It was a call I received a number of years ago but one I’ll always remember. Don called regarding his mother’s need for long term care. Her health had been slowly declining but she was still living at home. Her investments were dwindling and she needed increase care. It was a pretty typical situation we’ve seen over and over again. I knew where he was headed – or so I thought.
When we sit down with new clients to explain how we can move assets out of their name in order to qualify for government benefits, they so often think in terms of gifting outright to their children. Well, that’s what happened in this case. Don told me that his mother gifted the home to Don’s deceased brother’s son, Clyde, a year and a half ago. He lived in the home with his grandmother and was supposed to provide some care – or at least that was the plan – until Clyde decided that he wanted to sell and move to California to pursue a new career. I figured out what was coming.
Don told me that Mom was essentially being kicked out of her house. Clyde reneged on his agreement and was taking the proceeds from the sale with him. Don wanted to know what his options were. We talked about the possibility of suing Clyde to recover some of the money. The problem was that no written agreement existed. It sure looked a gift from Grandmom to Grandson, no strings attached.
He then asked me about assisted living care for his mom who, he felt, really needed supervision. She had approximately $50,000 in savings and $2200 in income from Social Security and pension. At a cost of $5000 per month it would take her about 18 months to run out of money, leaving her unable to pay the assisted living facility expenses beyond that and with nothing to get her into a nursing home later on if she needed it.
“It all sounded reasonable when she transferred the house”, he told me. “Clyde needed a place to live and Mom wanted to help him get on his feet.” I understood, but at the same time, I know that life doesn’t always go according to plans. It reminds me of the quote from a Robert Burns poem, that “the best laid plans of mice and men often go awry”.
That’s why we never advise our clients to transfer assets outright to other family members, but instead we use trusts. Even when someone tells me that “everyone is on the same page – we all get along”, that is hardly a guarantee. Life is too complicated, with so many twists and turns. What Don’s mother should have done is work with an elder care attorney to put a plan in place to help her grandson, as she desired, but first to be sure to provide for her care needs for the present and the future. Only when she no longer needed the funds should they have been given over to Clyde.
So what did Don do? I told him that he’d have to make that $50,000 stretch another 3 and ½ years before Mom could hope to qualify for Medicaid. He considered moving her to his home, not an ideal situation, but the least costly option. He took the name of an attorney to talk with about suing his nephew and he thanked me.