Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Should i trust the children?
Old 03-31-2011, 09:49 PM   #1
Dryer sheet wannabe
 
Join Date: Mar 2011
Location: Columbus
Posts: 14
Should i trust the children?

Hello

As my husband and I sat going over our retirement assets and we were kicking about the idea of passing on assets. I worry about someday getting sick and perhaps needing nursing care. I've always heard that nursing homes take all of your assets. How do you protect yourself from this kind of thing? I've also heard that long-term care is really expensive so I don't think that's an option.

We spoke of putting our homes in heirs' names and perhaps adding their names to our accounts. But this makes me nervous as I'm not sure I can trust them like that. Truthfully, none of them are very responsible. I've heard horror stories of people getting put out of their own homes and their money being taken.

I don't have biological children and my husband has natural one son. We practically raised my dead sister's children and do feel like they are ours. I have one neice who I know I can trust with everything but her husband is a different story.

I guess my question is how can you put assets in relatives name and still be protected? Is there a way I can buy CD's or IRA's in their names without their knowledge? I do have a joint bank account with my neice that she does not know is still open. We started it one summer to help her with college.

One other question. I asked my retirement system about what would happen to my pension if something happened to both my husband and myself. They said it would go to my next of kin. As I don't have natural children, I hope it's not my stepson. I want my neices and nephews to inherit all of my assets. I realize that as my husband's son, he is entitled to something but I don't want someone I barely know to inherit from me pesonally.

Thanks

April
__________________

__________________
April Fool is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-31-2011, 10:14 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
So many issues here. Nursing homes don't "take all your assets", they charge a daily fee that averages about $200/day. Assisted Living facilities charge about half that. Long Term Care insurance is a real possibility. Many threads on that topic suggest posters here vary from "already bought" to "I'm on the fence" to "it doesn't make any sense for me".

Presumably, giving your assets away is a ploy to qualify for Medicaid. Someone who's more knowledgeable than me will have to weigh in on what types of facilities accept Medicaid payments. I do know that the gov't will "look back" on recent gifts and disallow them if you apply to Medicaid too soon.

Certainly, one big problem with giving away assets is that you need to trust the recipient. It sounds like you don't have anyone you can trust. But I don't understand the goal. If you're trying to save your assets, who are you saving them for, the people you don't trust?

I don't have any ideas about putting assets in somebody else's name without their knowledge. "Ownership" usually includes "control", and you don't want to give up control. It's possible you could do a trust that pays you a regular income while you're living with the remainder going to someone at death. Then Medicaid could only offset your income. But again, what's the point?

I'm surprised that your pension would make any payment after both you and your husband are dead. That sounds like an option you selected, but you'd get a bigger benefit if you stuck to a straight life payout. (I haven't studied the PLOP thread.)

I assume you're looking at these issues here because you know that sooner or later you'll need to sit down with a lawyer to sort out who gets the money when you die and whether you have options before then, and you want to use the time with the lawyer as productively as you can.
__________________

__________________
Independent is offline   Reply With Quote
Old 03-31-2011, 10:19 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
I think some of your questions have technical answers- usually a pension or 401k can be passed by beneficiary designation, if it does not end with your death and/or your and your husband's deaths. Talk to the administrator first, if you are not satisfied look further.When my brother was dying he was annoyed with the way his GF had treated him in his illness, so he made a last minute transfer to another brother (not me). IMO, he gained nothing, neither of them was really any good to him when the going got rough. He did make one of them happy and the other sad.

He should have given it to a charity.

The other question- can you trust the children? Who knows, but even if you can how about their spouses?

ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 03-31-2011, 10:28 PM   #4
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,375
Why shouldn't you use your assets to pay for your nursing home care instead of giving them to your heirs early?
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 03-31-2011, 10:33 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by Bestwifeever View Post
Why shouldn't you use your assets to pay for your nursing home care instead of giving them to your heirs early?
It's called socializing private expenses, and it goes on and has been going on with college sholarships, nursing homes, and many other things probably since we were very young children.

Immigrants are very good at this, as they do trust their children and for the most part their children are more trustworthy (with respect to the family) than us acculturated yanks.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 03-31-2011, 10:44 PM   #6
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
I've observed the receiving end of this tactic, and in my opinion all it does is make family relations even worse than they were before. Which in this case seemed like a real challenge.

To say nothing of the fiduciary, reporting, and taxation burdens.

