Advice Needed From Experts in Elder Law

asphaltgambler · 03-02-2009, 06:02 AM

Short story here: Dad just turned 88 and his health is declining. My mom passed on three years ago and he is living alone. Dad is currently recovering from a stint in the hospital from pnuemonia and a fractured rib (from a fall he had three weeks ago) He is now in an adult care/ re-hab facility and should be out in another week or so.

He has Blue-Cross and good coverage BUT if he were to stay in that adult care facility for more than 22 days continuous the 100% coverage drops tp 80% Then that coverage ends at 101 day continuous at which Medcaid kicks in (I'm told)

He has modest liquid assets totaling @$225,000 in this market and the home place is valued @$ 800,00 in this market.

We consulted an attorney specializing in this area for general fact finding. The attorney tells us that if he is unable to pay and Medicaid kicks in that:

A) The facility can and will have the rights to his monthly SS check to recover for his care

B) Medcaid has the right to recover any and all expenses and will go after any assets including his house which they would sell for tax assesed value at that time

C) Medicaid can and will go back 5 years prior to "uncover" any sheltered assets (like the house)

So..................................does anyone here have current or past experience with this situation? We would like to shelter his assets now if there was a way. I do not think he will live another 5 years honestly but you never know..............

stomachmonkey · 03-02-2009, 06:56 AM

Pretty much sums it up.

Unfortunately as you found out you are kinda late to the game of moving his assets.

Sounds like he will be back at home before he uses up his benefits or at worst the out of pocket will be minimal.

Seems you believe he will be needing an adult facility or other type of supervision like home care which will eat into his assets.

Your best course of action at that point may very well be to have him move in with you and use his assets to cover expenses.

Any siblings around or are you the only option?

If there are sibs make sure you take control of the assets with the help of an attorney so everyone is on board and there is no fighting later.

At minimum you/someone needs to be added to his accounts as a trustee NOW. That allows you to deal with his assets differently than after he passes. Afterwards is a pain. My father had assets when he passed but no trustee so dealing with it cost me 10k the first week and nearly 60k by the time we liquidated house etc...

Took me almost 2 years to get it all sorted out.

Sorry to hear and good luck.

Dueller · 07:07 AM

In context the attorney gave you proper advice. There are some nuances, though.

Please don't take this the wrong way...and you are not alone as most people/heirs want to shield assets. Medicaid is needs based. Translation: it is WELFARE. People with $800,000 houses and a quarter mil in savings do not qualify for welfare. If their liquid assets are depleted then they can qualify but Medicaid will be allowed to have a lien on their homes to reimburse the state after their death. (There are some exceptions if a survuiving spouse is living in the home).

The irony is that people want to get Medicaid assistance for NH care but they would never dream of applying for food stamps or other welfare programs. But it is the same thing.

Oh and yes, NH can receive a persons SS check to help pay for their NH care.

Sorry to be the (second) messenger here.

There are ways to partially preserve assets, but in a nut shell you would have to use his assets for 3+ years to private pay NH care. Lawyers have to be careful because it is a felony to assist some with welfare fraud but not a crime to assist in estate planning. There's a fine yet fuzzy line there for lawyers.

asphaltgambler · 03-02-2009, 07:10 AM

My sister is the trustee and his will has been updated from a good attorney about 4 years ago. We are all on board and discuss frankly and openly options. Three of us live close enough to have him live with us if his condition warranted that

stomachmonkey · 03-02-2009, 07:12 AM

Quote:

Originally Posted by asphaltgambler

My sister is the trustee and his will has been updated from a good attorney about 4 years ago. We are all on board and discuss frankly and openly options. Three of us live close enough to have him live with us if his condition warranted that

That's great. You have a some tough things coming your way soon, but you know that, helps to have a family that cooperates.

Best,
Scott

911Rob · 911Rob's Garage

Put one of the siblings on title for the home, NOW.

No one should be on title alone; saves lots of BS in the event of a loss of life. my $.02

Hope your dad recovers full health and can enjoy his remaining years.

Dueller · 09:04 AM

Quote:

Originally Posted by 911Rob

Put one of the siblings on title for the home, NOW.

No one should be on title alone; saves lots of BS in the event of a loss of life. my $.02

Hope your dad recovers full health and can enjoy his remaining years.

No offense, but your $.02 could cost them a bundle under our tax law. E.g., suppose dad conveys house to self and child as joint tenants w/right of survivorship. Dad dies and home vests in the child/children by operation of law. No need to probate. Simple, right?

But wait a minute. Child takes the house with the donor's basis. Thus if dad paid $100K for the house 30 years ago and the house is now worth $800K, then when the child sells the house he/she would have to pay a capital gains tax on $700K....or about $140K in taxes.

Conversely, if the house passes at dad's demise, the heirs receive it with a "stepped up" basis of the value at the time of dad's death. Sell it the next day and there would be no capital gains tax.

Might wanna stick to selling them, Rob, and leave estate planning to others.

asphaltgambler · 03-02-2009, 08:57 AM

Thanks.............

911Rob · 911Rob's Garage

No reason to get all huffy Duey? It was a "one line" suggestion with the understanding that we live in DIFFERENT Countries, sobeit I may be a little ignorant about US Tax Laws? I've done a fair bit of 'estate planning'; although I'm not an expert as the thread requested.

