to $2000, on their own care at the end. The US spends billions of dollars invading other countries, bailing out banks, paying for benefits for many people, giving crazy salaries to public officials. But when it comes to elderly, law abiding citizens, they must impoverish themselves before they get any help at all. It's a crime. They can't leave anything for their kids--and these are middle class families. We're not talking about rich folks, in the case of my family.

So using trusts and annuities and whatever else--in my opinion, that is the way to go. Don't let nursing homes take it all. The US should take care of its own, it doesn't, and there is a legal way to protect your money. No brainer, the way I see it.

It's a great philosophical divide. Do we demand that seniors pay for their own care? Or do we allow them to pass on some of their wealth? And actually, it's not even just about passing it on. Those trusts are designed so that the senior can't take the money, except for interest in the case of Medicaid trusts. But the trustee can, and the trustee can do whatever he or she likes with it, including spending it on the senior. So the seniors pick someone they trust, and then the money is there for them when they actually need it.

Imagine a long nursing home stay the depletes all resources. Who pays, once all the money is gone, for the stuff Medicaid doesn't cover? In that case, the trust would have protected some money, not for the kids but for the elderly person.

I don't know why people are squeamish about this kind of planning. A great crime is being perpetrated against elderly people. They are being drained of all their wealth. Medicaid can even come back and get their houses after they die. I mean, it's ridiculous. The most vulnerable section of the population, literally with no voice. They are too weak to defend themselves and no one is representing their interests and telling this story. So nursing homes take all their money, and then the government comes back for their estates. It's wrong. Get around it if you can. Why be a sitting duck and lose all your money like that?
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JC Valley - seems you are getting great comments here. I found recently the VA was directly helpful. I was told the distinctions between what is "income based" and "what is an entitlement from years of service during war". Trusts are legal - but do need to be set up properly. (Ie. you probably want to use a lawyer for this, with rare exception.) - and - don't mess with the government and do anything illegal. Not worth it. You don't want to spend the next "x" number of years waiting for a call or letter to come....Do things right -and "You did the right thing" - explore all options, get professional opinions, and then make your decision. Log any professional opinions you got and who from. As for your uncle, unless he is professionally qualified to give an opinion, invite him to go with you or get his own legal advice. If anything gets questioned down the line by VA or IRS, you need to be able to say "who and qualifications" was consulted (lawyer, accountant, IRS, VA, etc.) - "My uncle says..." won't cut it. Good luck. (Is your Grandfather together enough still you can just ASK him to be an active decision-maker? Maybe he has a logical reason for pulling off the disposable undies, like maybe they are uncomfortable - itch, allergic to them, feel weird, etc? My father opted of women's pant shields as they were softer and just pinned them in his underwear. It worked til the end - age 93.)
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@ Debralee, No one said anything about hiding assets. She asked about a
irrevocable trust. When you sign up for Medicaid you have to show bank statements so there is not a lot of ways to "hide assests". Also having a
irrevocable trust is legal, if your not sure about some things then keep your opinion to yourself.
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VA aid and assistance is differnet from a VA pension. Va pensions are not conditioned to income level. VA Aid and Attention and medicaid are subject to income levels which include an inheritence. Hiding assets from a government entity for benefits is a felony. Your uncle is doing you a favor, those supposed lawyers are not.
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Just 2 weeks ago I made burial arrangements for my mother when the time comes with her money which is in a irrevocable trust. This was done because of the $2000 level for medicaid. If you are going to be the care giver then go to court and try to get guardinship of your grandfather. Sounds like the (good son),not, is wanting to help dear old dad spend his money and he will. If your grandfather is giving his money to you are anyone else to spend down for medicaid then he will not qualifily since they go back five years. Just keep doing research about medicaid and I would really think about being his caregiver. It is one of the hardest jobs that I have ever had.
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Just to clarify, we are not using a trust and so we are not qualifying for any benefits. That was the decision my grandfather made after talking to his son. And it may be the best decision. But I know that several lawyers recommended otherwise, and I am curious to know if anyone on here has used irrevocable trusts.
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You understand the situation correctly. However, a trust is not lying. When you give your money to an irrevocable trust, it is giving it away and preserving it for heirs. You are saying it is no longer yours. And people use these for estate planning and to "pre-qualify" for Medicaid. As you may know, if the elderly person needs nursing home care, they will pay for it until they only have $2000 in the bank before they qualify for Medicaid. And many people wish to pass on some of their money rather than pay it all to nursing care, so they shield the income with gifting to children or trusts.

So your understanding is essentially correct, and I think your moral apprehension is correct as well. I can fully understand the idea that people should simply lose all their money to their own care.

How did I get elected for the job? My mom did it until she died. Her brother never did it. Actually his mother-in-law is living with him, so there was no room for my grandfather. However, the son also doesn't really visit ever. When my mom died, my husband and I drove the 1.5 hours each way to visit my grandfather every week. The son never saw him. So the short answer is that no one else was available for the job.

I did have a contract when the VA benefit was in place, but I didn't actually take any money. However, later, my grandfather helped with the down payment on the house where we live now. So we have had a very informal family arrangement. I just read the thread on caregiving contracts and may try to figure out a more official exchange. I think it would actually protect me, in some ways. The son (my uncle) is very suspicious of me.
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I am not quite sure what you are asking - but I think that honest and integrity usually always take precedence over lying and deception. In this situation, according to the VA and medicaid regulations, it seems he doesn't qualify for benefits because of his inheritance - and you are questioning whether or not you should hide his assets (lie) so grandpa can continue to receive such aid?

What a blessing that he was given an inheritance to help care for his aging needs.

Now, regarding his caregiving, how did you get elected to do so, and not one of his children? Are you being appropriately compensated for doing so? If not, you need to sit down and get a contract in writing. You need time off as well and this needs to be addressed.

Bless you.
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