ELDERLY MOM

I know I will need legal advice, but I want to get some opinions/ideas/questions to ask etc. My 85 year old mom has finally decided it is time to move out of her house of 50+ years to an assisted living facility. She has no savings and gets about 1300 a month from social sec. The house has been sold ( in a week which is both good and bad ), She will walk away with a check for 150,000. what do I need to do to avoid as much tax and other government squeeze. She has some health issues and I do not think she will be around for another 10 years (harsh but realistic)She will not be able to drive any more thank goodness. The apartment will cost about 1700 a month. At this time she will not consider living with me or my sister as she wishes to stay independant as much as possiable.She could qualify for low income at the apartment,but with the 150,000 in the 'bank' I don't know how that will effect it.Again I will consult a elder law attorney. Looking for Ideas. Thanks

[Freckles]

When my Dad and Mom sold their place and moved into an elderly apartment in town.They went to the local funeral home and prepaid all of their funeral expenses and paid for their burial sites. I know it is hard to talk about this but at least when all is said and done that will be less money to worry about at the end. With all the arangements made in advance, it was sooooo much easier when they passed away.


Freckles

See an atty as soon as possible. There are ways that she can prevent some of that $ going to the state IF she puts it in your name and after a certain period of time. That time may be past however if she is not in the best of health. There are differences in the law if both parents are alive vs only one. When my dad died we put the home in me and my brothers name and after 21 months, it is now 'ours'. She lives there and pays rent. The rent MUST be documented and be reasonable. $1 per month is NOT ok. It must cover taxes and insurance and upkeep. We 'charge' her $250/month. There is a little bit left over to cover things that go wrong...like a new garage door opener recently. GOOD Luck!

[Burr]

The sale of her personal residence will not be taxed, since it was her primary home in at least 2 of the last 5 years, prior to sale. From what your saying, she will not reach the threashold for estate taxes either. For the most part, as far as taxes go, all you need is someone to prepare her tax return to report the transaction, there will not be tax liability for her.

As far as how to pay for, and arrange a place to live and health care, that's a good question, and not easily accomplished. I anticipate she has lived frugally over the years, so I don't believe much will change for her, and likely living in an assisted care facility will be much more social and enjoyable for her.

[Dodge1]

From my limited knowledge there are life insurance policies that will pay out a certain percentage of a lump sum premium that is paid up front.

I'd suggest contacting a knowledgeable insurance agent, and a tax attorney, to explain the ramifications and legality of this.

Might be well to consult with counsel about gifting, and the effect of that upon her entitlement to various forms of public assistance available for her living situation. Perhaps some gifting would permit earlier public assistance and the avoidance of at least some exhaustion of her assets, depending upon the circumstances.

[Fenwick]

I went through this with my parents not long ago. Good lawyer can help but hard to find! The hardest thing was getting them to gift some of their money to someone they trust so as to protest their funds. Meaning it was still their money held for their needs just not in their account. Every thing was within the law! It can get very tricky and that is were a good lawyer cones in. I wish you and your Mother good luck. Feel free to send a email; I'ed gladly share anything I learned and give you a name to contact but I have to say time is short for the action you need to take.
Fenwick

My mother died in a nursing home in 2000. She had extended care insurance, and owned a farm, so our situation was a lot different than yours.

Estate planning requires a good CPA as well as a knowledgeable attorney.

It's probably too late to buy extended care insurance, so talk to a number of insurance professionals, and again the attorney and CPA.

Doing this right isn't convenient. It will take a lot of your time. Don't jump at the advice of a single person. Double check with the CPA and attorney before you do anything.

Sounds just like my Mom.
The house sale proceeds won't be taxed.
My Mom now lives in a senior retirment center and enjoys it very much. Since I am the only surviving family, she has everything she owns in her name and mine w/"JROS". (It is a small amount). Her housing is subsidized due to her (similar to your Mom's)low income.

We just went through it with my mother-in-law, also.
Same scenario.

[Pond scum]

I cannot really comment on the tax ramifications, but I can comment on a few things that you must consider in regards to her future healthcare expenses. I am Director of Operations of a healthcare company in Ohio and basically I run nursing homes. There are decisions she needs to make , and realities that she must accept.

First the realities. 1. Even though she may be in good health now, eventually she will not be. It could be a slow and steady deterioration of health, or just as easily a sudden deterioration. 2. Healthcare is extremely expensive, especially for the elderly. You are not talking about the cost of band-aids and Tylenol anymore. You are talking about heart by-pass surgery and very expensive geriatric pharmaceuticals. $150,000 plus $1300 per month is not very much. 3. It is best to plan for these expenses now because trust me, they will occur.

Now the big decision. 1. What does she want to do with her money? If she plans to just utilize it herself for her own expenses, then it is really simple. She pays for her expenses until the assets are exhausted and then applies for public assistance (Medicaid) to help cover her ongoing healthcare expenses. Keep in mind, that Medicaid does not cover assisted living care in most states, but will cover long-term Care. If she wants to leave some or all of her money for family, then obviously it has to be gifted. You have to be careful here, however. If she were to gift away the money and then have a deterioration in her health, she would have no way to pay for her healthcare and would need to apply for public assistance. The problem is that the gift is still considered to be an asset for a set period of time and will disqualify her from receiving any public assistance. In Ohio, the period of time is five years, which means that if she applies for public assistance today, the gift would have had to been made more than five years prior to the date of application. If it was not, then the application will be denied and she will be disqualified for a period of years going forward. The amount of time she is disqualified is dependent upon how much money was gifted. Roughly, $150,000 would disqualify her for 30 to 35 months. How is she going to pay her healthcare expenses then? If the money is still there, then she can take it back. Basically, if a person gifts money at her age, they really need to be sure that the person she is gifting it to does not touch it for at least five years after the gift is made. That way it is there if she needs it.

Anyway, this was a long winded response, but just be careful. The advice given above about getting an attorney is right ion. There are attorneys who specialize in this sort of thing, so I would recommend getting one.