Need help with family financial situation - sheltering money / medicaid

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j0nnyg1984
Posts: 297
Joined: Sun Apr 24, 2016 9:55 am

Need help with family financial situation - sheltering money / medicaid

Post by j0nnyg1984 » Thu Oct 12, 2017 10:00 pm

Not sure if this is in the proper forum.

My dad was diagnosed with Alzheimer's approx. 9 years ago, and ~1 year ago, co-diagnosed with "Lewy Body" dementia and possibly Parkinsons, as he exhibits quite a few parkinsons-like symptoms. In the last month he has significantly deteriorated, to the point that my mother is no longer able to keep him at home and care for him full time. He has been in the VA hospital for almost 3 weeks now while they tinker with his medication in an attempt to get him to a position where we can safely move him to a care facility for the rest of his life. My parents are still married and have been for 39 years. Dad was always the breadwinner. Mom "retired" end of 2016 to provide full time care. Not sure how to list everything that could be required...

State of residence: WA
Mom: 61, in good physical health
Dad: 67, in great physical health, Vietnam vet

No LTCI for either
Minimal life insurance for both
Unsure of dad's VA benefits qualifications (we have been told that with his serving in Vietnam, Parkinson's is a presumptive disease that may entitle him to additional VA benefits / payments) - this is being worked on by my mom

Dad income: SS, ~$2400 / month
Mom income: $0

Investments @ Vanguard in low cost index funds, approx. 50/50 AA
Dad tIRA: ~900k
Dad rIRA: ~50k
Mom tIRA: ~15k
Mom rIRA: ~35k
Joint savings: ~50k
House: 250k, no mortgage
Car: 10k, no loan

So, mom and I have met with 3 different lawyers over the past two weeks to try and determine our next moves. Unfortunately, we have been given 3 options! Obviously, we want to shelter as much money as possible to ensure that my mom is able to live the rest of her life without worry. We have been told by an independent placement company that we will need to pay for a home for 2-3 years before medicaid would be allowed (these are the local home rules, apparently). We have received the following options.

#1: Take money from retirement accounts (maybe $150k a year) over the next 3-4 tax years to pay for dad's care. At the end of this period, right before the application for Medicaid, take all of his funds as a lump sum (I estimate this would be around $450k remaining), pay a huge tax hit, and transfer the assets into my moms name via a 5 year SPIA. The elder law / estate planning attorney says that this would ensure that my dad would qualify for Medicaid while preserving money for my mom's future. Our CPA is running numbers to see what would be possible within the 15% and 25% tax brackets, what we would end up paying for the lump sum removal of tIRA money, etc.

I do not like this option just because it seems like a lot of moving parts, a lot of taxes paid, etc.

#2: Divorce. My folks get a divorce immediately. This would split the marital assets, and given the length of their marriage, I have to assume that most of the assets would go to my mother. We would leave ~3 years of medical care ($300k, give or take) for my dad in the tIRA; everything else would be transferred to my mom. There are some unknowns here, too. One lawyer told us that my fathers Medicaid eligibility would be counted as an asset in his side of the divorce asset division. Another one told us that is highly unlikely. None of the lawyers were willing to give any suggestions as to what we could expect as far as asset division, but one told us "I would be as aggressive as possible." My mom is acceptable to this option and had discussed it with my dad years ago before his memory really went bad - he was also okay with the idea. We were told that due to conflict of interest, my mom could no longer retain the power of attorney for my dad - that would fall to me as #2 listed on the document. We're all okay with this.

edit: we are aware that my mom would lose her medical insurance coverage, currently through the company that my dad retired with, with this option.

To me, this seems like the most straightforward option. Very little "excess" tax hit imho.

#3: Legal Separation. This was the last option presented to us. Lawyer #3 does this a lot and considers himself a pioneer in this area (my speculation). He repeatedly mentioned his past cases and success with this option. The idea is that my parents file for legal separation. This would include a court ordered transfer of assets, similar to a divorce. This would move almost everything to my mom's name with no tax hit, similar to a divorce. They would stay married but have completely separate finances. My mom could retain power of attorney.

I have no idea how this would be allowed, and am very skeptical. Lawyer didn't appreciate my stream of questions about his successes with this while retaining Medicaid eligibility for the disabled party

I lean towards option #2 because it seems much simpler and cleaner. There is no major tax hit - we would only take out the funds required for my dad's care, and given his low income, the tax bracket would likely be only 15%. As I mentioned earlier, the CPA is aware of the options and is doing these calculations for us - we expect to hear from her next week.

There are some additional bits of information we would appreciate information on.
  1. My mom's dad (my gpa) just died last month. He had a small life insurance policy; my mom is set to receive ~15k. What should we do with this money given the above situation? Can we refuse to take it until a later date? Is it outside of the marital assets and not subject to any divorce or separation agreements?
  • It is my (very limited) understanding that at the age of 62, my mom would be eligible to take half of my dad's SS benefit, or approx. $1200 a month. Am I about on track here? One of the divorce lawyers I mentioned this to was completely oblivious to this information - she kept thinking that my mention of "half of his SS" meant that we would get it in the divorce proceedings; I eventually told her to please forget I ever mentioned it.
  • My mom plans to return to work as soon as my dad is settled somewhere (she's currently spending 6-14 hours a day with him at the VA hospital because she feels guilty).
edit: I forgot to mention this. The last lawyer we met said that we need to look into "appointing a guardian" for my dad as soon as possible because the power of attorney can be revoked. Except for the huge thread here on guardians scamming the elderly, I have zero knowledge of this. Can anyone fill me in?

