Mom is currently in a Psychiatric Facility. She cannot return home at this point. Possible Dementia onset. Doctors recommending Nursing Home. At this time, we agree. She lives in Pa. We are in the process of applying for entrance to a county nursing home. Under Medicare - with the thought of "spending down" to meet Medicaid Eligibility. She earns $2110/ Month. Has about $18 to $20K in savings. Has 2 Paid Life Ins polies worth about $8 K. She owns a home worth between $75 to $100K. Owns an old car worth about $2K. That's it. We've prepaid for her funeral arrangements. Her children don't want anything from her, just that she's well taken care of. Oh, one kicker...There's an outside chance she can recover and go home. But we can't be certain. Met w/ a Lawyer who wants $13 K for "planning" which includes: Setting up an Annuity for 1/2 of her house's worth and a Trust for her children for the other 1/2. We then can use TIS trust to pay for anything for Mom that Medicaid does not cover and for her Medicaid Look back Penalty period. Very confused. 1) Do we really need a Lawyer? 2) If we are going to end up spending all of her assets on her anyway, cant we just let the "Medicaid Spend Down" process take its course?
Getting an annuity for an individual who will be in the near future applying for Medicaid is beyond a waste of time and $... it will seriously be a huge and costly stumbling block imo. What DeAnna wrote about the income limit as per your state for Medicaid is critical. At $2110@ mo income for her, she’s over the monthly income limit for Medicaid in many states. It’s right at the edge for other states. And this is why any “annuity” is a bad, bad idea as the $ paid from the annuity goes into her income stream.... if she’s right under the max $ limit now that annuity will take her over. To me annuity ONLY work IF there is a community spouse who is likely to not need care themselves for quite a bit and they have $ beyond the 120k in liquid assets that a CS is allowed so that the extra $$ goes into a SPIA type of annuity for the CS as CS income does not count for the NH spouse. That’s not your mom’s situation.
Your mom to me flat does not have enough $ from her assets OR time to move back on her own to do anything creative with her $. It’s crisis financial planning. She’s fortunate in that she has a bit of liquid $ at 20k to private pay for a facility for a couple of months. That gives you leeway to get things spent down before applying for Medicaid as she can use her money to perhaps do things that will make things easier later on. Like a fully paid funeral & burial policy or getting long over dental work done as that’s not really covered by Medicaid.
What is something to carefully consider is the house situation. Their homstead usually an exempt asset for their lifetime for Medicaid in most states. Which sounds just terrific...BUT due to the copay or SOC (share of cost) required by Medicaid, once she goes onto Medicaid she will have no-nada-zero of her $ to spend on any house costs. If the plan is to sell the house, to me, you need to do whatever to get it sold ASAP and before she ever files for Medicaid. So that she (therefore you) doesn’t find herself in the yo-yo of applying for & getting onto Medicaid in September when she spent all her savings only to become ineligible the day the house is sold a few months later like in Dec and having to once again do a spend down, document all and then reapply for Medicaid.... makes me tired to even think of it.
(If mom should want to keep the house, that’s a whole other situation. If that’s the decision, there are things you should consider. So post if it’s keeping mom’s house).
Keep in mind that if house does not sell before she runs out of her 20k$ for private pay, that you or other family will have to pay all property costs out of your own pocket. Having a house on the market has costs.... to get the best price it needs to look it’s best so the utilities will be on, yard has maintenance , property taxes & insurance need to be in place. This stuff adds up and it’s on your wallet to pay. And you cannot be easily reimbursement from the sale as it’s moms house so it’s her $ and any $ to you looks like “gifting” which is not allowed by Medicaid. Until she submits a Medicaid application she can still use her $ to pay on things for her house....like taxes, insurance, utilities. My point is IF the decision is house will be sold then get on it and get with Realtors to get a comps book done so you know what is the likely sale. Ask the potential Realtors what their DOM (days on market) is for property similar to your mom’s. A short DOM Realtor may not be someone you would be friends with as they are pretty deliberate but that’s what you need rather than a “I’m your new BFF” type of Realtor imo.
Oh and the 13k for Planning by the atty is way way over the top.
If you have a good DPOA that allows for all financial (so you can sell house and ask the Realtors what’s what for your state) and your mom has a valid will and that house is fully owned by her then in my experience you or your sibling (if organized) can totally do her house sale, spend down & Medicaid application for a widow or widowed parent. It can totally be a DIY done by the DPOA.
