Trust to Protect Assets?

[NoEZmoney]

ASSET PROTECTION THROUGH TRUST?
DW's mother has a decent middle-class estate that she wants to leave to her daughters but is quite exposed to future healthcare costs as she has no LTC policy and has everything in laddered CD's and Money Market accounts. She has zero tolerance for stock market or any reliable index fund investing based on bad advice from her friends who live on Social Security alone.

Wife worries MIL will need 24 hour healthcare but won't leave house so she'll be paying dearly for that until she spends everything down for Medicaid. I think she'll outlive us all but in a sad (expensive) state. And we've both noticed gradual cognitive decline which will likely get worse ( family history of dementia). So we're concerned about her financial rationale as she gets worse.

I searched this site /FAQ's for trust info, asset protection but hot much help. Anyone have any first-hand experience about setting up a trust to protect assets from Medicaid spend down or bad judgement? Or are there some other tools that could do the same thing? I realize there's a 5 year setback so we have to move fairly quick.

TIA

 

[Sunset]

Better for OP's MIL to use her funds to get into a good nursing home which will allow her to convert over to Medicaid rather than kick her out.
If OP's MIL protects her assets from being spent on healthcare, and manages to qualify for Medicaid, her choices of healthcare homes will be the bottom of the barrel (based on my looking in my area for FIL).

OP's MIL may be "lucky" and die quick, or live a long time, so the daughters shouldn't count on getting anything.

Be thankful that the daughter's won't be needing to pay for their Mother's care

 

[RetiredHappy]

Better for OP's MIL to use her funds to get into a good nursing home which will allow her to convert over to Medicaid rather than kick her out.
If OP's MIL protects her assets from being spent on healthcare, and manages to qualify for Medicaid, her choices of healthcare homes will be the bottom of the barrel (based on my looking in my area for FIL).

OP's MIL may be "lucky" and die quick, or live a long time, so the daughters shouldn't count on getting anything.

Be thankful that the daughter's won't be needing to pay for their Mother's care

+1

 

[Walt34]

Better for OP's MIL to use her funds to get into a good nursing home which will allow her to convert over to Medicaid rather than kick her out.

↑ What he said.

NOW is the time to discuss this with an elder law attorney who practices in the jurisdiction where your MIL lives. Although Medicaid is a federal program it is administered by the states and rules differ widely - what you heard from someone may or may not have anything to do with reality.

The better class of care homes will require the person to have funds for at least a year, probably two or more, of fully self-funded care and then they will accept what Medicaid pays, eating the loss on the difference. This is one reason the first couple of years are so costly, to statistically make up for that difference.

We've been down that road, and what you need to be doing is laying the groundwork with an elder law attorney so you at least know what your options will be when the time comes. You may or may not be able to shield assets, that's one of the things to discuss. But the planning period for this started a couple of years ago.

 

[Dtail]

Better for OP's MIL to use her funds to get into a good nursing home which will allow her to convert over to Medicaid rather than kick her out.
If OP's MIL protects her assets from being spent on healthcare, and manages to qualify for Medicaid, her choices of healthcare homes will be the bottom of the barrel (based on my looking in my area for FIL).

OP's MIL may be "lucky" and die quick, or live a long time, so the daughters shouldn't count on getting anything.

Be thankful that the daughter's won't be needing to pay for their Mother's care

It usually works this way, but one is not guaranteed to not get kicked out when switching to Medicaid.
We have set up an irrevocable trust for my parents. Thus after a 5 year lookback, these assets are protected.
However, my parents effectively don't own these assets anymore, so there needs to be a true "trust" factor in the relationship.

 

[Sunset]

It usually works this way, but one is not guaranteed to not get kicked out when switching to Medicaid.
We have set up an irrevocable trust for my parents. Thus after a 5 year lookback, these assets are protected.
However, my parents effectively don't own these assets anymore, so there needs to be a true "trust" factor in the relationship.

I'm sure your's is good, I have heard of a horror story where the trust protected the assets so much, that the parents had very little money available to pay for care.

Sort of shot themselves in the foot.

 

[Dtail]

I'm sure your's is good, I have heard of a horror story where the trust protected the assets so much, that the parents had very little money available to pay for care.

Sort of shot themselves in the foot.