I know this is a lot of information. We're looking for any advise or resources (elder / divorce lawyers in the PDX area? :mrgreen: ), advise on which of the 3 options would seem best, both for preserving money for dad and mom as well as the highest chance of retaining medicaid eligibility, advise on the last couple of extra points I mentioned.

If any clarification is necessary, please let me know!

Thanks fam

dbr
Posts: 23391
Joined: Sun Mar 04, 2007 9:50 am

Re: Need help with family financial situation - sheltering money / medicaid

Post by dbr » Fri Oct 13, 2017 8:30 am

Many other issues aside, you should check housing possibilities at Wash State Veterans Homes and financial conditions that apply: http://www.dva.wa.gov/veteran-homes/veterans-homes In my state this is a helpful option for many people but the conditions that apply for continued support of a spouse separately in his/her own home are complicated.

State VA homes are not related to the Federal Veterans Administration.

ilskeptic
Posts: 58
Joined: Wed Feb 10, 2010 11:35 am

Re: Need help with family financial situation - sheltering money / medicaid

Post by ilskeptic » Fri Oct 13, 2017 8:47 am

I thought someone more qualified might chime in by now, but since no one has ...

I’m not a lawyer myself, so take all this for what it’s (ahem) worth. But I have been in the situation you’re in, and I’ve done the kind of scrambling you’re doing in hopes of not leaving the unaffected spouse in poverty. I also realize you may have left some stuff out of your post. But my first reaction is that you’ve been talking to the wrong lawyers.

For starters, I believe your dad’s potential VA assistance is called “Aid and Attendance.” But there are asset and income limitations. I would have expected a good eldercare lawyer to have that information at his/her fingertips. Mom shouldn’t have to do the research.

Second, it may be true that nursing homes in your area require patients to self-pay for “two or three years” before they will accept Medicaid payments. But that’s not what Medicaid requires for people who have assets ($1 million-plus in your dad's case) of their own. Medicaid looks back FIVE years to make sure an applicant hasn't tried to hide or divert assets; the lookback period starts when a Medicaid application is filed. It’s good that you’re thinking ahead, but, again, all the lawyers you consulted should have made this requirement clear first thing.

Third, given that the bulk of your parents’ assets are your dad’s and given his rather dire condition, I wouldn’t count on your mother being granted “most of the assets” in a divorce or separation. Again, IANAL and others here could tell me I’m wrong; but I think your father’s health would be a major consideration for a family court judge.

Fourth, the lawyer who recommended an annuity might -– might -– be on the right track. But waiting till the last minute to transfer that money might not be the ideal strategy. Under current tax law, your dad’s private payments for nursing home care prior to Medicaid will create a substantial medical expense deduction every year. I assume your CPA is considering that in considering optimum TIRA withdrawals.

I realize you’re in a tough situation, emotionally even more than financially. Been there myself. Take a deep breath. Talk to a couple more attorneys who specialize in eldercare law (if you haven’t done so already, contact your local bar association for referrals). Make sure you and your mom really understand the implications, for your father as well as your mother, before you make any big decisions. Good luck.

OnTrack2020
Posts: 96
Joined: Mon Mar 20, 2017 10:24 am

Re: Need help with family financial situation - sheltering money / medicaid

Post by OnTrack2020 » Fri Oct 13, 2017 9:19 am

Hmmm, we had something a little similar, but not quite. My mother went into a nursing home at age 61. My father went to see an attorney and did, I believe, a plain division of assets. There was no legal separation or filing of divorce. There was just a division of the assets on paper. However, my father held the majority of the assets in his name from an inheritance. In this case, your father holds the majority of assets in his name, and he is the one going into a care facility. And I agree with the other poster about the look-back period.

From what I know, in order to get Medicaid, the assets need to be spent down to a very low amount. I believe a house and a car can be kept. I would find an eldercare lawyer to discuss this with.

Please keep us posted on your situation.

vested1
Posts: 986
Joined: Wed Jan 04, 2012 4:20 pm

Re: Need help with family financial situation - sheltering money / medicaid

Post by vested1 » Fri Oct 13, 2017 9:20 am

As to your mother being able to get 1/2 of your father's SS benefit at her age 62, from my understanding that is incorrect. She can file for spousal, but the amount will be reduced because she is not FRA (full retirement age). The new rules also state that because she was not age 62 by 1/2/16 she will be "deemed" to be filing for both her own and for spousal whenever she files. I'm sorry to hear of your unfortunate circumstance.

I agree that you should consult a good attorney who specializes in elder issues.

