Financial Windfall / Caring for Mom

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dshelly77
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Financial Windfall / Caring for Mom

Post by dshelly77 » Sat Apr 06, 2019 8:29 am

Hi! Fairly new member here. Have been following the forums for a while but have never posted. I'm posting for feedback, suggestions on anything I may have missed in making sure my mom's assets are protected as she ages.

My mom is 72 and we've just come into a wrongful death settlement for my dad, her husband. The plan is to park those funds in a trust to protect in the event she goes in to a long term care facility within the next 5 years.
Secondly, we are in the process of selling and downsizing her home to a more manageable apartment. This will yield some proceeds that we will keep outside of the trust to help with any significant cash flow needs and traveling.
Her monthly income from pensions, social security, dividends exceeds the senior housing subsidized limits so anything she moves in to will be paid out of her monthly income.

My question is, is there anything else I should be considering as I try to protect her assets should she need long term care within the 5 year look back.

Thanks in advance for any feedback

DarthSage
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Re: Financial Windfall / Caring for Mom

Post by DarthSage » Sat Apr 06, 2019 9:21 am

I guess I'm not understanding--what are you trying to protect the assets from? Protect them from, say a lawsuit that would leave her destitute? Protect them so her heirs can inherit?

I don't understand why you're worried about the 5-year look back. Would you not want to use this money for her long-term care, should she need it? I understand that she's in good shape for her current needs, which is wonderful. I would be looking at investing this money well, so that it grows and is there for her down the line--maybe in a 5-10 year time frame (hopefully longer). You want this money so that she can get in a high-quality facility, should she need very involved care at some point. It doesn't sound like she would qualify for subsidized care (based on income/assets), which is a good thing.

delamer
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Re: Financial Windfall / Caring for Mom

Post by delamer » Sat Apr 06, 2019 10:00 am

Assuming you are planning for Medicaid/nursing home look backs, you should consult an attorney with such expertise in your mother’s state.

This isn’t a do-it-yourself project.

tibbitts
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Re: Financial Windfall / Caring for Mom

Post by tibbitts » Sat Apr 06, 2019 10:13 am

I'm definitely not an expert but are you sure an irrevocable trust would protect assets within 5 years? For long term care you'd want money available to spend a chunk up front to get into a better facility, no? Also most people are probably not looking at the kind of long-term-care you're thinking about by 77, so maybe there are some other health issues going on here.

GreenGrowTheDollars
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Re: Financial Windfall / Caring for Mom

Post by GreenGrowTheDollars » Sat Apr 06, 2019 10:18 am

I'd be careful about trying to protect those assets. She may need assisted living at some point, and that is generally NOT covered by Medicaid. Even more likely is that she needs in-home healthcare. Then, there's memory care. I do not know a senior who wouldn't prefer any of these options to a nursing home. The nursing home is truly the least desirable option. Making sure those funds are available for these purposes is very important. Don't let the tail (potential Medicaid coverage for nursing home expenses) wag the dog.

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Stinky
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Re: Financial Windfall / Caring for Mom

Post by Stinky » Sat Apr 06, 2019 10:22 am

delamer wrote:
Sat Apr 06, 2019 10:00 am
Assuming you are planning for Medicaid/nursing home look backs, you should consult an attorney with such expertise in your mother’s state.

This isn’t a do-it-yourself project.
+1

If the windfall is of any size, it’s likely that she won’t qualify for Medicaid, at least initially. A lawyer could tell you for sure.

If you’re preparing for some type of assisted living or nursing home arrangement for her, you should consider taking a tour of a few private pay facilities and compare them to the ones that accept Medicaid from the start. Based on my experience, you’ll find that the private pay facilities are much nicer and more attractive. I personally wouldn’t choose a lower-tier facility for my parent if I had a choice.
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iudiehard1
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Re: Financial Windfall / Caring for Mom

Post by iudiehard1 » Sat Apr 06, 2019 11:07 am

Don’t take this the wrong way....but “protecting her assets” can be interrupted to mean “how can we make Mom look poor so we can inherit more money”. That’s why the 5 year look back is no joke and something you don’t want to play with. I’m positive that isn’t really the intent.

As a son who just lost his mom a few years ago and helped manage her little nestEgg in her final years.....I will offer this advice from a perspective of a son who had to battle his siblings over playing games with the money before her death.

