My brother (who has POA) and I are debating the need for an irrevocable trust for my mother. She’s in an AL facility following a small stroke and we are in the process of cleaning out her condo to sell.
She has a car that she wants to sign over to my other brother. Other than house and car, about $90,000 in bank accounts and about $2,100 a month in SS and a small pension. We have no need of an inheritance from her. If we sell the condo, we’ll have money to keep her in the AL for several years. If she lives for any length of time (she’s 82), we may need Medicaid down the road for a SNF.
Do we need an irrevocable trust in order to qualify for Medicaid at some point? I know there’s a five year look-back, but I’m not sure what they’re “looking” at. We have spoken to a couple of elder law attorneys and they are insistent on an irrevocable trust, at the cost of thousands of dollars. I’m not convinced we need one. Has anyone been in a similar situation?
Does mom make to much income monthly to qualify financially for medicaid without a Miller Trust in place?
Regarding mom’s car…. her car is her asset. Assets are resources for how Medicaid looks at eligibility. If the cars title is transferred to another that is gifting of an asset which has value and is subject to a transfer penalty placed against a LTC Medicaid application. Details on autos, homes, land are all recorded at the courthouse and dovetail to State database. It’s a couple of keystrokes for a caseworker to find out all the details on these type of assets.
Say your mom’s car has FMV value of $32K and your State Medicaid program pays facilities $200 a day. That gifted car is abt a 160 day penalty period that Medicaid will not pay a facility where the elder is already living at as a “Medicaid Pending” resident. If this happens to y’all, is your bro fully prepared to private pay for those 160 days / not quite 5 months? If he won’t, are you going to pay for her stay? The facility DNGAF who private pays for her to stay there and pay any past due bill mom has incurred. But someone has to settle the bill and sign off financial responsibility for her to remain. The facilty will not blithely let mom stay there…. they will and can find a legit way to get her out of the place. Her bill still exists. All this drama will be in her health care history in some way. Admissions know how to read between the lines. So trying to get her into another place will be challenging.
Please pls pls find an attorney fully experienced in successful LTC filings. Sometimes asset protection can be done. But so often when admissions to a facility is on the horizon or has actually occurred, it’s too late to do creative financial moves. That ship has sailed. That your mom will have $ from condo sale to private pay enables her to have way more choices in where she can live. She is oh so fortunate.
Is her condo selling for so much $$$$$ that even after setting aside $ to private pay AL / NH, there’s still a ton of $ to place in an Irrevocable? To me, the amount of $ is the big factor if -IF - it makes sense to for her to do this. As there’s a risk she will outlive her $ before a full 5 yr lookback has passed. Especially if she has to leave AL and move into a NH/SNF. If she runs out of $ before the Long Term Care Medicaid lookback period ends, and she applies for LTC Medicaid, that Trust (and also that car if she gives it to her son) will be an issue for Medicaid as they can place a transfer (of assets) penalty on her application. There's risk. Was that explained? Planning for Medicaid eligibility is different than traditional Estate Planning.
The 5 yr lookback is a review of all your moms resources from the date of her LTC Medicaid application filing going back 5 years to determine IF any resources were used NOT of direct benefit for her OR if her resources were gifted to others. The application will have items Medicaid will require….. like 5 years bank statements &investments, info on real property (home, land cars) and what the disposition is/was on them, life insurance policy, any Trusts, any royalties, her income sources (like annual awards letter from SSA & pension). By filing for LTC Medicaid, it allows the State to get an all access pass to her financial history. If there is an issue, then she will have a transfer penalty placed against her LTC Medicaid eligibility. A Trust moves $ that was her asset to now be owned by the Trust.
Most States do a 5 yr lookback. To be able to be eligible for LTC Medicaid an elder has to be “at need” medically AND financially. Medically is needing skilled nursing care in an NH, unless your State does waivers for AL. Financially is at or near to the point of 2K max in nonexempt assets and max mo income of $2901 for most States. LTC Medicaid is different eligibility criteria than Home & Community Medicaid which can cover InHomeHealthcare.