JGoneRiding
Posts: 971
Joined: Tue Jul 15, 2014 3:26 pm

Re: Need help with family financial situation - sheltering money / medicaid

Post by JGoneRiding » Fri Oct 13, 2017 9:25 am

I KNOW people in WA state that went the legal separation route. It has worked well for them for the intended purpose of dividing assets (in their case assigning all debt to one spouse so they could get a home loan under the other) WA might be a little unique as it is one of 7? that is community property but also by equitability. I think you should consider this option to do EXACTLY what you want (split assets) but still allow your mom to maintain her rights as spouse and care giver and keep her medical.

The downside MIGHT maybe be that all assets will be split evenly (it might be impossible depending on the judge to avoid that no matter what remember wa is a community property sate) but as long as you get that 900k split via court order so your mom can hold it in a retirement acct you should be ok.

Also by not divorcing your mother will be eligible for 100% of your fathers SS when he passes. Otherwise she is only going to get 50%

vested1
Posts: 986
Joined: Wed Jan 04, 2012 4:20 pm

Re: Need help with family financial situation - sheltering money / medicaid

Post by vested1 » Fri Oct 13, 2017 9:36 am

JGoneRiding wrote:
Fri Oct 13, 2017 9:25 am
I KNOW people in WA state that went the legal separation route. It has worked well for them for the intended purpose of dividing assets (in their case assigning all debt to one spouse so they could get a home loan under the other) WA might be a little unique as it is one of 7? that is community property but also by equitability. I think you should consider this option to do EXACTLY what you want (split assets) but still allow your mom to maintain her rights as spouse and care giver and keep her medical.

The downside MIGHT maybe be that all assets will be split evenly (it might be impossible depending on the judge to avoid that no matter what remember wa is a community property sate) but as long as you get that 900k split via court order so your mom can hold it in a retirement acct you should be ok.

Also by not divorcing your mother will be eligible for 100% of your fathers SS when he passes. Otherwise she is only going to get 50%
The portion in bold is incorrect I believe. Survivor benefits are always 100%, even when the couple has divorced. My sister's benefit increased to her ex-husband's amount when he died. The 50% reduction is referring to spousal benefits, not survivor benefits.

Carefreeap
Posts: 2035
Joined: Tue Jan 13, 2015 7:36 pm
Location: SF Bay Area

Re: Need help with family financial situation - sheltering money / medicaid

Post by Carefreeap » Fri Oct 13, 2017 10:16 am

vested1 wrote:
Fri Oct 13, 2017 9:36 am
JGoneRiding wrote:
Fri Oct 13, 2017 9:25 am
I KNOW people in WA state that went the legal separation route. It has worked well for them for the intended purpose of dividing assets (in their case assigning all debt to one spouse so they could get a home loan under the other) WA might be a little unique as it is one of 7? that is community property but also by equitability. I think you should consider this option to do EXACTLY what you want (split assets) but still allow your mom to maintain her rights as spouse and care giver and keep her medical.

The downside MIGHT maybe be that all assets will be split evenly (it might be impossible depending on the judge to avoid that no matter what remember wa is a community property sate) but as long as you get that 900k split via court order so your mom can hold it in a retirement acct you should be ok.

Also by not divorcing your mother will be eligible for 100% of your fathers SS when he passes. Otherwise she is only going to get 50%
The portion in bold is incorrect I believe. Survivor benefits are always 100%, even when the couple has divorced. My sister's benefit increased to her ex-husband's amount when he died. The 50% reduction is referring to spousal benefits, not survivor benefits.
1+ The spouse is eligible for survivor benefits after 10 years of marriage.

OP I agree with the others that you really need to talk with an eldercare attorney who has a subspecialty for those with military benefits. I suspect there are some substantial skilled nursing facilities options for your father being a Vietnam veteran. The downside might be a long waiting list which may require self-pay until space becomes available.

The good news is that your parents do have substantial assets and that they should be able to weather that storm. Besides SS does your father also have a military or other pension?

I know it's a difficult situation but at least your folks are not impoverished. As an example, my 82 year old father is a Medicaid recipient in So. CA. Because he really has no assets I'm likely the one who will have to pay for private care for two years (@ 10k/mth $120k/yr) until a Medicaid facility has space. I'm sure there are others in a similar situation.

Katietsu
Posts: 787
Joined: Sun Sep 22, 2013 1:48 am

Re: Need help with family financial situation - sheltering money / medicaid

Post by Katietsu » Fri Oct 13, 2017 10:29 am

1) The VA has put enormous effort into nursing home, palliative care, hospice, etc during the last decade. I am not in Washington, but in my experience with several VA nursing homes, the VA homes are excellent as to the type of care as well as the cost. I would make sure that this option is fully explored before making any other decisions. Have you met with a social worker at the VA hospital? Is there a VA facility that will accept him but that is not geographically convenient?

2) Your mother can disclaim the life insurance. Is there a contingent or co-beneficiary. Not sure though if this is necessary.

3) Remember that all these decisions do not need finalized before placing your father. Hopefully this will take off some of the stress.

4) The best decision is not necessarily the easiest. This is a game of chess not checkers.

5) Consider how needed spending should be planned. For instance, does Mom need a new roof? Does Dad need a piece of medical equipment? Is it better to do these things before or after the separation?
Last edited by Katietsu on Fri Oct 13, 2017 10:46 am, edited 1 time in total.

