Estate planning for taking care of MIL

[Finance Dave]

Sorry if this is in the wrong section of the forum...feel free to move if it belongs elsewhere.

DW and I are going to update our estate plans. One thing she is concerned about is what happens if we both pass before my wife's mom (let's call her Karen)...who is 89 but doing ok. Karen is not financially well-off, so at this point if she goes into a nursing home she'd have enough savings for 1-2 years in a private facility, but after that she'd be out of money. Another factor here is that there are some other kids (my wife's nieces) who are not good with money, and may even do something dishonest if we were not around to watch things...and for this reason we are fearful of leaving a large single sum of money for Karen....they may "convince" her to do something not in her best interest.

So we were wondering what other options we have for covering some of her nursing home expenses on a monthly basis. Does anyone know what tool we could use in estate planning to essentially "dole out" money to her on a monthly basis? If we did something like this, would it affect her eligibility for Medicaid? Another concern is if we leave Karen money and she gets dementia or something similar, who would "manage" the funds? Karen has no other children besides my wife. Other things we should consider?


Would a trust work for this? Other than this, our estate is VERY basic...first and only marriage for both of us, no children of our own, no businesses owned, etc. If we would pass in the next 5-10 years, our estate would be fairly substantial ($1.5-$2.5M?). Of course if her mom were to pass soon, this would all become a non-issue.

Thanks in advance for ideas.

 

[Ian S]

A trust may be the way to go but, you really need the advice of an estate planning attorney to get it right. Does Karen get Social Security or any kind of pension? Some nursing homes may be willing to admit a person like your MIL as long as she can pay the going rate for some period of time after which they will be satisfied with what Medicaid might pay. Re estate planing, if you are still working or are on a pension from a company, they may offer the ability to sign up for a legal plan at nominal cost that would pay for much of the cost of a trust. That's what I did.

 

[OldShooter]

A trust may be the way to go but, you really need the advice of an estate planning attorney to get it right. ...

This. The issue is that you do not want the trust counted as part of her assets. This is the basic goal of a "special needs trust" but I have never heard of one in the context of taking care of an elder person. Definitely territory where expert help is needed.

 

[Sunset]

A trust may be the way to go but, you really need the advice of an estate planning attorney to get it right. Does Karen get Social Security or any kind of pension? Some nursing homes may be willing to admit a person like your MIL as long as she can pay the going rate for some period of time after which they will be satisfied with what Medicaid might pay. Re estate planing, if you are still working or are on a pension from a company, they may offer the ability to sign up for a legal plan at nominal cost that would pay for much of the cost of a trust. That's what I did.

Yes,
This has been my experience, many nursing homes will take a person IF they have 3+ years worth of costs in the bank, then when a person has run out of money, they can stay on Medicaid.

Directly going to a Medicaid accepting facility, would be a desperate last resort and NEVER my first choice.

In our area we found some reasonable charging nursing homes that would accept a person and keep them (very important) when they ran out of money. As long as the person had $325,000 in the bank + avg SS.

 

[Finance Dave]

Thanks for the input, I'll keep researching and start talking to some nursing homes. We live in a small town, so may be very few options.

 

[nwsteve]

As you screen elder care properties, suggest you also check them out at your state agency that inspects. Look specifically for results from last inspection. Most states disclose infractions found and if cured. Typically there are several levels of infractions--ranging from being shut down to failing to file reports or have records completed on time.