I can't suggest what would be an appropriate amount of retainer that would include Medicaid planning, but excluding that, a few thousand or more would be more in line for a retainer, depending on the estimate for the total planned services. That's another area to explore - what specifically would be included in the "planning"?
DeeAnna offers good advice for the planning and implementation stage.
Some other issues:
I would SERIOUSLY NOT consider a county facility. Make a checklist of what you want, call, interview and see a variety of nursing homes before making a decision.
I interviewed one county facility at one time when we needed to find a place for my mother, b/c it was an "Eden Alternative" facility. I knew as soon as I walked in that I didn't need to go any farther.
Consider the fact that your mother is in a psych facility now, and factor that into your search. You can save yourself a lot of time by asking what psych treatment might be available before going out to interview and inspect the different ones you'll contact.
I don't wish to pry, but consider the fact that many memory care facilities also treat dementia patients. Separate that possible issue from any psychiatric facilities, if that's the prime factor for being in a psych facility now.
And seriously consider NOT getting an annuity. How old is your mother? She could outlive the period for which the annuity needs to be in place before taking nontaxable withdrawals. An aggressive banker pulled this with my parents when they were in their 80's. They would have had to survive the taxable withdrawal period, but my mother died before they even reached that stage.
CAVEAT: My experience with annuities was several years ago; I haven't kept up on terms, so my suggestions are based on what my parents encountered.
You want funds to be available as needed for your mother's care, not with complicated withdrawal terms.
And, BTW, there are no malpractice issues in place. Bad advice is not ground for malpractice unless you act on it, which apparently you've realized is not a good option.
If you need assistance on finding competent and qualified legal counsel, just post back. Or try the state bar association practice area list, make a checklist of what you want and start calling, before you even make an appointment. Search for legal counsel as thoroughly as you would research an investment, vehicle or home purchase, or other big ticket item.
And ask about Living Trusts so that you can get a good understanding of how they operate. Avoiding Probate is a good reason for a trust, but your mother's condition, potential longevity, asset levels, bequests, and more all factor into the equation.
Ask about funding the trust, step-up issues and accelerated tax rates on withdrawals after death.
And obviously, you want the funds available for her care now.
BTW, I'm guessing this attorney suggested him/herself as Trustee to manage the assets? Tell Mr/Ms. Dollar Sign that you won't be needed his/her services.
What you need is a Lawyer who specializes in Medicare and Medicaid and in setting up Power of Attorney (POA) as your Mom needs to set up a Durable Power of Attorney and a Power of Attorney for Health Care along with a Living Will or Health Care Directives (as per your state regulations).
Your Mom should spend all of her money paying for her care at the nursing home and not worry about leaving any money as inheritance at this time. She will need to sell the house to qualify for Medicaid. If she keeps the house, then Medicaid can ask for the proceeds from the sell of the house after your Mom dies and you sell the house.
Since your Mom is still in a Psychiatric Facility, WAIT and see how well your Mom does in Medicare Rehab at the Nursing Home. Medicare pays a percentage % of your Mom's expenses at the Rehab-Nursing Home for 100 days (as long as your Mom is participating in physical &/or occupational therapy and is improving--that improvement is extremely important to qualify for Medicare paying for her stay at the Rehab nursing home). Typical Medicare stay is 30 days for someone who is planning to go home afterwards (for example if they have a total knee or hip replacement). If your Mom is planning to live at the nursing home, then the number of Medicare days is usually longer. Once your Mom stops physical &/or occupational therapy, then PRIVATE PAY will start and you can expect to pay between $5,000 to $8,000 PER MONTH depending on the facility.
Based on what you have told us, after you sell your Mom's house, she will have approximately $140,000 to "spend down". That $140,000 will pay for about 24 MONTHS of living at the nursing home and then she will have to change to Medicaid.
Since your Mom has "Possible Dementia onset", then most likely she will need to be in a "Memory Care Unit" which cost higher than a regular room at a nursing home.
"She earns $2110/ Month". You need to look at Medicaid requirements and see if your Mom will be getting too much income to qualify for Medicaid in your STATE ( Medicare is federally-operated and Medicaid is State-operated.) Go to your state's Title 19 or Medicaid website and look at the requirements for monthly income.
I hope that answers some of your questions. A lot of the future depends on how well your Mom does in physical and occupational therapy and how severe her dementia is and how fast it progresses (or your Mom's condition declines) as to where she will be living. Good Luck and God Bless.