ChrisC
Posts: 546
Joined: Tue Jun 19, 2012 9:10 am
Location: North Carolina

Re: Need help with family financial situation - sheltering money / medicaid

Post by ChrisC » Fri Oct 13, 2017 10:40 am

j0nnyg1984 wrote:
Thu Oct 12, 2017 10:00 pm
Not sure if this is in the proper forum.

My dad was diagnosed with Alzheimer's approx. 9 years ago, and ~1 year ago, co-diagnosed with "Lewy Body" dementia and possibly Parkinsons, as he exhibits quite a few parkinsons-like symptoms. In the last month he has significantly deteriorated, to the point that my mother is no longer able to keep him at home and care for him full time. He has been in the VA hospital for almost 3 weeks now while they tinker with his medication in an attempt to get him to a position where we can safely move him to a care facility for the rest of his life. My parents are still married and have been for 39 years. Dad was always the breadwinner. Mom "retired" end of 2016 to provide full time care. Not sure how to list everything that could be required...
Sorry to hear about your situation. Your parents are especially fortunate to have a child looking after them for this.

State of residence: WA
Mom: 61, in good physical health
Dad: 67, in great physical health, Vietnam vet

No LTCI for either
Minimal life insurance for both
Unsure of dad's VA benefits qualifications (we have been told that with his serving in Vietnam, Parkinson's is a presumptive disease that may entitle him to additional VA benefits / payments) - this is being worked on by my mom

Dad income: SS, ~$2400 / month
Mom income: $0

Investments @ Vanguard in low cost index funds, approx. 50/50 AA
Dad tIRA: ~900k
Dad rIRA: ~50k
Mom tIRA: ~15k
Mom rIRA: ~35k
Joint savings: ~50k
House: 250k, no mortgage
Car: 10k, no loan

So, mom and I have met with 3 different lawyers over the past two weeks to try and determine our next moves. Unfortunately, we have been given 3 options! Obviously, we want to shelter as much money as possible to ensure that my mom is able to live the rest of her life without worry. We have been told by an independent placement company that we will need to pay for a home for 2-3 years before medicaid would be allowed (these are the local home rules, apparently). We have received the following options.

#1: Take money from retirement accounts (maybe $150k a year) over the next 3-4 tax years to pay for dad's care. At the end of this period, right before the application for Medicaid, take all of his funds as a lump sum (I estimate this would be around $450k remaining), pay a huge tax hit, and transfer the assets into my moms name via a 5 year SPIA. The elder law / estate planning attorney says that this would ensure that my dad would qualify for Medicaid while preserving money for my mom's future. Our CPA is running numbers to see what would be possible within the 15% and 25% tax brackets, what we would end up paying for the lump sum removal of tIRA money, etc. I think you got something lost in translation here. You have to start the clock running on the spend-down as soon as possible for Medicaid purposes. So, Dad's transfer of funds should begin before or during the time he starts paying for his medical, long term care. If Dad takes 2 or 3 major distributions from his tIRAs while he's paying for his LTC, the tax burden might not that be that huge, as a lot of his medical expenses would be deductible, this would also start the clock running on the look back period, and Mom would have some funds stashed away for her own future care. Perhaps, you got the SPIA thing garbled up in your take from the lawyer -- he might have been suggesting a SPIA for the life of your Mom, not 5 years -- never heard of such a 5 year SPIA -- there's a 5 year look back/spend down period for Medicaid. In any event, your accountant should be running a lot of numbers here, including pro forma tax returns for the future years.

I do not like this option just because it seems like a lot of moving parts, a lot of taxes paid, etc. I actually think this option might be your best bet, as it moves funds into your Mom's account for her future benefit via an SPIA, helps with Medicaid spend-down, and would start Dad on the right path for care facilities, as he would be private paying for a while and would make his access to Medicaid eligibility much easier after he exhausted his funds. Also as soon as he exhausts his funds, as a Vietnam Veteran he would be eligible for VA Aid and Attendance benefits, which would entitle him to some LTC payments for his care

#2: Divorce. My folks get a divorce immediately. This would split the marital assets, and given the length of their marriage, I have to assume that most of the assets would go to my mother. We would leave ~3 years of medical care ($300k, give or take) for my dad in the tIRA; everything else would be transferred to my mom. There are some unknowns here, too. One lawyer told us that my fathers Medicaid eligibility would be counted as an asset in his side of the divorce asset division. Another one told us that is highly unlikely. None of the lawyers were willing to give any suggestions as to what we could expect as far as asset division, but one told us "I would be as aggressive as possible." My mom is acceptable to this option and had discussed it with my dad years ago before his memory really went bad - he was also okay with the idea. We were told that due to conflict of interest, my mom could no longer retain the power of attorney for my dad - that would fall to me as #2 listed on the document. We're all okay with this.

edit: we are aware that my mom would lose her medical insurance coverage, currently through the company that my dad retired with, with this option.

