Dad is in Assisted Living. His estate (my inheritance) is being consumed by the $8,000/month cost. Medicaid will start covering costs only when his estate is completely gone. There is only $102,000 left currently.
I’d like to get what’s left for me and my 2 brothers. I know that the IRS or maybe state government can “claw back” money that’s been siphoned off under many circumstances.
Is there any way to “legally” preserve an estate for the heirs? I have Power of Attorney.
Are you sure he’s in Assisted Living, rather than a nursing home?
I don’t think Medicaid covers assisted living. They might cover some itemized medical services in an assisted living setting.
Perhaps this should be in IMHO because there isn’t likely to be a factual answer to this.
It’s Assisted Living. Mrs. F works there so she is very knowledgeable concerning Medicaid etc.
I’d ask a mod about post placement if I could see how to do it on my phone.
As this is a legal question, I’ve moved it to IMHO.
Contact an elder care attorney. ASAP.there may be avenues to preserve assets depending on some ifs. Initial Consultations should be free
I do that, tyvm. I didn’t know there is such a specialized attorney.
The short version is there are ways to preserve the estate. If you had planned ahead and done that several years ago.
The government is very wise to the (reasonable) desires of the family not to drain the family fortune (be it great or small) into the final care of the soon-to-be-deceased. And thereby to dump the expense of their care on the taxpayers. So the government has done a very thorough job of making it substantially impossible for folks to pull that trick off.
IANA formally trained expert, so I second the suggestion for the OP to locate a trained expert in their jurisdiction. But as a rule of thumb, you’re several years too late and I expect you’ll have little success. I take no joy in telling you this. But IMO it’s best to have a realistic expectation. If nothing else that will reduce the chance of falling for the inevitable scammers who prey upon the desperate.
I’m sorry to hear about your dad, but you aren’t owed an inheritance and there is no estate.
While he is alive, the money must be used for his benefit. As PoA, you have a fiduciary duty to ensure that his money is used for this. There is only an estate after he dies which may be left to you and your siblings.
I seem to recall that gifts of up to $15,000 per year don’t have to be reported to the IRS by either the giver or receiver. I’ll ask about that when I talk to an attorney.
This apparently varies by state.
I suspect the OP didn’t read this or at least didn’t absorb it, because it isn’t what he wants to hear. But it is the truth, starting with “you aren’t owed an inheritance.” To that I would add that it’s always a mistake to count on any inheritance, especially money or other liquid assets (as distinct from personal items as keepsakes).
I am also sorry to hear about your father’s condition. I hope the assisted living is helping to make the remainder of his life bearable.
It is true that gifts below the threshold aren’t IRS reportable. But it’s also true that voluntarily depleting Dad’s assets on the way to Medicaid will be detected by Medicaid when you apply for it. And they will insist the money be returned to Dad, and spent on his care, before they begin paying anything.
As a separate matter and as @Roderick_Femm said just above, you having POA for Dad does not mean you can spend or divert his money for your benefit. Your legal authority extends only to managing his money for his benefit. And his benefit means paying his bills.
My late first wife was a banking attorney. She often dealt with banks that detected family members transferring value from Aged Parent’s account to themselves by check, in-person withdrawal, online transfer, or by ATM. Which results in Dad’s account being frozen instantly and it won’t be unlocked without a court order.
Every financial institution of every kind is aware of this concern and is required by law to monitor for it. You are playing with fire by transferring any money from Dad’s assets to yourself.
I’ve been reluctant to reply, because i didn’t want to be harsh, and I’m hardly a legal expert. But i agree with @FinsToTheLeft and @Roderick_Femm. And I’m pretty sure that’s how Medicaid views the matter.
We did transfer substantial assets from my mom’s account to ours before her death. In order to do that, both the lawyers and the accountants made sure:
that mom was on board with the idea. Mom was rather senile at the time, but she clearly and explicitly expressed her support to both her lawyer and her accountant.
that we left her enough to realistically pay all her bills for the rest of her life. That was a lot more than $100k. She wasn’t in assisted living at the time, but we ballparked what it would cost per year if she moved to the assisted living place she was talking to, and multiplied that by a generous life expectancy. (She was still in fairly good shape when this happened. Then, a few months later, she caught covid and was dead in 3 weeks. Yeah, plenty of money for her lifetime.)
And even so, some of the financial institutions my brother dealt with gave him a lot of trouble.
Also, I’m really sorry about your dad. It’s incredibly hard to watch your parent fail and head towards death. Try to spend as much good time with him as you can, before he’s gone. Best wishes.
Does your dad have a spouse at home? Is he likely to need a nursing home anytime soon? I’d still contact an experienced Medicaid /elder care attorney.
Here’s my story.
My parents resided in Florida. When my dad unexpectedly landed in a nursing home for an extended period after a hospital stay we scrambled for ways to pay.
I found an elder care attorney who examined my parents assets and determined they were under a certain threshold of available assets. I think less than 110k She set up a Qualified Income Trust (QIT) also called a Miller Trust for my Dad through which his income was diverted and he qualified for Medicaid. It reduced his room and board at the nursing home significantly.
She also divided their bank accounts. And my mom remained in their home and retained her own income and some spousal income iirc. That came from social security and pension. Iirc.
Eventually after almost two years my Dad got well enough and they both went to assisted living. (AL) He couldn’t return home with mom they both needed assistance. We thought about moving mom to the nursing home with dad under the same QIT terms. But it was not a great environment so we sold their house and moved them to AL. The QIT no longer applied so they were responsible for the costs of AL. But they were in better shape financially because of the QIT.
They lived well for another two years. Paying AL costs but still with an income from SS and pension. When they passed away within 2 wks of each other there was a bit of money left. Moms paid out on death that year But! The attorney advised us to delay Dads probate as Medicaid could claw back what it paid for my Dads nursing home care. Two years was the statute of limitations. During that time it sat quietly in a blind account. Until the clock ran out and then checks were written.
Good luck and don’t despair you may have options!
My MIL is celebrating her 86th birthday today. She recently inherited from her two sisters and is now trying to give as much of it as possible to her children and grandchildren. She has spoken with an attorney who does this kind of thing. It will help, but will require her to remain alive into her 90s.
Thanks @kenobi_65
And apologies to @Mr.Duality for derailing your question.
Hopefully more informed folks have provided you with some useful advice.
MIL may also be able to use a trust, not merely give away the funds. The problem with the give-away is that if she needs some of it later, she can’t necessarily get it back. But with a suitable trust, she may be able to retain some emergency funds for unforeseen circumstances but remain within the Medicaid rules. Further, to the degree those funds derive from sales of appreciated assets, she’s paying capital gains tax unnecessarily. By waitinguntil the estate matures, stepped up basis applies and there are no gains taxes.
The fact she’s consulting with a pro suggests she’s getting good advice. But some folks prioritize giving early handouts to family over other ideas which are even better in terms of overall safety for MIL and overall financial outcome for the eventual heirs.
She has her own savings as a separate thing, so she’s in good shape there. She also has all of us offering her a place to live. She insists she’s not ready yet to leave her home (three stories, 4 bedrooms, etc). She also doesn’t like the idea of a house cleaner coming in weekly to help.
The elderly can be so stubborn! My
Mom sabotaged every attempt we made to help ( we all lived out of state) with housecleaning and meals. She refused to use free senior transit to visit my dad three blocks away so we set up a daily driver service to pick her up and drop her off. She was going deaf and blind but independent as hell thus our lives were hell. J/k. Home is where I wanna die too.