Medicaid, life estate in child's home, and caregiver agreements.

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I have been taking care of my father with Parkinson's disease and dementia on and off the past 2 years. He's been back and forth between his house and mine, but mostly at my house the past 2 years. Sadly he has deteriorated rapidly during this time. He's now at my house permanently as he can no longer live alone. He's divorced, I'm the only child, and I'm married. I'm his POA. Unfortunately I have no other family in the area to help other than my wife who has been very supportive. My wife and I are young professionals and both work full time, although I've been rather flakey at work the past few years for obvious reasons. Thankfully I have a very family oriented employer that's been flexible and even allowed me to do some work from home. However I have started to realize that I'm not going to be able to keep this up forever as I believe my father will need round the clock care soon. I want to take care of him as long as I can, but I worry about the financial impact on my wife and I. We can't live on her income alone, we have a mortgage, student loans, and to hire someone would cost far more than my salary. My father has very little savings currently, but after the sale of his house that would change. I've been reading about caregiver agreements and I think this would be a good option given the situation. I've also read that it may be possible for him to purchase a life estate in my home and not disqualify medicaid as long as he stayed there at least a year. I would plan to keep him with me as long as possible (e.g. his assets ran out and I had to start working again or the situation became unsafe). Has anyone setup something similar or have any insight? I don't want to do anything that could potentially disqualify him for medicaid in the future. I'm planning to consult with an elder law attorney soon, but thought I'd reach out to this forum first. Both my father and I live in Florida.

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Figured I would follow up with everyone on this. I decided not to pursue the life estate after much thought. I discussed it with an elder law attorney and while the life estate would not be an issue for medicaid eligibility down the road (provided my father lived with me for at least 1 year prior), I decided to give ALFs (likely a Memory Care focused one) a shot. My father still lives with my wife and I, however we have been looking into the local ALF respite care programs as a starting point to establish a relationship with one and see where that leads with time. Many of the thoughts/concerns expressed earlier on this topic were a factor in my decision. Thank you to all for your input.
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FlaLove, make sure that the attorney that you consult to get the Life Estate set up with has a tax preparer that is familiar with the tax consequences of your father PURCHASING a life estate in your home. The calculation of how much you and your wife will need to declare as income - whether it be caregiving income or capital gains since you noted that your home's value has increased since you got your mortgage - will need to be included in your planning, not just the Medicaid planning. Your caregiver agreement will need to include provision for payment of taxes and also a rider on your homeowner's insurance for workman's compensation. Also you will need to make sure that you update your homeowner's insurance to reflect change in ownership and caregiving situation. Speaking from personal experience, Parkinson's Disease can drag on for decades with a family member and dementia is not uncommon. Your back up plan should include 24/7 care if you go out of town as you will have set up a responsibility for a vulnerable elder in your home. Purchase of the life estate also means that if your parent thinks they can stay in the home, but you don't want to continue giving care, you DON'T have the right to just have them move out. A lawyer will go through all of these items for you - you're not getting No's from all on here. We are asking you to think through for years, not just the pay-off soon in the next 6 months.
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My mil set up a life estate in a second home, with her five children as joint tenants with right of survivorship (you can imagine the problems THAT will probably entail!; "last sibling standing" will end up with it all, and other sibs' heirs get nothing).

Anyway, mil said she did it so there wouldn't be a problem with Medicaid down the line for her. I had thought the 5-year timeclock started ticking, but I could be wrong. (Mil's children will never put her in a facility, I'm sure, but we're not local, thank goodness.She inherited some money a while back and blew it all, including on trips to Europe, the Arctic and Antarctica. I'm not going to be willing to contribute towards her care!)
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Good luck, FlaLove. Please let us know how it sll works out. We learn from each other.
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Thank you all for your continued input and suggestions. Igloo, I will definitely research and discuss some of what you mentioned when I visit an attorney. Planning to do so shortly.

I've seen several comments regarding having to take care of my father for potentially decades. This is precisely why I want to leave medicaid as an option on the table. With proper medicaid planning, why is this an issue?

I feel most people are seeing my plan as a huge risk and liability. I didn't elaborate on the numbers in detail, but I feel this situation can greatly financially benefit my wife and I with the life estate and I could maintain my income with a caregiver agreement until we can't do it anymore. With the life estate, my wife and I's mortgage would be completely paid off 25 years early and my father would be able to provide me income for at least a few years. The alternative is him paying for a facility that would drain his assets in the same time period or sooner. Most of the stress I've experienced over the past 2 years is balancing work and my father. Being able to just focus on my father without income loss is going to be a huge relief for me. It will also give me opportunities to do things that I never had time to do when I was working even without my dad in the picture. My father rests/naps a lot of the day and there's going to be huge gaps for me to do things for myself around the house. Preparing healthy meals, exercising, reading books, continuing my education through self-study, etc. I'd actually greatly be looking forward to these things. In regards to my wife, yes she is on board and supports this idea. An evening out and other local activities for part of the day is not an issue at the moment, but I do understand these activities may not be as organic and may require more thought/planning at times. Yes, I realize my father's needs will only increase from here. We would have a backup on deck.
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FlaLove - in re-reading your posts, have a? for you, so FlaLove really just what is your wife's feelings in all this? Would she really be totally 100% happy about your father being there "at need" 24/7 for years or possibly decades? Shifting household financial responsibility to just her income when you went into marriage as partners & having an increasingly frail old man living in the home......well just may not be what she envisions her 20's & 30's to be. Forget going on a last minute evening out; or using those free tickets to the concert that landed on her desk; or putting in the living room that awesome vintage 1960's sofa she's been hunting for since college as the living room is now dads day-room..... or even her walking around the house in a T and panties. If you prioritize dad over her - which is what you will be doing - resentment is going to build and it's not going to be pretty.