Transfer penalties can be pretty hefty. Based roughly on the day rate a State reimburses a facility for custodial care. A gifting penalty of 200K in a State that reimburses $200 per day is about 1,000 days. 1000 days = not quite 3 years of ineligibility. 50K gifting = 250 days. The sticky with transfer penalties is the elder is already living in the facility. So if they are to stay in the facility then family will have to pay for them or move them into their home to care for. The facility will do whatever to affix the unpaid bill onto family.
It’s a lot to mull over. About 70% of those in a NH are on LtC Medicaid. You are not alone in trying to figure out all this.
There may be different considerations for someone without dependents. Any attorney can set up trusts for you but not all attorneys have the experience to give the best advice whether it is in your best interest. An elder/estate attorney is up on the latest law changes affecting trusts and other legal documents to be sure the wording is correct to achieve what is intended. We have the irrevocable and revocable trusts and did not spend thousands of dollars! Of course that varies for different parts of the country.
I was surprised at the differences when I called around before selecting the one we used (who was recommended by a friend). One had a high fee just for the consultation where we would then learn the total cost if we hired them. We had a free consultation with the one we chose and was told up front how much it would cost IF we decided to hire them to prepare the trusts. Had we not been able to afford them we still would not have been charged for the consultation.
Get the facts from someone specializing in what you need to know.
She was terminally ill and her husband was working closely with the attorney on her Medicaid application. It's really important to get good legal advice because each situation is different.
One issue with HCBS is… the $ the State paid for IHHS can be subject to the required attempt for Medicaid Estate Recovery aka MERP. MERP is a required attempt on any LTC Medicaid paid services. However! for Community based Medicaid paid services, like IHHS, it’s up to a State to determine if it will extend recovery attempt to those as well. It’s something your friend should be aware of. As the Medicaid liens can be real subterranean to find their existence.
The only trust that I know of that would be needed under the situation you describe is a irrevocable funeral trust and that would be done through the funeral home.
I, strongly encourage, everyone to interview multiple attorneys. Elder law is the new money maker and they are unscrupulous in their direction and fees, many are not elder law experts, no requirement needed to call yourself an elder law attorney, certified elder law attorneys DO HAVE certified elder law training. Not every attorney is a legitimate elder law attorney and they just have a check list that makes them the most amount of money, whether you need it, benefit from it or anything else.
I have a revocable trust set up for my husband, in case I die before him. A niece is the back up Trustee in the event of my death. If he predecedes me, I can revoke the trust because it is no longer needed.
If you plan to use your mother's assets to pay for her care, then no trust is needed. After her assets, which include savings, checking, home, car, stocks, bonds, etc are spent down, then she will qualify for Medicaid. Each state has its own maximum amount of assets that you can have to qualify for Medicaid. In some states it is 2K.
The 5 year lookback is to make sure a person is not giving away assets to hide them from Medicaid. Gifting the car may be a no-no, if it was gifted during the 5 year period before applying for Medicaid.
Having a living trust will avoid probate when your Mom dies.
In my state, which is NC, I paid 300 dollars for attorney consult and 800 for the trust.
You need education about shielding funds because of the 5 year look back for Medicaid. This includes gifting the car which needs to be sold for fair market value. One loophole which you can look at is continuing insuring her car, paying taxes at brothers expense and let brother use it. But there is a limit on brother gifting the other way for the Medicaid look back
You definitely need to speak to the elder lawyer to know her state probate rules and Medicaid. You can ask about a personal needs trust or Miller Trust. Look that one up and include your state in the query.
Because you have no real understanding of how all of this works, even after consults with two attorneys, I worry a bit about your abilities to gather information, options and to act in the best interests of your mom.
I would contact a licensed Fiduciary recommended by one of these attorneys so that you can perhaps how best to move forward. These Fiduciaries are often appointed by the courts when there is no family, to act in the best interests of the senior. That may be what's needed now, because two attorneys should really have been able to give you better options, and more than a few of them.
You are correct that Irrevocable Trusts will cost a LOT of money to set up. They also have repercussions and rules, regulations you need to Thoroughly understand; for some reason that's not happening?
I can only wish you best of luck.