To me, this seems like the most straightforward option. Very little "excess" tax hit imho. My wife is the retired divorce lawyer in our family of lawyers -- this seems quite risky on the asset division side of things, especially since if your Dad is cognitively impaired, the court might appoint a guardian ad litem or some other representative of his interests, given the divorce and conflict of interests that appear -- too many unknowns and Mom losing her medical insurance coverage as a result of the divorce, seems like shooting your foot here, since the cost of new coverage could be terribly expensive given what's happening in the individual insurance market with Obamacare.

#3: Legal Separation. This was the last option presented to us. Lawyer #3 does this a lot and considers himself a pioneer in this area (my speculation). He repeatedly mentioned his past cases and success with this option. The idea is that my parents file for legal separation. This would include a court ordered transfer of assets, similar to a divorce. This would move almost everything to my mom's name with no tax hit, similar to a divorce. They would stay married but have completely separate finances. My mom could retain power of attorney.

I have no idea how this would be allowed, and am very skeptical. Lawyer didn't appreciate my stream of questions about his successes with this while retaining Medicaid eligibility for the disabled party Can't really address this situation because some states don't really recognize a formal legal separation with a division of assets -- seems novel and interesting but could be the worse of all worlds for Medicaid look-back purposes too, as Medicaid might not look too kindly at this and reach back into Mom's assets, in any event

I lean towards option #2 because it seems much simpler and cleaner. There is no major tax hit - we would only take out the funds required for my dad's care, and given his low income, the tax bracket would likely be only 15%. As I mentioned earlier, the CPA is aware of the options and is doing these calculations for us - we expect to hear from her next week.

There are some additional bits of information we would appreciate information on.
  1. My mom's dad (my gpa) just died last month. He had a small life insurance policy; my mom is set to receive ~15k. What should we do with this money given the above situation? Can we refuse to take it until a later date? Is it outside of the marital assets and not subject to any divorce or separation agreements?
Mom should take the insurance proceeds and stick it in a separate account;
if she places it in a joint account, it probably is commingled with Dad's assets and becomes marital property.

  • It is my (very limited) understanding that at the age of 62, my mom would be eligible to take half of my dad's SS benefit, or approx. $1200 a month. Am I about on track here? One of the divorce lawyers I mentioned this to was completely oblivious to this information - she kept thinking that my mention of "half of his SS" meant that we would get it in the divorce proceedings; I eventually told her to please forget I ever mentioned it.
I believe she will be entitled to spousal benefits on her husband's SS retirement benefits;generally she would receive 50% of Dad's Primary Insurance Account with SS, if she takes at Full Retirement Age (FRA) at 66; if she takes at 62, she would still receive spousal benefits but at a reduced level and if she previously worked and had SS earnings credits, she might be entitled to the greater of her retirement benefits on her earnings record or her spousal benefits.
  • My mom plans to return to work as soon as my dad is settled somewhere (she's currently spending 6-14 hours a day with him at the VA hospital because she feels guilty).
This could be an issue with SS benefits because if she takes benefits before FRA, her earnings could diminish her SS benefits.

edit: I forgot to mention this. The last lawyer we met said that we need to look into "appointing a guardian" for my dad as soon as possible because the power of attorney can be revoked. Except for the huge thread here on guardians scamming the elderly, I have zero knowledge of this. Can anyone fill me in? Nah, I wouldn't recommend this -- guardianship is a drastic step here, generally requires court appointment, and Dad might lose all his civil liberties, including the right to vote -- there's another thread in this forum of how guardianship could be quite perilous to the elderly -- read that twice; I think a living trust would be more appropriate here, with you or your Mom as trustee over his assets.

I know this is a lot of information. We're looking for any advise or resources (elder / divorce lawyers in the PDX area? :mrgreen: ), advise on which of the 3 options would seem best, both for preserving money for dad and mom as well as the highest chance of retaining medicaid eligibility, advise on the last couple of extra points I mentioned.

If any clarification is necessary, please let me know!

Thanks fam
You have a lot on your plate -- the lawyers you consulted might not be up to the task in helping you navigate this situation;
keep on investigating for suitable counsel; one does not really appreciate how valuable a good lawyer is in these situations until you need competent legal assistance.

j0nnyg1984
Posts: 297
Joined: Sun Apr 24, 2016 9:55 am

Re: Need help with family financial situation - sheltering money / medicaid

Post by j0nnyg1984 » Fri Oct 13, 2017 10:46 am

Trying to reply to everyone in one post, sorry for the mess.

@dbr: thanks for the link, we will check it out.

@ilskeptic: we've talked to 1 family / divorce lawyer and 2 elder care lawyers, one of whom is a partner for the premier firm in our area, and is the only CELA (certified elder law attorney) in our county.

We were pretty disappointed in the lack of knowledge that this CELA showed in all of the "other" stuff; VA benefits being one of those areas.

Regarding the 5 year look back period, yes, we've very aware of this. A divorce or legal separation with division of assets isn't considered a gift, so this won't apply. As I (think I) wrote, we would divide the assets, then spend down my fathers remaining money until he qualifies for Medicaid, then make his Medicaid application.

I can't comment on the division of assets, that's still an unknown to us. Both of the lawyers who specialize in divorce / separation made it sound like from their past experience in these cases, they would succeed in getting a large percentage moved over to my mom.

Finally, yes, we are aware of the medical expense deduction, and the CPA is running the numbers.