1. You are going to be very very happy that she has this wealth to manage her “quality of life” needs in her late years. The quality of facilities are night and day from each other and the difference is location and $. When you have to transition any parent to assisted living, they don’t go happily as they only think “nursing home”. Some of these places are resort style places that I would like to vacation too.
2. The places can certainly be expensive, but they won’t break the bank. In fact, if you get her nestEgg invested well....it may actually be something that the interest can pay or only slowly draw down the capital. For example, my mother was coming up around $500 short a month on her budget and draw from her meager IRA withdrawal. I estimated at that burn rate she would have to live in that assisted living facility for about 22 years before we ran out of cash. She lived only 2.
3. Medicaid isn’t for rich people and your mother is rich. Medicaid nursing homes in general are low quality and places that you go to die.
4. You want to live with no regrets as it relates to “preserving the money” for your benefit. In fact, I consistently told my siblings that I hope Mom lives to be 100 and she burns through every dime of the money.
5. Why do we think someone else should pay for your final years?
6. All that said, I took over my Moms finances to indeed make sure that her nest egg wasn’t scrambled and she could maintain a high quality of life. In fact, in the end we split a sizable nestEgg 3 ways and we all could be proud of how Mom lived her final years.

So, if you really want to help and perserve her money. Help her get it invested well and get a quality return on the investment for years to come. Looking for ways to pass through the money through Tax and gifting strategies is another way but in the End making her poor when she really isn’t poor may seem “sophisticated”......but the right prosecutor might actually call it “criminal”.
Proverbs 13:20 - Walk with the wise and become wise, for a companion of fools suffers harm.

DarthSage
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Re: Financial Windfall / Caring for Mom

Post by DarthSage » Sat Apr 06, 2019 11:19 am

iudiehard1 wrote:
Sat Apr 06, 2019 11:07 am
Don’t take this the wrong way....but “protecting her assets” can be interrupted to mean “how can we make Mom look poor so we can inherit more money”. That’s why the 5 year look back is no joke and something you don’t want to play with. I’m positive that isn’t really the intent.

As a son who just lost his mom a few years ago and helped manage her little nestEgg in her final years.....I will offer this advice from a perspective of a son who had to battle his siblings over playing games with the money before her death.

1. You are going to be very very happy that she has this wealth to manage her “quality of life” needs in her late years. The quality of facilities are night and day from each other and the difference is location and $. When you have to transition any parent to assisted living, they don’t go happily as they only think “nursing home”. Some of these places are resort style places that I would like to vacation too.
2. The places can certainly be expensive, but they won’t break the bank. In fact, if you get her nestEgg invested well....it may actually be something that the interest can pay or only slowly draw down the capital. For example, my mother was coming up around $500 short a month on her budget and draw from her meager IRA withdrawal. I estimated at that burn rate she would have to live in that assisted living facility for about 22 years before we ran out of cash. She lived only 2.
3. Medicaid isn’t for rich people and your mother is rich. Medicaid nursing homes in general are low quality and places that you go to die.
4. You want to live with no regrets as it relates to “preserving the money” for your benefit. In fact, I consistently told my siblings that I hope Mom lives to be 100 and she burns through every dime of the money.
5. Why do we think someone else should pay for your final years?
6. All that said, I took over my Moms finances to indeed make sure that her nest egg wasn’t scrambled and she could maintain a high quality of life. In fact, in the end we split a sizable nestEgg 3 ways and we all could be proud of how Mom lived her final years.

So, if you really want to help and perserve her money. Help her get it invested well and get a quality return on the investment for years to come. Looking for ways to pass through the money through Tax and gifting strategies is another way but in the End making her poor when she really isn’t poor may seem “sophisticated”......but the right prosecutor might actually call it “criminal”.
This was what I was trying to get at, but you said it so much better! I can see protecting assets if there's reason to be concerned--your parent has a potential pending lawsuit, or is vulnerable to sending $$ to scammers or something. Saving money for heirs is a nice thought, but is much lower on the priority list than providing comfort to an aging parent.

Gnirk
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Re: Financial Windfall / Caring for Mom

Post by Gnirk » Sat Apr 06, 2019 11:56 am

OP, I am sorry for the loss of your dad, I’m sure no settlement can replace that loss.
I think you want to manage this money so that your mom will have the best quality care if/when it’s needed.
Speaking from personal experience:

There are big differences in quality of care for both failing physical health and failing memory. My mom was physically healthy, but suffered from Alzheimer’s Disease, and after 4 years we realized she needed more care than we were capable of. I visited every memory care facility, and there are numerous ones, in our area. Those who accepted Medicaid were far different than those who didn’t. And there were big differences in quality of care, patient to caregiver ratios, cleanliness, food, etc. In some, the residents were basically ignored most of the time because there was a low staff to patient ratio. The food was unappealing and of poor nutritious quality.