I think I've read that giving away one's assets to avoid the Medicaid spend-down is now subject to a five-year lookback. If you feel that the heirs are not very financially responsible then it's probably better to spend your money on a long-term care insurance policy.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 04-01-2011, 07:33 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,647
Been going through the Medicaid drill with DW's father who is in an Alzheimers facility. Step mother is still independant. They no longer have a house but I did get the gist of what happens with a house. If other assets are depleted to the Medicaid limit (step mother can have about $109K, father about $2600 or something) the house would be left alone until the spouse dies. Federal law requires the states to recoup the Medicaid expenses from the sale of the house after death. As to giving assets away, Medicaid will do a five year look back and won't qualify you if they find you have diverted. I assume you can attempt to get the $ back and spend it down to get clear with Medicaid.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is online now   Reply With Quote
Old 04-01-2011, 08:56 AM   #8
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Quote:
Originally Posted by April Fool View Post
Hello

As my husband and I sat going over our retirement assets and we were kicking about the idea of passing on assets. I worry about someday getting sick and perhaps needing nursing care. I've always heard that nursing homes take all of your assets. How do you protect yourself from this kind of thing? I've also heard that long-term care is really expensive so I don't think that's an option.
You might look into long term care insurance, though many think it is still an overpriced rip off. Personally, I just try to budget for the eventual possibility. I'd rather have all sorts of great assisted living facilities and nursing homes available to me because I can afford it than being stuck with whatever medicaid facility will take me. I might want to get what I gave away back to buy better care but the money and assets I gave away may be gone or the recipient may not cooperate.

Quote:
We spoke of putting our homes in heirs' names and perhaps adding their names to our accounts. But this makes me nervous as I'm not sure I can trust them like that. Truthfully, none of them are very responsible. I've heard horror stories of people getting put out of their own homes and their money being taken.
Yup. It happens. It is no longer your house. You now do not have control. What if they had financial problems and had to file bankruptcy? I've seen parents have to buy back interests in their home from bankruptcy trustees when all the parents did was create a life estate for themselves and transfer the remainder interest to their kids. The joint accounts do nothing to help you be eligible for public assistance. Also, depending on the extent of your assets, transferring assets while you are alive may have gift tax consequences and will result in loss of step up in basis when you die, so for tax reasons it generally is not a good idea to give everything away.

Quote:
I don't have biological children and my husband has natural one son. We practically raised my dead sister's children and do feel like they are ours. I have one neice who I know I can trust with everything but her husband is a different story.
And if they get a divorce the husband may seek half the assets, including assets obtained from you.

Quote:
I guess my question is how can you put assets in relatives name and still be protected? Is there a way I can buy CD's or IRA's in their names without their knowledge? I do have a joint bank account with my neice that she does not know is still open. We started it one summer to help her with college.
If you buy CDs or other income producing assets in someone else's name their social security number will have to be disclosed and they will have to pay taxes on any interest earned. You can't keep it from them without a tax problem. Your IRA is your IRA. You can't just transfer it to someone else. So, the simple answer is no, you cannot transfer assets to relatives names and still be protected. If you give your stuff away now so that you may be able to get public assistance years from now, that stuff is no longer your's and you cannot control what happens to it. Now you might talk to a lawyer about using irrevocable trusts to hold your assets but this gets into complicated planning and even with trusts you are unlikely going to be able to impoverish yourself to get public assistance.

As others have noted, there are transfer lookback periods for Medicaid. This area is rather complex but I thought that I should at least mention the issue too.

Quote:
One other question. I asked my retirement system about what would happen to my pension if something happened to both my husband and myself. They said it would go to my next of kin. As I don't have natural children, I hope it's not my stepson. I want my neices and nephews to inherit all of my assets. I realize that as my husband's son, he is entitled to something but I don't want someone I barely know to inherit from me pesonally.

Thanks

April
You probably are not getting the whole picture. I do not know what kind of pension this is. If it is something that you can pass along to heirs you may be able to do a beneficiary designation or address it in your will.

I suggest that you and your husband go talk to a lawyer who is a good estate planner and talk through these issues you have raised. Do not rely on what doofi like us tell you on the internet.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 04-01-2011, 09:34 AM   #9
Full time employment: Posting here.
Lusitan's Avatar
 
Join Date: Jan 2006
Location: Boston
Posts: 620
Quote:
Originally Posted by Bestwifeever View Post
Why shouldn't you use your assets to pay for your nursing home care instead of giving them to your heirs early?
That would make too much sense.
__________________
Lusitan is offline   Reply With Quote
Old 04-01-2011, 09:42 AM   #10
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,136
If Martha's post didn't set off enough alarm bells to the perils of what you are considering then I'm not sure of what's needed to convince you this is a bad idea.

Quote:
Originally Posted by Nords View Post
If you feel that the heirs are not very financially responsible then it's probably better to spend your money on a long-term care insurance policy.
Yep.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-01-2011, 10:00 AM   #11
Dryer sheet aficionado
 
Join Date: Mar 2011
Posts: 47
As far as I know there is no way to gift assets and still keep it so it's there if you need it. Once it's gifted it's no longer yours. As yes horror stories abound. It's rare you can trust anyone with a large sum of cash.
You are allowed to gift X amount, ($12,500 I think) per year per person that cannot be taken back by MC should you end up in their system. But again, it's no longer yours.
Homes and personal property cannot be taken out from under you by MC or NH's, but like was said, it's an estate asset and must go through probate upon death.