I am truly ignorant to your tax systems, but here in Canada we have something called 'Death Taxes' and Inheritance Taxes and the Gubmint can really be a beeOtch to deal with when dealing with estates of any value; such as a million dollars posted herein.

I have seen families stripped of wealth during the process. By having two people on title the property is held from the estate. Of course, the sooner you do this the better; but it's never too late imo! I would at the very least consult with an expert on the issue. Sure, most often it's only a postponement of the inevitable.... but postpone away I say! The less value in the estate at death, the better.

There are things to consider like if any of the assets have been claiming deprication or losses; has the asset increased in value since it was aquired?, are there any 'business' interests involved? You may have very well pointed out the most NEGATIVE possibility that could occur in the event of having someone on title; however it was only a two cent suggestion AND one that is VERY MUCH warranted to be reviewed. It's a very simple solution to a very complicated matter in most scenarios.

I admit that I'm not an expert, but I do employ some of Canada's finest (and most expensive) tax accountants and we are constantly exploring methods of tax planning....... so don't confuse me with the RE girl that sold you your house? Accountants and Lawyers NEVER tell me what to do; they only give me advise AND something always goes ding-a-ling in my mind when I hear a lawyer giving advise; Ha, Ha, my bad

It's a BIG subject, I'd be getting some real advise and not from the braintrust of PPOT?

I'm a developer, paying taxes to us is like wiping your arze when you take a $hit dude......... that's about a nickels worth for ya now! bye bye councillor.

DEATH and TAXES in Canada LINK
Getting advice
Bear in mind that the situations outlined here are simple summaries of often complex
tax scenarios. All cases should be dealt with on an individual basis, and professional
legal and tax advice should always be obtained when dealing with estates.

Dueller · 03-02-2009, 10:59 AM

Huffy? Gimme a break , Rob. I open my comment with "No offense..." and close it with a smiley face emoticon and you think THAT'S huffy? Pretty thin skinned for a developer.

As to estate taxes, currently anything under $1.5M is not generally taxable. We're in a weird situation here in the states legislation wise because of an old Omnibus bill that could result in a) eliminating inheritance tax altogether b) reverting back to a $600K threshold for estate tax to apply or c) having the threshold established at $2-5M. Most money's on the latter end result. BUT...the very situation I enumerated in my example is a very common mishap....and expensive one I see when people don't consider all the consequences of their legal actions.

While I understand your intent with having another name on the deed, the urgency of your advice ("...siblings on the title, NOW.") was a bit overstated given other consequences.

But nice try at backpeddaling....

Unhuffily yours, D

asphaltgambler · 03-02-2009, 12:04 PM

Boys.....BOYS........

911Rob · 911Rob's Garage

Smiles back at you councillor

KFC911 · 03-02-2009, 12:32 PM

Quote:

Originally Posted by asphaltgambler

Boys.....BOYS........

It's them there wimens that make 'em act like that

!

ruf-porsche · ruf-porsche's Garage

Quote:

Originally Posted by 911Rob

Put one of the siblings on title for the home, NOW.

No one should be on title alone; saves lots of BS in the event of a loss of life. my $.02

Hope your dad recovers full health and can enjoy his remaining years.

I would put all the sibilings on the title. You don't know how money and property can corrupt even the closest of family.

Dueller · 12:56 PM

LOL...you guys crack me up.

Back to the original query. AG, you could transfer the assets over to children. If done above board (i.e., not trying to hide it from Medicaid, gift tax returns filed, etc), you then could wait 36 months and then apply for Medicaid. If you were to place the money/assets in any type of trust, the waiting period is 60 months. During the intervening period, your dad would have to pay for any of his NH care not covered by insurance or Medicare (as opposed to Medicaid.

Typically skilled nursing care runs $6-7K/month. Assumiong he has a $2K/mo SS benefit that would leave $4-5K/month shortfall. So you can see in a 3 year period he could use up $150K+ of his assets transferred to someone else. But, if the house is transferred to a child and then sold you would end up with a big tax on the gain. One solution is to allow him to sell the house then transfer the money....that way there is no tax on his gain. And a gift under the estate exemption would not be taxed (under current law...may change).

Once he has served out that waiting period on transfer of assets, he would possibly qualify for Medicaid (under current law).

DISCLAIMER: The foregoing is offered for purposes of discussion and is not intended as legal, accounting or other professional advice.

Dueller · 03-02-2009, 12:58 PM

Oh yeah...AG...hoping your father recovers and enjoys his twilight years.

911Rob · 911Rob's Garage

Oh druthers, these one liner posts can get me into trouble 'eh? Ha.
Love the disclaimer Due!

My advise was for tax purposes not medicaid evasion fwiw?
The "now" part is a summary of how IRS (Rev Can) looks at these things; the longer somebody else is on title the better; that's all.

Agreeing who'll be on title, well that's another story and YES, like RUF said, inheritance differences can and often do divide.

I hope he lives another 20 years!

Dueller · 03-02-2009, 01:09 PM

CMA, Rob, CMA.

911Rob · 911Rob's Garage

Good read, based on American laws too.....

asphaltgambler · 03-03-2009, 06:54 AM

Thanks guys for the advice and support. The will is concrete and divides his estate equally among the four of us. We (us kidz) have a very good relationship and have discussed how we feel.

The flip side here is that Dad is pure old school and we have also agreed (amongst ourselves) that dad would never liquidate his estate until he is in the clay.