With the help of a geriatric case manager, we found a private care home which was licensed for 3 residents and specialized in dementia. My mom received almost one-to-one care, the meals were well- balanced, tasty, and cooked from scratch. She was treated like family. My mom lived there for eight years, and stayed through hospice care until her death at the age of 90.

The cost at the beginning was $4,000 per month, but during the last two years was around $6,000 per month, which is less than a nursing home but more than some of the large memory care facilities.

I was my mom’s DPOA, so managed her finances and health care. My brother and I agreed that her money would be used to pay for the best quality of care possible, and anything left would be a bonus. She was frugal and saved all of her life. She was also fortunate that she had LTC insurance that paid a good portion of the first four years of her care. But even if she hadn’t, we would have spent every dime of her money on ensuring she had great care and the best quality of life under the circumstances.

Topic Author
dshelly77
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Re: Financial Windfall / Caring for Mom

Post by dshelly77 » Mon Apr 08, 2019 7:51 am

Thank you for all your comments, feedback.
Our primary purpose is to have my mom get the best possible care as she ages. But she's bad with money and I've managed her income/needs since my dad passed away. Just testing to make sure the advice I've been given is appropriate.

From your comments, it seems I'm considering all that I should. We have hired an estate attorney and are planning for enough over the next few years so that if she needed assisted/memory care/in home care, her monthly cash flow plus liquid assets provides for a variety of options. I was advised of a trust by the attorney to protect the assets.

Will post under a separate thread on investment questions re: preservation of principal and long term care planning.

Thegame14
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Re: Financial Windfall / Caring for Mom

Post by Thegame14 » Mon Apr 08, 2019 8:00 am

dshelly77 wrote:
Sat Apr 06, 2019 8:29 am
Hi! Fairly new member here. Have been following the forums for a while but have never posted. I'm posting for feedback, suggestions on anything I may have missed in making sure my mom's assets are protected as she ages.

My mom is 72 and we've just come into a wrongful death settlement for my dad, her husband. The plan is to park those funds in a trust to protect in the event she goes in to a long term care facility within the next 5 years.
Secondly, we are in the process of selling and downsizing her home to a more manageable apartment. This will yield some proceeds that we will keep outside of the trust to help with any significant cash flow needs and traveling.
Her monthly income from pensions, social security, dividends exceeds the senior housing subsidized limits so anything she moves in to will be paid out of her monthly income.

My question is, is there anything else I should be considering as I try to protect her assets should she need long term care within the 5 year look back.

Thanks in advance for any feedback
get assets out of her name for the 5 year look back for medicaid

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RickBoglehead
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Re: Financial Windfall / Caring for Mom

Post by RickBoglehead » Mon Apr 08, 2019 8:02 am

The protection of the assets is the key to understand better. Protection from what? Keep in mind that an attorney makes money in many ways, including by creating a trust document. You should ask WHAT this trust would protect her assets from, and ask questions until you completely understand the reasons before you commit to a trust.
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NotWhoYouThink
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Re: Financial Windfall / Caring for Mom

Post by NotWhoYouThink » Mon Apr 08, 2019 8:11 am

Agree with the above advice to think hard about what you are protecting from whom before you create a trust.

That money is hers to spend on her care. Your priority should be to maximize the use she can get from that money, NOT to minimize the money she pays for care. There is a huge difference between the quality of care she can get as a self-pay resident with all choices available, and the care she can get at the mercy of Medicaid funding.

For example, if the money is in a trust, how can it be used to support her? (hint: it probably can't). So what does the trust do for HER? Pay for a few incidentals?

You say she isn't good with money. Well, many people aren't, but we don't take away their money for that reason. 72 isn't very old. Unless her health is seriously compromised already, she should consider using the money to buy suitcases and travel clothes and start seeing the world, or whatever else she wants to do. My mom traveled internationally into her 80s. It would not have been good to hide her money in a trust and prevent those opportunities.

Maybe instead of going right to the attorney to fund a trust, you should work with her on what her financial needs are, and see if the money available is enough to fund the lifestyle she expects while she is healthy. If not, she needs to dial back her lifestyle. If it is, then you can come back here for investment ideas. If she is not good with money maybe she can give you POA to manage her money, but still have it available for her use and not locked away in a trust.