Yeah, that's why we left enough assets outside the trust to start the process if necessary under a non medicaid setting.
Another decision one must make is whether to keep the income in the trust, in order to grow the trust but be subject to higher tax rates.

 

[CardsFan]

Wife worries MIL will need 24 hour healthcare but won't leave house so she'll be paying dearly for that until she spends everything down for Medicaid.

I think this should be your biggest concern.

My DMIL is 90 and has stated flatly she will NOT go to a nursing home (or assisted living or even independent living). When we get older, we get more stubborn. At her age, and with her assets, she could afford to do this, but I suspect she will also expect the local kids to be the care taker.

In any event, the cost of in home care can be as much, or more, than a NH. It is her money, and she should do what she wants (unless dementia really sets in), but she needs to be on board with getting into a care setting BEFORE the money runs out. When she gets down to the cost of 3 years in a NH, it is time to go and pay for the first several years. Of course, as said above, make sure the NH will take Medicaid after the money is burned.

JMHO

 

[aja8888]

We had a handicapped relative in her 60's end up in a Medicaid nursing home. I went and visited her and was in shock as to what an absolute understaffed pigpen that place was. I would be real careful on selection of any nursing home when the time comes.

 

[ivinsfan]

It's your MILs money until she dies. That's what money is for, to provide for you in your old age. I suspect you worded your question poorly saying that your wife is worried Mom will spend all her money for her own needs. I don't know what you mean by protecting money from Medicaid spend down...that is merely spending her money for her own care.


Many older people have gradual cognitive decline but that doesn't mean you can take their money.





This is why they say don't count on your inheritances until they hit your bank account.

 

[savory]

Better for OP's MIL to use her funds to get into a good nursing home which will allow her to convert over to Medicaid rather than kick her out.
If OP's MIL protects her assets from being spent on healthcare, and manages to qualify for Medicaid, her choices of healthcare homes will be the bottom of the barrel (based on my looking in my area for FIL).

OP's MIL may be "lucky" and die quick, or live a long time, so the daughters shouldn't count on getting anything.

Be thankful that the daughter's won't be needing to pay for their Mother's care

Sound advice. My Dad ended up on Medicaid which allowed for my mother to be taken care of in a proper way a few years later. (It was concerning that they would have enough money for both of them). I could not get him into a Medicaid bed unless I paid a bribe. That I did and the place was awful.

I was very happy to take care of my mother in a decent fashion. She did not have lots of money but enough to take care of her needs with good care givers and a decent nursing home when the home caregivers could not take care of her anymore.

I would steer away from the Medicaid route.. You may not want to visit her in the place she ends up.

 

[marko]

Seems to vary state to state regarding Medicaid and NH quality. My grandad needed to go to a NH for a few weeks of respite after surgery before going home. The place was beautiful, clean and well staffed, but they did not know how to charge him because they had never had a paying patient; it was 100% Medicaid people.

FWIW, a few years ago my brother was in a SNF (skilled nursing facility) for six months. The therapist there begged me to find a way to get him on Medicaid (I couldn't due to his assets) because "we could give him so much more therapy" rather than a self paid patient.

 

[pb4uski]

If the mother wants to leave an estate to her daughters then, when the time comes, she should agree to go to a nursing home because at home care will drain her estate much faster than nursing home care and is more likely to leave a larger estate.

How does your MIL feels about finnagling her finances so taxpayers end up paying for her nursing home care even though she can afford to pay for it?

In matters like this, there is "no easy money".

 

[youbet]

Seems to vary state to state regarding Medicaid and NH quality. My grandad needed to go to a NH for a few weeks of respite after surgery before going home. The place was beautiful, clean and well staffed, but they did not know how to charge him because they had never had a paying patient; it was 100% Medicaid people.

.

Wasn't your grand father's stay covered by Medicare? Post surgical recovery, if required, is commonly covered by Medicare for up to 100 days.

 

[ncbill]

Last I checked, Medicaid here pays $200/day...at the last SNF I used private pay rate was ~$8,000/month, or ~$267/day.

Most nursing homes here take Medicaid...they wouldn't be able to stay in business taking only private pay patients.

The church-affiliated CCRCs run the best SNFs here, but they're getting fed from assisted living at the same CCRC.

No chance you'll be able to get your loved one into their SNF coming from outside the CCRC, even if they are private pay.