@ontrack2020: yes, they have to spend down to like 2k for my dad and 54k for my mom, primary house and car are excluded. Pretty ridiculous imho. As I mentioned above, we have been in discussions.

@vested1: thanks, I think I read something about this on the SS website. I need to look more into it, but it's kinda confusing for someone with no SS experience.

@jgoneriding: yes, exactly. Even if it was a 50/50 split of the assets, I would be perfectly okay with that. 500k is more than enough for my mom to take care of herself for the rest of her life, especially with her going back to work.

@carefreeap: finding said attorney is much easier said than done. As i wrote, we've spoken with 2 "elder care" attorneys already. We are looking for more, but even with my parents huge network of friends, we haven't been able to find a recommendation for another.

No pension, everything is listed in the first post.

Yes, definitely glad that they have money. Dad was always good about being frugal, and while he may not have made the best investment choices (variable annuities in his tIRA, closed REIT's in their rIRA's [thanks, Edward Jones broker]), he still did pretty damn well.

EDIT: addition replies were posted while I typed this.

@katietsu: My mom has been talking with them at the VA. We know of 4 VA facilities in the general Pacific NW area, the closest being about 5 hours away. Mom has said that she is okay with this distance as long as it's an okay place, etc.

@chrisc: I didn't garble the details on the 5 year SPIA. She told us that a 5 year SPIA is the only Medicaid accepted annuity - we have no other choice. The SPIA is used only to get the money out of my dad's ownership and into my moms. Once it goes through this SPIA process, the money is not subject to the look back period. Yes, the CPA is running through those details.

Thanks for your input on the other two options we have been looking at. Yes, I am starting to think that the first option may be best, but we really need to get the financial information from the CPA to make a hard determination. Seems like we should be able to pull a substantial amount of money from the tIRA without huge tax consequences due to the medical deduction, the standard deductions for the married couple, etc.

So, if my mom takes the insurance inheritance proceeds and puts it in a separate account, wouldn't it still be considered an asset for the required Medicaid spenddown?

Thanks for the SS information - not as cut and dry as I had hoped for. Financially, she doesn't need to take her SS next year, it was a suggestion from the CELA lawyer to "take it as soon as possible." She didn't give any good explanation as to why she would recommend this.

Regarding the guardianship, we were told that I could / would be appointed as guardian. He definitely won't be voting anymore - he doesn't even know what's going on 99% of the time. We set up trusts, wills, medical and durable powers of attorney, and medical directives years ago, so those are all in place.

Thanks again



Thanks for the replies, all. Hopefully I can get some additional information, because honestly, nothing here has clarified any of the pathways provided by the three lawyers we've consulted with. Not expecting a miracle answer, and I appreciate all information provided!
Last edited by j0nnyg1984 on Fri Oct 13, 2017 11:04 am, edited 1 time in total.

stan1
Posts: 4864
Joined: Mon Oct 08, 2007 4:35 pm

Re: Need help with family financial situation - sheltering money / medicaid

Post by stan1 » Fri Oct 13, 2017 10:58 am

I'll try to keep my advice focused on a few "next steps" since you have a complex situation:

Make sure you fully understand the VA benefits before you make any other decision.

Make sure your dad does not have any medical conditions that would qualify him for hospice care. You said he is in great physical health so this might not be an option right now. Medicare benefits for hospice are extensive.

dbr
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Re: Need help with family financial situation - sheltering money / medicaid

Post by dbr » Fri Oct 13, 2017 11:34 am

All I can say is you have my sympathy. Having been there and done that with a much less complicated situation I still remain gobsmacked at the complexity, ambiguity, and contradictoriness of what might or might not happen.

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Re: Need help with family financial situation - sheltering money / medicaid

Post by Katietsu » Fri Oct 13, 2017 11:50 am

Also, I want to remind you and especially your Mom to take small breaks, at minimum, from the situation. Does your Mom have grandkids she could spend an hour with at the park, for example. These breaks can really help you to make better decisions for your Dad.

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Re: Need help with family financial situation - sheltering money / medicaid

Post by ChrisC » Fri Oct 13, 2017 11:57 am

j0nnyg1984 wrote:
Fri Oct 13, 2017 10:46 am
Trying to reply to everyone in one post, sorry for the mess.

@dbr: thanks for the link, we will check it out.

@ilskeptic: we've talked to 1 family / divorce lawyer and 2 elder care lawyers, one of whom is a partner for the premier firm in our area, and is the only CELA (certified elder law attorney) in our county.

We were pretty disappointed in the lack of knowledge that this CELA showed in all of the "other" stuff; VA benefits being one of those areas.

Regarding the 5 year look back period, yes, we've very aware of this. A divorce or legal separation with division of assets isn't considered a gift, so this won't apply. As I (think I) wrote, we would divide the assets, then spend down my fathers remaining money until he qualifies for Medicaid, then make his Medicaid application.

I can't comment on the division of assets, that's still an unknown to us. Both of the lawyers who specialize in divorce / separation made it sound like from their past experience in these cases, they would succeed in getting a large percentage moved over to my mom.

Finally, yes, we are aware of the medical expense deduction, and the CPA is running the numbers.

