Transfer of Resources

In Some Rare Circumstances, Last Minute Medicaid Planning Is An Option

I was working with a family today. Dad was in the nursing home getting rehabilitation. Elderly Mom was still living at home, and she is too fragile to be able to take care of Dad if he comes home after rehab. Mom and Son said Dad weighed about 230 pounds, and Dad would need someone around the clock to care for him. Dad is likely to live in the nursing home until he dies.

Mom was disappointed because she expressed how hard Dad had worked over the years to save some assets to pass along to their children. They owned a paid-for home, and they had another roughly $230,000 of life savings. We discussed how, normally, people in a nursing home have to spend all of their savings until they have less than $2,000 remaining. She also told me that the nursing home in Lake Charles, Louisiana, would cost her husband $5,400 monthly. She could foresee their life savings that they had spent seven decades saving - wasting away.

We discussed a particular legal strategy that would enable them to save Mom about $175,000 of her $230,000. The only way this strategy works is that if the bulk of the non-home assets are liquid, and there is a child or children that will cooperate with the plan. The legal strategies are very complicated, but it involves:

  1. The parents transferring their Countable Resources to other parties;
  2. The parent applies for Long-Term Medicaid - and gets denied due to the transfer of resources. Medicaid will assess a penalty period that lasts a number of months;
  3. Assets are returned to the parents to reduce the value of the original transfer, thus reducing the penalty period;
  4. Parent spends the returned funds on their care.

All of this is very complicated and there is a significant amount of documentation that is necessary. One mistake can cost the family their entire life savings and perhaps even their home.

Taking advantage of legal strategies to protect your assets from losing to the nursing home is most effective when you plan ahead - at least five years before a nursing home situation. Since no one knows if - or when - they will go into a nursing home, it's difficult to determine when you should engage in Medicaid planning. But we know that the sooner you take the right action, the better.

But if you have a relative who is in the nursing home right now, or they are within days of going into the nursing home, and they have cash assets of $120,000 or more, you may want to give us a call so that we can help you determine if there are actions you can take within the rules of the Louisiana Long Term Care Medicaid Manual to protect what you've save for yourself and your loved ones.

Protecting Assets When Parent Already in the Nursing Home

I met today with the children of a woman who is presently residing in a Baton Rouge nursing home due to her dementia diagnosis. The children had no idea how long term care and Medicaid financing for long term worked.

They told me that Mom owned a home, three annuities, some cash in the bank, and expensive jewelry and antiques. Their financial advisor referred them to my office. I asked them what they knew about long term care Medicaid. They said they were starting to "hear things" but they wanted to get the truth.

I told them that if all of the assets stayed in their mother's name, then their mother would be forced to spend her $475,000 of financial assets until she had less than $2,000 remaining. They told me that their mother was spending about $8,000 per month currently on her care. I also told them that - if Mom keeps everything in her name - then after Mom spends all of her finances, she will qualify for Medicaid, but then Medicaid will have the right to enforce its Medicaid Estate Recovery rights after Mom dies, forcing the house to sold after Mom dies to reimburse Medicaid for what they spent on Mom's care after Mom spent all of her own money.

Since the timing of your legal planning to avoid losing assets to nursing home expenses is so critical, we are not going to be able to save as much for them as we would for those who are more pro-active and engage the right legal help when they are still healthy.

The children will be back in the office next week to sign a slew of legal documents to ensure that they will save and protect about $300,000 of Mom's assets from losing it to the nursing home. While we weren't able to save everything because this planning started while Mom was already in the nursing home, we are going to be able to save hundreds of thousands for this family - even if Mom resides in the nursing home for many, many years.