How can we transfer life insurance policies without violating Medicaid requirements

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Hi, my mom went a little overboard on life insurance policies, and was paying out more than a third of her Social Security check for life insurance (and almost half on credit card balances but that's another story). I took over one of the policies, and after some wrangling my brother took over another. A couple I cashed out and used it for her expenses. The rest I started paying on and have ownership of. The payments became unmanageable and I cashed out the largest policy. But...I have since learned that to qualify for Medicaid she is going to have to use up the cash value of all of these. None of this was done to dodge Medicaid requirements, just to make her finances more manageable and stable. Is there any way to justify the transfer of these policies on that basis, or any other basis?

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If the policies have cash value, they are an asset. You can cash them out and use them for her finances (paying on house items, mortgage whatever) you just cannot gift the value to yourself or your brother. As long as the cash is used for her benefit then it will not be a problem for Medicaid.

Angel
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Ribb - I answered this in the post you also did in "Financial". I'd suggest you & mom see an elder law atty ASAP & before mom applies for Medicaid. Mom is likely to have transfer penalty issues with the change of ownership of the policies PLUS whatever 1099 - C taxes & fallout on her CC debt. IMHO mom is past her kids doing her Medicaid application as a DIY project.
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