@ontrack2020: yes, they have to spend down to like 2k for my dad and 54k for my mom, primary house and car are excluded. Pretty ridiculous imho. As I mentioned above, we have been in discussions.

@vested1: thanks, I think I read something about this on the SS website. I need to look more into it, but it's kinda confusing for someone with no SS experience.

@jgoneriding: yes, exactly. Even if it was a 50/50 split of the assets, I would be perfectly okay with that. 500k is more than enough for my mom to take care of herself for the rest of her life, especially with her going back to work.

@carefreeap: finding said attorney is much easier said than done. As i wrote, we've spoken with 2 "elder care" attorneys already. We are looking for more, but even with my parents huge network of friends, we haven't been able to find a recommendation for another.

No pension, everything is listed in the first post.

Yes, definitely glad that they have money. Dad was always good about being frugal, and while he may not have made the best investment choices (variable annuities in his tIRA, closed REIT's in their rIRA's [thanks, Edward Jones broker]), he still did pretty damn well.

EDIT: addition replies were posted while I typed this.

@katietsu: My mom has been talking with them at the VA. We know of 4 VA facilities in the general Pacific NW area, the closest being about 5 hours away. Mom has said that she is okay with this distance as long as it's an okay place, etc.

@chrisc: I didn't garble the details on the 5 year SPIA. She told us that a 5 year SPIA is the only Medicaid accepted annuity - we have no other choice. The SPIA is used only to get the money out of my dad's ownership and into my moms. Once it goes through this SPIA process, the money is not subject to the look back period. Yes, the CPA is running through those details.

Thanks for your input on the other two options we have been looking at. Yes, I am starting to think that the first option may be best, but we really need to get the financial information from the CPA to make a hard determination. Seems like we should be able to pull a substantial amount of money from the tIRA without huge tax consequences due to the medical deduction, the standard deductions for the married couple, etc.

So, if my mom takes the insurance inheritance proceeds and puts it in a separate account, wouldn't it still be considered an asset for the required Medicaid spenddown? I think the insurance claim benefits are your Mom's as the designated beneficiary of an insurance policy, not subject to Medicaid resources of your Dad's application as long as she doesn't mingle the proceeds with Dad's accounts -- she can always assign her claim to you to make it abundantly clear, but you don't need to do this, in my opinion -- just have her invest it in a CD with her name on it

Thanks for the SS information - not as cut and dry as I had hoped for. Financially, she doesn't need to take her SS next year, it was a suggestion from the CELA lawyer to "take it as soon as possible." She didn't give any good explanation as to why she would recommend this.

Regarding the guardianship, we were told that I could / would be appointed as guardian. He definitely won't be voting anymore - he doesn't even know what's going on 99% of the time. We set up trusts, wills, medical and durable powers of attorney, and medical directives years ago, so those are all in place. If you have these items already in place, I'm surprised that someone, knowing those items,
would counsel you to have a guardianship -- if your risk is that Dad might revoke his POA, that seems to me a small risk, especially if the POA document covers his incapacity -- under what circumstances would he revoke it -- under the circumstances in which he was completely cognitively impaired?


Thanks again



Thanks for the replies, all. Hopefully I can get some additional information, because honestly, nothing here has clarified any of the pathways provided by the three lawyers we've consulted with. Not expecting a miracle answer, and I appreciate all information provided!

likegarden
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Re: Need help with family financial situation - sheltering money / medicaid

Post by likegarden » Fri Oct 13, 2017 12:56 pm

We looked into these subjects too. We live in NY state. We have no need for nursing home care in the near future. Looking ahead we established a trust for our house, could add CDs to it. A Trust has beneficiaries listed and is not accessible by Medicaid. To protect assets for a surviving spouse we understand about the 5 year look-back used by Medicaid.
We also know that retirement accounts are not accessible by Medicaid, only the distributions count if you are above 70 1/2. Therefore it is important to have updated the list of beneficiaries in the IRAs, such as #1 : spouse, #2 : children. Additionally we have Long Term Care Insurance, but nursing home costs are climbing much faster than benefits.
Last edited by likegarden on Fri Oct 13, 2017 1:37 pm, edited 1 time in total.

GerryL
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Re: Need help with family financial situation - sheltering money / medicaid

Post by GerryL » Fri Oct 13, 2017 1:08 pm

stan1 wrote:
Fri Oct 13, 2017 10:58 am
I'll try to keep my advice focused on a few "next steps" since you have a complex situation:

Make sure you fully understand the VA benefits before you make any other decision.

Make sure your dad does not have any medical conditions that would qualify him for hospice care. You said he is in great physical health so this might not be an option right now. Medicare benefits for hospice are extensive.
To OP: Keep in mind that the VA Aid and Attendance allows a much higher value of assets than Medicaid. That is to say, you can apply long before the individual has completely spent down his/her assets.

We were able to apply for my mom (a WWII Army vet) when she was down to $20k. That was almost 20 years ago, so the limit may be higher now. She was granted the full A&A allowance because due to her Alzheimer's the cost of her assisted living situation was counted as a medical expense.

