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            Jamie called because her dad was in need of Medicaid.  He was now in a nursing home and Mom was living at home.  They had about $120,000 of countable assets.  I asked about the home and Jamie told me her parents had transferred it to her 7 years earlier.             Jamie was confident when she asked me to confirm that the home is protected and would not be subject to New Jersey Medicaid’s spend down requirements.  I told her she was correct, but then I asked her whether Mom would remain in the home.  That’s when Jamie told me that the plan is to sell the home and have Mom move in with Jamie and her husband.             Jamie told me the house would probably net $200,000.  That money plus the $60,000 of countable assets that Mom could keep under Medicaid’s Community Spouse Resource Allowance would be used to support Mom.             I then asked Jamie if she had accounted for capital gains tax in her calculations.  Jamie sounded puzzled.  “Aren’t Mom and Dad entitled to exclude gain from the sale of their home,” she asked.  “It has been their primary residence for 30 years.”             I explained to Jamie that since she

            More often than not, the calls we receive in our office concerning a long term care crisis are made by one or more of the adult children of the senior in failing health.  We ask whether there is a power of attorney in place which will legally permit a family member to act for the senior, which will allow us to guide those families.             However, we also know that just because the adult child has the legal ability to act for the parent doesn’t necessarily mean that child is emotionally ready to step forward.  A role reversal is necessary.  Without it, the POA is useless because the child is powerless to act.  The parent, in many respects, must become the child and the child the parent.             When Dad says, after nearly starting a fire in his home or falling down the stairs for the third time, that he’s ok and sees no reason he can’t continue to live alone, it’s often difficult for the children to step up and make the tough decisions.  So often they are waiting for Dad to say “it’s time”.  For many parents that day will never come.             It becomes more difficult when the parent

                Last week I was telling you about George and Mary.  Mary has dementia and may soon need nursing home care.   George had gone to an elder law attorney who told him that once Mary spent down her assets she’d qualify for Medicaid.  That advice came at a time when George and Mary were living together, but not as husband and wife.                 That all changed when George and Mary recently were married.  It’s what Mary always wanted.  But, it also changed things dramatically as far as Medicaid is concerned.  Now George must spend down Mary’s and his own assets before achieving Medicaid eligibility.  He’ll be able to keep his home and approximately $120,000.                 I asked George about their finances.  He told me he has approximately $1,000,000 and Mary has $300,000.  If Mary lives long enough she could easily exhaust her assets and start spending down his.  So, what should he do?                 Luckily, he has some time.  I recommended to him that we do asset protection planning for him, placing his assets into a trust under what we call 5 year planning.  In 5 years, if Mary spends her assets completely, as long as George has a home and no more

                George called me because his wife, Mary wasn’t doing well.  She has dementia and he is facing the prospect of needing long term care for her, possibly in a nursing home, although he would like to do everything possible to keep her at home.                 As the conversation always does, it quickly focused on the cost and how to pay for it.  George told me that he and Mary only recently married after having been together for 30 years.  She had always wanted to be married.  Her declining health had made him realize that life is short and if this is what makes her happy then, “why not”?                 However, he told me that they had always kept their finances separate.  He felt pretty confident that she could pay for her own care for at least a few years.  That was good but I explained to George that should she run out of money he would need to start paying for her care from his bank account.                 He didn’t seem to mind but asked me about Medicaid.  “Wouldn’t Medicaid kick in after Mary runs out of money,” he asked.   “We went to an elder law attorney a few years back and

                Last week I was telling you about the call I received from Lou.  His dad had been living in senior housing but now needs nursing home care.  Dad has $80,000 left in assets which he plans to spend down and then apply for Medicaid.                 When I asked Lou about gifts and other transactions over the past 5 years he told me that his dad had set up an irrevocable trust just before applying for senior housing.  Since it wasn’t a problem in terms of qualifying for the housing program, Lou figured it would be the same for Medicaid but he was wrong.                 That’s because the housing program focused on income and not assets.  How much income he had, determined his eligibility as well as how much rent he paid.   I explained to Lou that the irrevocable trust assets were only relevant so far as the income generated from them (ie. interest or dividends).  Keep in mind that there are different housing programs that can sometimes have different rules but many of the programs work this way.                 Medicaid, on the other hand, does look at the assets.  First, I told Lou that just because his dad has an irrevocable trust

                The other day, Lou called me about his dad, who had been living in senior housing for a few years.   His health has deteriorated and he now needs nursing home care.  Lou’s plan is to spend down the $80,000 his dad has left, applying it towards the nursing home bill.   Sounds like a solid plan.                 Lou wants help with the Medicaid application.  I asked him about gifts and  other transactions over the past 5 years, the Medicaid look back period.  Lou was pretty confident he didn’t have a problem.  He told me that he had set up an irrevocable trust and transferred a few thousand dollars into it shortly before Dad moved to the senior housing.  Since it wasn’t a problem when he applied for the housing he figured it wouldn’t be for Medicaid either.                 That’s where Lou got it wrong. While eligibility for senior housing is generally needs based, the rules are quite different from Medcaid.  Government benefit programs can have very different rules.  Next week I’ll explain exactly where Lou’s mistake was.