Mom Has $1,000,000. She’ll Never Run Out of Money (Part 1)
December 26, 2011
Paul called concerning his 88 year old mother who needs nursing home care. “She doesn’t have a power of attorney. I think she needs one”, he said. I concurred but our conversation didn’t stop there. As we always do, I asked him about Mom’s finances. “Her income consists of Social Security of $1000 per month and what she generates in income from investments”, Paul told me. “But I’m not worried because she has $1,000,000 in assets. I don’t think she’ll ever run out of money so Medicaid isn’t possible or necessary.” “Maybe – maybe not”, I replied.
Why did I say that? Doing some quick math, spending approximately $100,000 a year of her assets on nursing care, it will take 10 years before Paul’s mom spends it all. A 10 year stay isn’t all that likely, is it? After all, she would be 98 at that point. Not likely, but it is certainly possible. But let’s say she doesn’t outlive her money. What if, instead, she lives in a facility for 6 years or 8 years and spends $600,000 or $800,000?
I told Paul that whatever is left will be passed on to her heirs in her will. The exact amount will depend on how long she lives and how much she uses for her care. I then asked if she had a will. That’s when he told me that Mom has 3 children, but Paul’s brother Bill has “issues”. “He hasn’t been deemed disabled or even diagnosed with anything”, Paul told me, “but Bill never married, has never held a job for very long and is just ‘off’.”
Paul told me that Mom’s will leaves 2/3 of her estate to him to look after his brother. I then asked about Bill’s situation, his financial needs. Not surprisingly, he has nothing to his name. As we were talking, Paul had an “aha” moment. He realized that there just might not be all that much left for Bill and that the financial burden would fall to him. Suddenly, Medicaid seemed to be more relevant. Paul grew concerned and asked, “Is there anything you can do to help me?” “Actually, there just might be”, I told him.
Next week I’ll share with you what I told Paul.
No Luck with Medicaid? VA to the Rescue
December 19, 2011
Karl had been in an assisted living facility for several years and doing well there. His family felt fortunate. Although Karl didn’t have much in the way of assets he did have income from Social Security and a pension, totaling $5000. He also had a long term care insurance policy that was paying $2500 a month. His daughter, Mindy, called me, however, because now Dad needed nursing home care. She figured she needed to apply for Medicaid. That’s when I explained to her that Karl couldn’t get Medicaid, even if he has not even a dollar to his name.
Mindy corrected me. “Dad only has $500 in the bank. His income doesn’t count towards the $2000 asset limit”, she said. That’s true but the assets aren’t Karl’s problem. He has too much income. You see, if his income exceeds the Medicaid reimbursement rate, that rate which Medicaid pays the nursing home for its’ Medicaid residents, then he won’t qualify. (Actually, Medicaid requires the resident to give his income to the nursing facility and then it will pay the difference up to the reimbursement rate.) And the long term care insurance, which will pay out for another 3 years, counts towards income.
“But, the nursing home we looked at said their private pay rate is $10,000 per month”, Mindy told me. “He only has $7500. What are we going to do?” I asked her if Karl was a veteran. He was, of World War II. If you are a regular reader of this blog you know that there is a wonderful program available to wartime veterans and their surviving spouses which can provide additional income in the form of a pension.
I told Mindy that Karl could obtain a pension of $1700 per month. That would bring his income up to $9200 per month, close to the $10,000 she was quoted. We could either negotiate with that facility or find another one that would accept her dad’s income on a private pay basis. That would get her through 3 years, until the insurance policy is tapped out. And what then? Karl’s income would most likely be below the Medicaid reimbursement rate at that point and we could then qualify him for Medicaid.
I could hear the relief in Mindy’s voice. “This is all so complicated. I am so lucky I found you. I could never have figured this all out myself. ” I understood completely. It’s so difficult to navigate through the long term care system without a knowledgeable guide. To see if VA benefits can help you check out our 30 second VA Quiz at http://elderlawtodaypodcast.com/areas-of-practice-2/veterans-benefits/
The Best Laid Plans of Mice and Men
December 12, 2011
It was a call I received a number of years ago but one I’ll always remember. Don called regarding his mother’s need for long term care. Her health had been slowly declining but she was still living at home. Her investments were dwindling and she needed increase care. It was a pretty typical situation we’ve seen over and over again. I knew where he was headed – or so I thought.
When we sit down with new clients to explain how we can move assets out of their name in order to qualify for government benefits, they so often think in terms of gifting outright to their children. Well, that’s what happened in this case. Don told me that his mother gifted the home to Don’s deceased brother’s son, Clyde, a year and a half ago. He lived in the home with his grandmother and was supposed to provide some care – or at least that was the plan – until Clyde decided that he wanted to sell and move to California to pursue a new career. I figured out what was coming.
Don told me that Mom was essentially being kicked out of her house. Clyde reneged on his agreement and was taking the proceeds from the sale with him. Don wanted to know what his options were. We talked about the possibility of suing Clyde to recover some of the money. The problem was that no written agreement existed. It sure looked a gift from Grandmom to Grandson, no strings attached.
He then asked me about assisted living care for his mom who, he felt, really needed supervision. She had approximately $50,000 in savings and $2200 in income from Social Security and pension. At a cost of $5000 per month it would take her about 18 months to run out of money, leaving her unable to pay the assisted living facility expenses beyond that and with nothing to get her into a nursing home later on if she needed it.
“It all sounded reasonable when she transferred the house”, he told me. “Clyde needed a place to live and Mom wanted to help him get on his feet.” I understood, but at the same time, I know that life doesn’t always go according to plans. It reminds me of the quote from a Robert Burns poem, that “the best laid plans of mice and men often go awry”.
That’s why we never advise our clients to transfer assets outright to other family members, but instead we use trusts. Even when someone tells me that “everyone is on the same page – we all get along”, that is hardly a guarantee. Life is too complicated, with so many twists and turns. What Don’s mother should have done is work with an elder care attorney to put a plan in place to help her grandson, as she desired, but first to be sure to provide for her care needs for the present and the future. Only when she no longer needed the funds should they have been given over to Clyde.
So what did Don do? I told him that he’d have to make that $50,000 stretch another 3 and ½ years before Mom could hope to qualify for Medicaid. He considered moving her to his home, not an ideal situation, but the least costly option. He took the name of an attorney to talk with about suing his nephew and he thanked me.
COLA Increase Returns in 2012
December 5, 2011
The last 2 years have been especially tough on seniors, especially those on fixed incomes. That’s because there has been no cost of living increase since 2009 so Social Security benefits for millions of Americans have remained the same. Next year, however, the government has announced a 3.6% cost of living adjustment (COLA). This means seniors and the disabled will see a little more in their checks beginning in January. But the COLA can be beneficial to more than just Social Security recipients.
I have spoken and written often about a wonderful benefit available to many of our elder law clients, specifically wartime veterans and their widowed spouses. It is a non-service connected pension, commonly referred to as the Aid and Attendance benefit. It provides a monthly pension to seniors needing increased long term care and is a real life saver for people receiving care at home, in an assisted living facility or a nursing home setting. The 3.6% COLA applies to this program as well.
In real dollar terms that means, for example, that in the case of a married couple, the maximum pension of $1949 per month increases to $2019 per month. For the widowed spouse of a veteran it jumps from $1056 to $1094 and for a single veteran from $1644 to $1701. And keep in mind that this pension is income tax free.
Take our VA Quiz to see if you just may qualify. Email us at contact@hauptmanlaw.com and we’ll send you the 4 easy questions you can answer in seconds, that could get you as much as $24,000 a year of additional income.
