Betty and Tom met with me the other day to discuss a very difficult situation that was developing around health care for Tom’s mother, Rita Jones, who is 78 years old. It has become increasing clear that mom will need skilled nursing care in the near future. Tom and his brother, Mike, disagree on what to do with mom’s assets. Mike wants to transfer everything out of mom’s name now and find a way to hide the assets. Tom wants to preserve assets but doesn’t want to do anything that is dishonest. Betty and Tom recently moved in with Rita and they don’t want to move again. They would like to buy the house but they have limited funds. They asked me if there was any way that they could get the house and qualify mom for Medicaid.
I looked over the financial facts and this is what I found:
|Checking/Savings – joint with Mike and Tom||$80,000|
|IRA – Mike/Tom equal beneficiaries||$100,000|
|Life Insurance – Mike/Tom beneficiaries Full Value – $1,500||$3,500|
I told them there is a way to qualify mom for Medicaid and preserve these assets. This was my suggestion:
|Mom has a resource allowance when she goes on Medicaid||$14,850|
|FV of life insurance it is not > $1,500.00, the CSV is exempt||$ 3,500|
|The IRA is in payout status, so that is exempt||$100,000|
|Pre-pay mom’s funeral||$10,000|
|Pre-pay Mike, Tom and their wives’ funerals/$7,500 each||$30,000|
That leaves them with excess resources of $ 215,150
(Resources are the House plus $35,150.00 cash on hand)
Here’s where it gets interesting:
|Tom and Rita can buy a ½ interest in mom’s house as Joint Tenants with Right of Survivorship, converting $190,000 resource into a cash asset of
The ½ interest still owned by mom has a legal impediment so it doesn’t count as a resource
|The cash for the house is added to the cash on hand||
|The available resources are reduced from $215,150.00 to||
|They can make a gift of $30,000 each to Mike and Tom||
|That leaves them with $60,000 to pay the NH||
If everyone agrees, instead of spending $215,150 on mom’s care, they can spend $60,000 and preserve $313,500 (which includes mom’s home for Tom and Betty).
We’re starting work on the case tomorrow.