Also what about her own elders? You ready for her mom, aunt, whomever, move in with you all as well? And for a decade or two? Cause if you do this for your dad you have to do it unconditionally for her elders too.

Dads already there right? I'd suggest you meet with an atty. as suggested but also set a 6 month date from whenever he moved in to ask your wife about keeping dad there. If she has ANY hesitation or concerns, then get him moved into a facility ASAP. And you and your bride move on with life.
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FlaLove - the fact that you are actively doing "planning" on this is a huge plus. And doing it before you place dads home up for sale even more so. Platinum stars to you! You've gotten some great advise regarding the reality and challenges of caregiving.

Regarding the legal & financial, I'd suggest you ASAP schedule a NAELA or CELA level elder law atty appointment. But before you do this gather together the info on dads house (like last 2 tax assessor bills, deed of trust & release); his awards letters - those are the annual statements that denote what he will make as income each month from his SS, retirements; any old legal especially his will. And do a"face sheet" on dad. I'd bet that it's suggested that the proceeds from the house sale get placed into a special needs trust with a personal services contract between you & the trust so that the trust pays you each month to provide care & trust administration. The goal of the SNT will be to defund within 5 -7 years so he can segueway into & totally qualify for medicaid. If his caregiving gets to be overwhelming for you all before the defund, its ok as the contract done will be Medicaid compliant. You & your brides house stays in your name, dad lives with you. This is a pretty safe conservative plan.

Now if you like risk and dad is still pretty youngish & owns his home, I'd ask the atty about dad doing a SCIN. Self canceling installment note. SCIN are pretty involved as its an equation based on actuarial tables & property value. I'd bet Medicaid just hates these! You could sell your place then buy & move into dads house via the SCIN at the lowest monthly payment due and if he dies before note ends, you owe zero. It self cancels. It will not be an asset due to his estate so no estate (MERP) recovery on it. Now if he needs to move into a facility, the note you pay to him is "income" and needs to be low enough so between the amount of SCIN and his SS $ is under Medicaid limits. Or you buy it and rent it out, it's yours you can do what you want with it. All dad gets is whatever the SCIN note $ amount is set at. SCINs are involved financial & requires pretty experienced legal to do to begin with plus add in a layer for medicaid compliance. SCINs used often by wealthy to move property down the line to younger family at minimal cost to the buyer and lowers the sellers estate taxes. But can be used to maneuver Medicaid if the situation aligns.

FL is a very pro-property rights state to begin with and seems to be as well when it comes to the rules for property, Medicaid & MERP. Like FL allows for "Lady Bird Deeds" (enhanced benefit deed). Only 6 states do this.
Good luck & it should all work out as you are thinking ahead!
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So, with Parkinsons and some dementia, late 60s, no other physical issues like heart problems, diabetes....he could live what, another 20-30 years?

That of course is the problem--you don't know. Our elderly, increasingly infirm and sometimes demanding parents don't come with an expiration date. Something that you could see yourself doing for 3 years turns into 10 years, or longer.

I would suggest a couple of posters, specifically JessieBelle and TGengine on having parents living at home. Just go into this with foreknowledge of what " might" be. Good luck!
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Babalou, maybe I'm being naive, but I have thought about many of these factors. This is where I figured the life estate would offer some financial benefit for potential lost opportunity in the workplace. My home has appreciated a lot from what I paid for it a few years ago. Using the life estate calculator on AgingCare with the current value of my home, my father would be able to purchase a life estate that would be close to the remaining balance on my mortgage. This would be huge in reducing my expenses during the next few years to take care of my father.

I have not researched SS impact, however I would continue to contribute a portion of the caregiving income to an IRA during this time.

For health insurance, I would plan to join my wife's plan. The higher premium with me on it is relatively close to what is coming out of my paycheck for my current employer sponsored plan. I also have an HSA account that's well funded for deductibles.

For respite/vacations, I would establish a backup.

No plans for children in the next few years.

I have an idea of what I'm getting into. I know it's going to be very stressful at times, but also very rewarding to be by his side and for those little moments. I think I would be more stressed at work with him in an AL then I would as his caregiver. Maybe it's an only child thing.
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