Some long term care places will put your assets into their system, it's kind of a draw down system I think, the longer you're there the less of the assets are yours. But it doesn't take long for them to aquire it all.

I know of one here that you buy the condo, as your health goes south you're moved to assisted, then nursing, then hospice. But you have to buy into it and you cannot re-sale unless you move out, but by then they own all your assets anyway. The up side is once you buy in you cannot be thrown out when your money is gone.
For some it's not a bad deal, not sure I'd want it though.
__________________
GRambler is offline   Reply With Quote
Old 04-01-2011, 10:04 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Jul 2010
Location: Chicago
Posts: 1,001
Quote:
Originally Posted by April Fool View Post
I guess my question is how can you put assets in relatives name and still be protected? Is there a way I can buy CD's or IRA's in their names without their knowledge? I do have a joint bank account with my neice that she does not know is still open. We started it one summer to help her with college.
Don't know any way to buy CD's w/o their knowledge. My inlaws do this with DW all the time in case something happens, but new banking laws require SS# on everything (even as beneficiary), even though the inlaws are liable for the taxes. Since you still have this joint account with the niece, this is the one loophole I see, you can do a bunch of cash withdrawals from other sources, then deposit into this account. I assume your SS is the responsible tax id for income on this account. You may want to update the beneficiary info on this account while you're at it. Only downside is she can clean out this account at any time.
__________________
Dimsumkid is offline   Reply With Quote
Old 04-01-2011, 10:24 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Apr 2010
Posts: 1,691
I would urge you to get some professonal advice. Seek out recommendations for a good lawyer who specializes in wills. Do the same and find a good fee for service financial advisor who is knowledgebale in dealing with seniors issues and government programs. Then make some decisions and action them.

We did this for our wills. Some of our pre-conceived notions and some input from friends proved to be incorrect. It was well worth the investment to get it done right and to provide us with peace of mind.

And after you have done that, review you situation periodically with these advisers-sooner if your respective financial or heath situations alter in any substantive way.
__________________
brett is offline   Reply With Quote
Old 04-01-2011, 10:25 AM   #14
Full time employment: Posting here.
 
Join Date: Jul 2007
Location: ST LOUIS
Posts: 994
Quote:
Originally Posted by GRambler View Post
As far as I know there is no way to gift assets and still keep it so it's there if you need it. Once it's gifted it's no longer yours. As yes horror stories abound. It's rare you can trust anyone with a large sum of cash.
You are allowed to gift X amount, ($12,500 I think) per year per person that cannot be taken back by MC should you end up in their system. But again, it's no longer yours.
Homes and personal property cannot be taken out from under you by MC or NH's, but like was said, it's an estate asset and must go through probate upon death.

Some long term care places will put your assets into their system, it's kind of a draw down system I think, the longer you're there the less of the assets are yours. But it doesn't take long for them to aquire it all.

I know of one here that you buy the condo, as your health goes south you're moved to assisted, then nursing, then hospice. But you have to buy into it and you cannot re-sale unless you move out, but by then they own all your assets anyway. The up side is once you buy in you cannot be thrown out when your money is gone.
For some it's not a bad deal, not sure I'd want it though.
You bring up a good point I wonder if they count the 13k a year gift limit?
__________________
Proverbs 15:22 Designs are brought to nothing where there is no counsel: but where there are many counsellors, they are established.
rec7 is offline   Reply With Quote
Old 04-01-2011, 10:41 AM   #15
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,135
Quote:
Originally Posted by rec7 View Post
You bring up a good point I wonder if they count the 13k a year gift limit?
If the $13k is in the form of cash then I can't see that it will be counted as anything other than a gift. If the cash gift is under $13k I don't believe you even have to declare it.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 04-01-2011, 10:47 AM   #16
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Medicaid does not honor the annual federal gift tax exclusion. It looks at all transfers. Apples and oranges.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 04-01-2011, 11:18 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
I have a similar situation as I am also childless. I am not married at this time, so it is a lot different than the OP's situation.
My problem area is unscrupulous siblings. This is by no means a unique situation in life.

Some thoughts...and by no means should you take this as any sort of advice. See an attorney.

I went to an attorney specializing in estate planning, and spelled out the whole soap opera situation to him. His suggestion was to establish a Revocable Living Trust and pick a close friend who was financially stable and knowledgeable about trusts to serve as my Successor Trustee.
I thought about this a lot and really couldn't come up with one who would know what to do in case of my incapacity, temporary or permanent.
I had several choices that I knew I could trust, but they are several years older than I am.
Hmmm...what to do?