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Re: Need help with family financial situation - sheltering money / medicaid

Post by dbr » Fri Oct 13, 2017 1:11 pm

GerryL wrote:
Fri Oct 13, 2017 1:08 pm
stan1 wrote:
Fri Oct 13, 2017 10:58 am
I'll try to keep my advice focused on a few "next steps" since you have a complex situation:

Make sure you fully understand the VA benefits before you make any other decision.

Make sure your dad does not have any medical conditions that would qualify him for hospice care. You said he is in great physical health so this might not be an option right now. Medicare benefits for hospice are extensive.
To OP: Keep in mind that the VA Aid and Attendance allows a much higher value of assets than Medicaid. That is to say, you can apply long before the individual has completely spent down his/her assets.

We were able to apply for my mom (a WWII Army vet) when she was down to $20k. That was almost 20 years ago, so the limit may be higher now. She was granted the full A&A allowance because due to her Alzheimer's the cost of her assisted living situation was counted as a medical expense.
Yes, an important thing to understand is that different programs can have different financial structures and you have to research all of them to see what is what.

j0nnyg1984
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Re: Need help with family financial situation - sheltering money / medicaid

Post by j0nnyg1984 » Fri Oct 13, 2017 3:54 pm

Katietsu wrote:
Fri Oct 13, 2017 11:50 am
Also, I want to remind you and especially your Mom to take small breaks, at minimum, from the situation. Does your Mom have grandkids she could spend an hour with at the park, for example. These breaks can really help you to make better decisions for your Dad.
I told her a long time ago, if she wanted a grand kid, she better have another one herself, cuz I wasn't going to :D Neither my brother nor I have any kids. I took her to a hockey game earlier this week, I'm trying to do stuff to keep her out of the house. She's been tapering down her stays at the VA hospital a bit - today she'll only be there about 5 hours, yesterday it was only about an hour, etc. It doesn't matter, she still feels super guilty, thinks she's abandoning him.

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BL
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Re: Need help with family financial situation - sheltering money / medicaid

Post by BL » Fri Oct 13, 2017 4:38 pm

Unsure of dad's VA benefits qualifications (we have been told that with his serving in Vietnam, Parkinson's is a presumptive disease that may entitle him to additional VA benefits / payments) - this is being worked on by my mom
This may be critical to get the right info on and action may be required. There should be a county veterans services officer for your county that may be able to assist in making claims for a presumptive disease. The claims may take a long time to get through the system. The VA may have long term care and so may the state veterans organization. Without a disability rating or nearly indigent,it may not be easy to get in. I just ran across some old info on that that I discarded because it was (10 years) old so not necessarily relevant. The VA is also likely to be able to help or refer, but I would try all options. There may also be some references available from American Legion or VFW if needed.

dbr
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Re: Need help with family financial situation - sheltering money / medicaid

Post by dbr » Fri Oct 13, 2017 4:57 pm

BL wrote:
Fri Oct 13, 2017 4:38 pm
Unsure of dad's VA benefits qualifications (we have been told that with his serving in Vietnam, Parkinson's is a presumptive disease that may entitle him to additional VA benefits / payments) - this is being worked on by my mom
This may be critical to get the right info on and action may be required. There should be a county veterans services officer for your county that may be able to assist in making claims for a presumptive disease. The claims may take a long time to get through the system. The VA may have long term care and so may the state veterans organization. Without a disability rating or nearly indigent,it may not be easy to get in. I just ran across some old info on that that I discarded because it was (10 years) old so not necessarily relevant. The VA is also likely to be able to help or refer, but I would try all options. There may also be some references available from American Legion or VFW if needed.
In my state the state VA homes do not allow admissions without a degree of medical necessity. I think the explanation I got was a need for at least three skilled nursing activities per day. Medication management is not a skilled nursing activity. I can't comment on "presumptive disease." Assistance with in-home care is different.

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Re: Need help with family financial situation - sheltering money / medicaid

Post by JGoneRiding » Sun Oct 15, 2017 10:10 am

WA state recognizes all inheritance as separate property. So your mom should be totally fine there as long as she puts her inheritance in her own account. I might open a new one just for this inheritance so there is never any question of it having any marital funds and then I would add nothing to that account after the original pay out until Medicaid issues are finalized

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Re: Need help with family financial situation - sheltering money / medicaid

Post by ResearchMed » Sun Oct 15, 2017 10:31 am

I haven't tracked all of the various comments above and the comments on the comments.

But two quick... comments:

1) You seem to live in Washington, but want an attorney in Portland? Best to get an attorney who is licensed in and *very* familiar with the laws in your (parents) state of residence. State laws can vary wrt these issues.

2) Your father is already taking SS, prior to age 70. Waiting until 70 would maximize his benefits and thus those to your mother as a survivor.
But IF they divorce, the "rules" may be different in terms of how your mother would end up in the best position.
I'm not sure what the best SS strategy long-term, including for mother, would be, but you should look into this soon.

Some of the attorneys do not seem to understand things... OR Washington has some odd and different rules, especially about Medicaid and the very important look-back.
You do NOT want to screw that up, and risk having money taken back from your mother because it was all sorted out/divided/transferred "too late".

Good luck. It's not an easy situation.

RM
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