Investing Father's Assets Who Is In Nursing Home (POA)

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Watty
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by Watty » Thu Aug 15, 2019 10:26 pm

One thing that I have not seen mentioned is that you need to have a contingency plan in case something happens to you.

If you are the the only person who has a power of attorney and you get hit by the proverbial Mack truck then your Dad's finances could be in limbo. It is possible that the state could assign a lawyer to manage his care and finances and that would open up multiple cans of worms.

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aln10788
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by aln10788 » Fri Aug 16, 2019 2:16 am

Watty wrote:
Thu Aug 15, 2019 10:26 pm
One thing that I have not seen mentioned is that you need to have a contingency plan in case something happens to you.

If you are the the only person who has a power of attorney and you get hit by the proverbial Mack truck then your Dad's finances could be in limbo. It is possible that the state could assign a lawyer to manage his care and finances and that would open up multiple cans of worms.
Good point I never considered this. Could we somehow just make my sister a backup POA?
Swimmer wrote:
Thu Aug 15, 2019 7:02 pm
OP, I didn’t want to quote the long conversation, but I believe your math/understanding is incorrect. Medicaid will cover the difference between the nursing home cost and his income. His pension, social security, and any other income will all go to the nursing home. MA covers the shortfall.

If the nursing home cost is $7000 and his total income is $4000, MA pays $3000.
I didn't realize this is how it worked. If that's the case the I would never even have considered a medicaid facility. So does the mean I don't need an irrevocable trust anymore if I'm not trying to "hide the assets for medicaid purposes"? I just want to insure his assets are protected.

If I was to keep everything out of a trust and make my sister and I both a beneficiary on all accounts should I switch his assets to a 60/40 split as recommended earlier and keep the money currently in the checking accounts in a high yield 2% savings account?

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Stinky
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by Stinky » Fri Aug 16, 2019 5:45 am

aln10788 wrote:
Fri Aug 16, 2019 2:16 am
Swimmer wrote:
Thu Aug 15, 2019 7:02 pm
OP, I didn’t want to quote the long conversation, but I believe your math/understanding is incorrect. Medicaid will cover the difference between the nursing home cost and his income. His pension, social security, and any other income will all go to the nursing home. MA covers the shortfall.

If the nursing home cost is $7000 and his total income is $4000, MA pays $3000.
I didn't realize this is how it worked. If that's the case the I would never even have considered a medicaid facility.
OP, I'm glad that you posted your information and question to the Board, because you've gotten a lot of good advice and comments here.

I'm also glad that you now understand how Medicaid works when a person has Social Security and a pension. In skimming the prior posts, it doesn't appear that you knew about this Social Security/pension offset when you started the thread.

I'm wondering whether the lawyer advising you gave you good information about how Medicaid would work in the case of your father. You might review the notes and documents from your meetings with the lawyer.

It's possible that the lawyer mentioned the SS/pension offset, and you didn't pick up on that. If that's the case, it's understandable given the issues that you're dealing with right now.

But, if the lawyer didn't mention the SS/pension offset, taking you so far down the path of preparing for Medicaid for your father, I believe that the lawyer gave you incredibly bad advice. If that's the case, I would fire that lawyer today, and find someone else to assist you.

I wish you the best as you help your father out with his health challenges.
It's a GREAT day to be alive - Travis Tritt

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Watty
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by Watty » Fri Aug 16, 2019 5:55 am

aln10788 wrote:
Fri Aug 16, 2019 2:16 am
Good point I never considered this. Could we somehow just make my sister a backup POA?
That would be a good thing to ask an elder care lawyer about as soon as possible since a lot depends on what you Dad is still able to legally consent to.

Gnirk
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by Gnirk » Fri Aug 16, 2019 5:58 am

Is your father legally able to sign papers for new Durable Power of Attorney naming a secondary DPOA? If not, you may be able to do what I did (my mom had Alzheimer's so was deemed unable to sign legal papers):

I was her Durable Power of Attorney, but she had not provided an alternate, in case something happened to me. Among the powers granted to me by the DPOA was the power to set up a trust, so I had her attorney set up a Revocable Living Trust naming me as the trustee, with an alternate trustee if I was unable or unwilling to act. The terms of the trust followed exactly the specifics of her will as to distribution of assets after her death. Even though the trust was revocable, the language of the trust was such that it couldn't be revoked unless the grantor (my mom) was of sound mind, which of course she wasn't because of her dementia.

I then transferred all of her assets to the trust. Well, except for her EE Bonds, which the Treasury Dept would not allow :annoyed , thus they were the only asset that had to go through probate!

A Revocable Living Trust is not the same as an Irrevocable Trust, as it does not have Medicaid protection, but that was never our concern. We always planned on using her assets to pay for her care, and were able to get the best possible care for her in a licensed private care home that specialized in caring for those with dementia. She lived there for 8 years, through Hospice until her death at the age of 90. Much of it was covered by her monthly pension and social security.

miamivice
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by miamivice » Fri Aug 16, 2019 7:52 am

I am more than slightly uncomfortable with this thread. The OP appears to be more interested in maximizing the amount of money he and his sister get from his father's inheritance than worrying about the care, happiness, and joy in his father's life.

For example, he says that "I expect a life expectancy of no more than 7 years". Note that he didn't say that "my father's doctor has said he has a life expectancy of no more than 7 years". What does the father's doctor say? Some folks Googling it said that the father may live for many years.

What is the chance the father improves and no longer needs nursing care (for example, can move to assisted living?). Medicaid would stop paying in that case and then the children have raided the father's piggy bank leaving him with nothing. Keep in mind that the vast majority of inheritances are spent in just a couple years.