After a lot of thought, I asked the attorney to be my Successor Trustee.
I would rather have a knowledgable and licensed lawyer in charge rather than any relatives (who showed their true colors greed when my Mom passed 10 years ago).
At least my attorney has to answer to the NYS Bar Association and courts, if any monkey business were to occur.

One of my closest friends (really an adopted brother) is my Trust
Protector, who has the power to fire the attorney and take over as Successor Trustee if conditions warrant. Mr B is an alternate ONLY as long as he is living with me.
I wrote in a specific clause to set a limitation on legal fees not to exceed a certain percentage of my estate on an annual basis. I set up a Durable PoA to allow the attorney to conduct business for me in the case of temporary incapacity. I do have a LTC insurance policy in place.
All of my investment accounts have my Revocable Living Trust as the beneficiary. My home has been transferred into the Trust. My bank accounts have to be re-registered as belonging to the Revocable Trust.
I personally would never sign over any asset to any relative or friend. I observed the havoc created in my late husband's family when his parents did an Irrevocable Trust involving the family home while they were still living. What a fiasco.
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 04-01-2011, 12:22 PM   #18
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
I'm sure there are lots of legal loopholes you can jump through to at least partially accomplish what you're trying to do here, but my big problem with this is the overall notion itself.

Basically, you have the means to provide for your own old age, and you are trying to find a way to pass that wealth on to someone else, and make the rest of us pay for your care instead. It's cheating, and the rules you're trying to dodge are there specifically to try and prevent the kind of selfish, underhanded actions you're trying to achieve.
__________________
kombat is offline   Reply With Quote
Old 04-01-2011, 01:48 PM   #19
Full time employment: Posting here.
Lusitan's Avatar
 
Join Date: Jan 2006
Location: Boston
Posts: 620
Quote:
Originally Posted by kombat View Post
Basically, you have the means to provide for your own old age, and you are trying to find a way to pass that wealth on to someone else, and make the rest of us pay for your care instead. It's cheating, and the rules you're trying to dodge are there specifically to try and prevent the kind of selfish, underhanded actions you're trying to achieve.
+1

At least it's April Fool's Day
__________________
Lusitan is offline   Reply With Quote
Old 04-01-2011, 05:16 PM   #20
Dryer sheet wannabe
 
Join Date: Mar 2011
Location: Columbus
Posts: 14
Hello

Perhaps I did not make my post clear. Since I have no children, a health care fund is the first thing that I started for us and I am confident we can provide for ourselves in that way. Also, I will have a very good health care plan that will take care of us very well and will provide nursing home care for a limited period of time. If it comes to that, it will even provide Hospice care at no charge.

When I said, "needing health care," I did not mean to live. I was led to believe by a friend that if you went into a nursing home for a long period of time that no matter what your situation is that your house was taken as collaterial. She said that happened to her and she had a hard time getting it back. I believed her. It just got me thinking of ways to protect myself.

My statement on "passing on assests" was badly phrased. I should have said after we were gone. I'm not a fool; I just sound that way. I was thinking about CD's or IRA's or even putting their names on my annuities but certainly not as a way to hide money but as a way to make double sure that my step-son does not inherit from me. I don't want to have to come out and actually writeit in a will because I don't want my husband to know that I feel this way. My stepson really thinks because I have no natural children that he is going to get everything. He has never liked me and has always treated me less than dirt. My husband has to make him be civil to me. At first I wanted him to like me but after thirty-two years, I give up.

I am really going to look into a trust. I hear Suzy Orman speak of if often. Thank you Freebird for making that suggestion and telling your experience.

I do not get a pension from my job. We do not pay into social security. We pay into a retirement fund and what is left after you die does go to the next of kin.

We are going to definitely hire a certified financial planner and an attorney to try to straighten all these issues out. After we see him, we are going to update our will accordingly.

Thanks so much for all of your kind explanations and wise suggestions. I am taking everything to heart and am taking notes. Please know that I in no way plan am trying to cheat anyone out of anything. That has never been my way. I just have trouble expressing myself so please bear with me if I don't explain myself just right. Thanks so much. I really appreciate you.

April
__________________

__________________
April Fool is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Trust funds or is there a better way? farmerbrown FIRE and Money 25 05-15-2009 10:27 PM
living trust? bbbamI FIRE and Money 29 02-02-2007 07:23 PM
Trust planning Arif FIRE and Money 14 06-27-2006 07:10 PM
Trust/Will Preparation? OldAgePensioner Other topics 11 11-01-2005 09:38 AM
Living Trust johnblake Other topics 7 11-24-2004 10:07 AM

 

 
All times are GMT -6. The time now is 08:11 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.