Good luck.

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Sandtrap
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Re: Financial Windfall / Caring for Mom

Post by Sandtrap » Mon Apr 08, 2019 8:18 am

0. Do not easily be "sold" a "trust package" as a solution to things.
1. Seek legal counsel, estate lawyer. (find one that is not selling "drive through window/boilerplate" trusts)
2. 5 years is not too far away. And, your mom's needs still uncertain. Scenario is changing. So, until things settle down, keep your funds with the following in mind: A) Liquidity, B) Security of Principal (this means no funds or equities, yet), C) Accessibility (do not lock in the funds. IE: CD Ladders, treasuries, etc.)
3. Seek legal counsel.
4. See #3.
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NotWhoYouThink
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Re: Financial Windfall / Caring for Mom

Post by NotWhoYouThink » Mon Apr 08, 2019 8:55 am

Sandtrap wrote:
Mon Apr 08, 2019 8:18 am
0. Do not easily be "sold" a "trust package" as a solution to things.
1. Seek legal counsel, estate lawyer. (find one that is not selling "drive through window/boilerplate" trusts)
2. 5 years is not too far away. And, your mom's needs still uncertain. Scenario is changing. So, until things settle down, keep your funds with the following in mind: A) Liquidity, B) Security of Principal (this means no funds or equities, yet), C) Accessibility (do not lock in the funds. IE: CD Ladders, treasuries, etc.)
3. Seek legal counsel.
4. See #3.
Sandtrap, I understand that you are recommending that OP get advice before acting, but "seeking legal counsel" often turns into "getting sold a trust."

Most people don't want to spend $300 or $500 or $1000/hour discussing possibilities and options with an attorney, they don't think they can afford it. And many attorneys, realizing this, listen to a short description of the situation and then quickly offer a solution, which happens to be a pre-packaged trust document, with a few inputs that can be tweaked to reflect the specifics of the situation.

If you need a trust, and if you and your attorney communicated well enough that the attorney understood your situation fully, and you fully understood what the trust does and does not do, that can be fine. But if you weren't clear, or were intimidated by the attorney and did not ask enough questions, you end up spending money on something that either doesn't help, or that undermines your intent. And I believe that happens more often than most attorneys would like to admit.

So before seeking legal counsel, I think the OP, and all of us who may need estate planning help, should spend considerable time researching and thinking through what we want to happen under various situations. It may be that the best solution is not to "protect the assets" in a trust. Certainly I have no intention of "protecting my assets" in a trust for Medicaid planning. Most people don't need to do any such thing.

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Sandtrap
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Re: Financial Windfall / Caring for Mom

Post by Sandtrap » Mon Apr 08, 2019 9:23 am

NotWhoYouThink wrote:
Mon Apr 08, 2019 8:55 am
Sandtrap wrote:
Mon Apr 08, 2019 8:18 am
0. Do not easily be "sold" a "trust package" as a solution to things.
1. Seek legal counsel, estate lawyer. (find one that is not selling "drive through window/boilerplate" trusts)
2. 5 years is not too far away. And, your mom's needs still uncertain. Scenario is changing. So, until things settle down, keep your funds with the following in mind: A) Liquidity, B) Security of Principal (this means no funds or equities, yet), C) Accessibility (do not lock in the funds. IE: CD Ladders, treasuries, etc.)
3. Seek legal counsel.
4. See #3.
Sandtrap, I understand that you are recommending that OP get advice before acting, but "seeking legal counsel" often turns into "getting sold a trust."

Most people don't want to spend $300 or $500 or $1000/hour discussing possibilities and options with an attorney, they don't think they can afford it. And many attorneys, realizing this, listen to a short description of the situation and then quickly offer a solution, which happens to be a pre-packaged trust document, with a few inputs that can be tweaked to reflect the specifics of the situation.

If you need a trust, and if you and your attorney communicated well enough that the attorney understood your situation fully, and you fully understood what the trust does and does not do, that can be fine. But if you weren't clear, or were intimidated by the attorney and did not ask enough questions, you end up spending money on something that either doesn't help, or that undermines your intent. And I believe that happens more often than most attorneys would like to admit.

So before seeking legal counsel, I think the OP, and all of us who may need estate planning help, should spend considerable time researching and thinking through what we want to happen under various situations. It may be that the best solution is not to "protect the assets" in a trust. Certainly I have no intention of "protecting my assets" in a trust for Medicaid planning. Most people don't need to do any such thing.
Absolutely true.
You are correct.
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