One thing I haven't read is what does the father want in his life, either through desires communicated today or previously. Could he live at home if the kids hired 24 hour home nursing care? If so, would he like to his spend his retirement on at-home care? Few people I know ever want to spend a single day in a nursing home.

The OP has said his father doesn't mind having a roommate in the nursing home. Really? The father wants to spend the next 7 years in a shared room with a variety of other men who are all in various end of life phases? That sounds like hell on earth in my opinion.

The Father's care and the Father's desires come first. The OPs attitude is more about preserving maximum inheritance for himself rather than using his father's financial resources to provide the best possible care for his father.

HomeStretch
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by HomeStretch » Fri Aug 16, 2019 8:48 am

aln10788 wrote:
Fri Aug 16, 2019 2:16 am
Watty wrote:
Thu Aug 15, 2019 10:26 pm
One thing that I have not seen mentioned is that you need to have a contingency plan in case something happens to you.

If you are the the only person who has a power of attorney and you get hit by the proverbial Mack truck then your Dad's finances could be in limbo. It is possible that the state could assign a lawyer to manage his care and finances and that would open up multiple cans of worms.
Good point I never considered this. Could we somehow just make my sister a backup POA?
Swimmer wrote:
Thu Aug 15, 2019 7:02 pm
OP, I didn’t want to quote the long conversation, but I believe your math/understanding is incorrect. Medicaid will cover the difference between the nursing home cost and his income. His pension, social security, and any other income will all go to the nursing home. MA covers the shortfall.

If the nursing home cost is $7000 and his total income is $4000, MA pays $3000.
I didn't realize this is how it worked. If that's the case the I would never even have considered a medicaid facility. So does the mean I don't need an irrevocable trust anymore if I'm not trying to "hide the assets for medicaid purposes"? I just want to insure his assets are protected.

If I was to keep everything out of a trust and make my sister and I both a beneficiary on all accounts should I switch his assets to a 60/40 split as recommended earlier and keep the money currently in the checking accounts in a high yield 2% savings account?
You do not have a clear understanding of how your dad’s care would be paid by Medicaid. Understandable as Medicaid is complex. Your dad’s care costs may be fully paid by dad’s pension, SS and possibly his retirement account distributions so Medicaid and a Medicaid trust would not even be needed.

Before setting up a Medicaid trust or adding POD/TOD designations in lieu of a will, I suggest you get a second opinion from a reputable estates and trusts lawyer who can also advise on the lack of successor POA issue and your dad’s legal capacity.

Don’t feel pressured into making a decision without another legal consultation just because the retainer with the Medicaid trust attorney expires in a month - it’s a sunk cost. Also, don’t buy in to the school of thought that it’s always a smart financial move to legally impoverish a parent/oneself through a Medicaid trust in order to get the government to pay for care through Medicaid. You probably won’t get the same level of care and comfort as you could through self-pay.

I suggest you re-read bsteiner’s two posts.

SuzBanyan
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by SuzBanyan » Fri Aug 16, 2019 9:03 am

miamivice wrote:
Fri Aug 16, 2019 7:52 am
I am more than slightly uncomfortable with this thread. The OP appears to be more interested in maximizing the amount of money he and his sister get from his father's inheritance than worrying about the care, happiness, and joy in his father's life.

....

I disagree with your assessment and think you should cut OP some slack. Given that she has a two month old and her father has been in a nursing home following a hospitalization for about 2 months, I would say she has had a few stressful months and is working towards a plan for caring for her father in the best way possible for the rest of his life. It also looks like she may have gotten some bad advance from an elder law attorney. But she did come to Bogleheads and has gotten good advice here ...

OP, my heart goes out to you and all the challenges you are facing. Take care of yourself and you extended family

Swimmer
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by Swimmer » Fri Aug 16, 2019 9:54 am

I think we’ve seen several red flags wrt the attorney. OP, does this attorney want to manage the trust he says you need long term?

I wish you and your family all the best, and am happy you reached out to this board. It will all work out. Be grateful that your dad saved and that, hopefully, you’ll be able to avoid the Medicare system.

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aln10788
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by aln10788 » Fri Aug 16, 2019 11:32 am

Just to clear some things up. My father is way too far in his diseased to ever recover. He absolutely doesn't want to be in the nursing home, his short term memory is so bad he sometimes thinks he is actually at his home. If it were up to him he would go back to living by himself and drink himself to death as he has been for the past decade. It rough having him in the nursing home knowing he doesn't like it but we are doing what needs to be done to keep him alive. He has said he is somewhat coming around to the nursing home as he has someone to cook for him, he actually has social interactions now, and staff he help him with the cable box when he forgets how to use it.

I will a meeting scheduled with the lawyer now to discuss all the advice given here. Their advice on the medicaid was before they knew about his pension/social security so I'm not sure what their advice is now.

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Peter Foley
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Re: Investing Father's Assets Who Is In Nursing Home (POA)

Post by Peter Foley » Fri Aug 16, 2019 10:50 pm

OP asked:
Could you explain the reason behind the Roth conversion. The vanguard one is an IRA now. How does this work and why does it help?
Basically, money withdrawn from an IRA is taxed at the owner's rate. In the case of your father, with high medical expenses the rate is likely to be zero or close to zero. If you were to inherit the IRA you would be required to take minimum distributions and the money coming from the IRA would be taxed at your marginal tax rate. Money converted to a Roth is taxed at the owner's rate - again, likely zero in the case of your father. Money withdrawn from a Roth IRA is not taxed. So if you were to inherit a Roth IRA you would pay no taxes on that money.

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