Is it legal, responsible, (morally ethical?) to dip into our mom's savings before she's deceased to provide for the needs of family members? -

Is it legal, responsible, (morally ethical?) to dip into our mom's savings before she's deceased to provide for the needs of family members?


My sister and I have been jointly appointed as both Guardian and Trustee of our mom's person and estate. Mom is now in assisted care due to dementia. She is 88 and otherwise in good health. Her assets are in a trust account that she and Dad set up years ago before his death. She not in danger of running out of money anytime soon. We have siblings who could use financial help and are requesting distributions from mom's trust. One of the in-laws, (or perhaps outlaw), has suggested removing her from her "revocable" trust in order to put her on Medicaid, moving her to an AL facility that accepts medicaid in order to greatly reduce her expenses, and distributing the max sum allowed tax-free to each sibling every year from her trust account. His lawyer says the distributions can be legally done. My lawyer says there's a conflict of interest with my sister and I being Mom's guardians, vowing in court to act on her behalf to protect and provide for her, and then using our position as trustees to begin distributing her assets before she's deceased - even before she's sick. Wording in the trust document provides for changes to the account only such as that will benefit the trust beneficiaries: the four siblings AND Mom since she is still alive. This issue seems to be coming dreadfully close to fracturing the family.

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Run, don't walk to your nearest Elder Care Attorney [they are the experts on Trusts and Medicaid] before anyone lays a finger on your Mother's Trust. That Trust is for her and her care, not anyone else care.

I bet your parents were frugal and saved every dime they could, my parents were the same way. I wouldn't even dream of touching any of my parents money for myself while they were still alive.

I cannot believe that one relative wanted to remove Mom from her own trust and have the money distributed before she had even passed. Sorry that won't work with Medicaid and the 5 year financial look back. There might be exceptions as each State has different requirements and programs.

Medicaid would see that money passed to relatives and would brand it as "gifts", thus Medicaid would subtract those $$$ amounts from your Mother's care. Mom would then need to pay out of pocket, but oops, there isn't enough money left for her to do that. Now what? Someone would then need to take Mom to their house and care for her until she was eligible for Medicaid. Depending on how much was removed from the Trust, it could take a few years.

It's terrible and so very common how money can tear a family apart.
Helpful Answer (16)

I do think there is several issues with doing that.

Really, on top,of everything and Sis would leave yourselves open to elder abuse too. (Taking advantage of elders financially is elder abuse.....)

I would not go along with it. Moral and ethical aside...there is also criminal issues. Doing what is proposed would be a breach of the fiduciary responsibility...just say no.
Helpful Answer (14)

Nevada1Linda, your lawyer is giving you sound advice. It is illegal, immoral and unethical for the distribution you suggest. It would also NOT work for Medicaid, they will see the "gift" and refuse the application. Ask YOUR attorney if the trust can create a loan to these needy folks, with prevailing interest rates, on a Medicaid compliant loan form.
Helpful Answer (13)

his lawyer is wrong. You cannot impoverish your mother to enrich rest of family. I would bet lawyer knows IRS taxes and not state Medicaid law. The money is for vulnerable elder, not state to pay for her. Get your mother a lawyer that specializes in Medicaid. You will find the experts and armchair quarterbacks are frequently out for themselves. Your lawyer is right. And if it goes to court and your parent gets a fort appointed guardian, there will be even less left. Shame on sibling. No estate until she dies.
Helpful Answer (12)

Morally, ethically? No way. It might fracture the family but you and sis will stay out of jail. I don't mean to be snarky but think how this sounds:

Put dear old mum in a cut rate joint to save money so family members can cash in early. I would rather suffer the rath of the "needy" family members. Let em yell. Don't do this.
Helpful Answer (12)

First, only your mother or father can change the trust. I'm appalled that anyone, including an in-law would suggest dipping into the trust.

Second, for the record, your mother cannot be "removed" from the trust. She's not a beneficiary, she's a grantor of assets allocated for and eventually transferred to heirs and beneficiaries named in the pour-over will and trust.

I honestly can't even comprehend the audacity, selfishness and greediness of the in-law who made that suggestion (request?). It literally "blows my mind!"

Fourth, even if annual payouts are provided for in the Trust, ALL the conditions must be met before these payouts can be made and payouts must be made in strict accordance with those Trust terms.

Fifth, as Trustee, you would be in flagrant violation and abuse of your mother's intents and wishes, and of the Trust. Those are grounds for legal action by the heirs/beneficiaries. While I don't have as much insight into guardianship, I would think it's grounds for breach of your duties in that position. The judge who appointed you would have grounds to remove you from your position.

Sixth, not having read the Trust, I still question advice of the attorney who said it can be legally done, but the real issue is exactly how those allocations are addressed in the Trust and on what the distribution depends (i.e., are they annual distributions during her lifetime or only after her death?)

Seventh, if the family is fractured, that's unfortunate, but your obligation is to your mother now and the beneficiaries later (unless the trust specifically provides for annual payouts during your mother's lifetime).
Helpful Answer (12)

Thank you all for your thoughtful, insightful, sympathetic and creative answers. Your encouragement has helped me to peacefully stay the course of responsibility and loving care for mom. I was never tempted to waver from that nor would I ever consider breaking the law by acting outside of the trust agreement confines, but your words gave me some needed strength. I asked my attorney to send an email letter out to my sisters and explain as clearly as possible exactly why we cannot begin using mom's money. He did that beautifully but already I have received strong push-back from one sis. With all due respect to my family, I agree with those of you who said that financial problems are usually due to lifestyle choices and that those who need mom's money before she has passed would do better to seek public assistance for themselves rather than for her (putting her on Medicaid). I'm sure this battle will be ongoing and I, for some reason, will be seen as uncaring and out of touch with the less fortunate in the family, but I will continue to take my responsibility seriously and with integrity. I owe it to Mom.
Helpful Answer (12)

Court appointed. Darn auto correct. By the way Medicaid facilities will do a five year lookback on transfers from the account which I'd bet has mom as beneficiary and the rest of you collect when she dies as remainder. Hope the outlaw has kids that treat them the same way.
Helpful Answer (9)

Linda, thanks for sharing with us your decision on addressing others' desire for the funds. It's comforting to know that efforts to offer advice have been worthwhile. And I compliment and support you on your very ethical and realistic decision, which is also a compassionate decision for your mother's needs.
Helpful Answer (8)

Nevada1Linda this is a terrible idea. Your lawyer is right, there is a conflict of interest. The other commenters are right--she would not be eligible for Medicaid because of the look back period. IF the trust states specifically that the other beneficiaries (besides mom) are entitled to funds paid out before mom's death then you and your sister as trustees can do that legally. Just know that if it fractures the family, that's not on you. You are doing the right thing by protecting mom and performing your duties.
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