My mother has an investment account of more than $300k. She is 79, in ok health and is moving in with one of her daughters in Massachusetts. We are looking into Mass Health as a provider and realize her assets will disqualify her.
We also understand that if we were to sign up for adult day services or a nursing home facility, they will tap into her assets first.
We would like to protect those assets and wanted to know our options.
I understand there is a 5 year look back, so this is something we need to consider now. Can we change the ownership of the account to one of her children or create some type of independent LLC? What is the process for each and what are the tax implications, if any?
See an attorney who specializes in elder law. Be careful about transferring assets into someone else's name. Very risky. First of all, it would trigger a gift tax. Next, the money would BELONG to that person. In case of divorce, it's marital property. In case of a lawsuit, it's fair game.
Seriously, it's one thing to try to protect assets legally from nursing home expenses. It's quite another, in my opinion, to do everything possible to spend NONE of mom's money on her own care. Lordy.
If you do plan to take this asset protection approach you should hire and be willing to pay for a highly qualified estate planning attorney with experience in recommending asset managements. A guy who has a one shop elder law legal practice with emphasis on Medicaid might be suitable to provide Medicaid qualification advice, but with $300K you're talking about a significant amount to invest and I think would find better resources in a mid to large size law firm with an actual estate planning practice for people with what I'd consider high net worth.
I also ask the question: what else should her money be used for if not her care?
Also remember your sister will be taking on a "thankless" job and the expense is high... She should inquire about a Caregiver Agreement with Mom's funds...
Mom can't take it with her BUT she can be comfortable through her remaining years without being a financial burden on her family...
Thank you for saying that, Glad. That's exactly the point here. In my post, I was trying to say pretty much the same thing, but you said it better than I. Why are the assets being protected when Mom needs care? Doesn't she deserve better than being treated as a 2nd class citizen (which, lets be realistic here, is what happens when you go on Medicaid in a nursing home). With her assets, Mom could have a very nice private room and all the "extras" that someone on Medicaid cannot afford.
I'm going to describe a couple of personal situations here, so forgive the length of this post - but this is exactly what can happen if you try to "protect" those assets and leave your Mom on Medicaid.
I have seen firsthand what happens when someone enters a nursing home on Medicaid - with both of my parents. Unless they require a private room for medical reasons (my Dad had C-Diff, so he had to have a private room to avoid infecting others), they will be placed in a shared room - and unless someone happens to pass away just before they enter the facility and leaves a window-side bed open, your loved one on Medicaid will be placed in the other corner of the room, which means a space approximately 10' wide and as long as their bed, behind a curtain that will likely remain pulled shut most of the time - so they can't even see out the window. Ever. Unless they happen to get a nice roommate who is willing to leave the curtain open, but 9 times out of 10, it doesn't happen that way. And if a Medicaid recipient wants a private room, someone else has to pay for it - because even with Medicaid, if the resident is on SS, the nursing home takes all of their income, with a small "discretionary" amount left each month.
Oh, and those private rooms? There's a difference in some nursing homes between a temporary private room used for a patient there for physical therapy and rehab after an illness or injury vs. those that are permanent residents. A temporary resident there for therapy gets a large, bright, sun-filled room on the front of the building, where they can look out and see the street and activities going on outside. They have a private bathroom and even a pretty electric fireplace, nightstand and 2 chairs with plenty of room to move around. A private-pay permanent resident room is about 3/4 of the size of a temporary room, with barely enough room for the bed, a recliner and nightstand, a window facing the rear of the building where if they're lucky, they might see a tree or two and a parking lot - otherwise they're looking at the other side of the building - so a wall. No fireplace, no room for any extra chairs, and they share a bathroom with the person in the next room. And someone has to pay $465 a month for that private room, in addition to what Medicaid pays and paying their SS to the nursing home too.
When my dad had to enter a nursing home, he had just a short time before agreed to sell my son his old van for $300. My son took possession of the van, paid out over $400 to get it insured tagged, etc - and then the van broke down the next day and was not repairable, so it had to be junked. Dad told my son to consider it paid in full, because he didn't know it was going to break down and he felt badly that my son had paid so much to get it on the road and then it died. A month later, Dad fell, was hospitalized and had to go into the nursing home on Medicaid. When Medicaid learned that the van had been transferred to my son's name, I had to go back to the junkyard that took it and get a signed statement from them that this non-running van had $0 value when it was transferred. THAT'S how picky they are about assets. So if they will go that far to pursue a $0 asset, what do you think they'll do with your mom's $300k assets?
My mom is now in a nursing home on Medicaid. The only things she owns are her vehicle and home. We have tried a shared room, and she becomes depressed because she's stuck behind that curtain that divides the room, as I mentioned before. When she becomes depressed, she talks about just "giving up" and "letting go", because life isn't worth living if she can't even look out the window. So yes, I pay the extra for a private room for her every month. If I sell the house, which is only worth about $30k if I'm lucky, every penny of that sale will have to go to the nursing home, because the transfer or divestment of that asset will make her ineligible for Medicaid until the money from the sale runs out (which would be all of about 4 months at the current rate the nursing home charges). If the house is transferred to my name, the same scenario occurs, except now she is ineligible for Medicaid, so the entire $7000+ per month would have to be paid out of pocket. When someone on SS only has about $1400 a month coming in, where is that going to come from?
If you somehow hide or "protect" your mom's assets and put her on Medicaid, all of the things I've mentioned are going to become your Mom's reality. Doesn't she deserve better, especially since she was apparently careful financially throughout her life and has the funds to obtain the best of care, at least for a while, until the money runs out and she *has* to go on Medicaid?
My advice: transfer NOTHING.
If you think mom will get into a decent facility on Medicaid, you are dead wrong. She can afford to live like a queen and she deserves to. Leave it in her name and make sure her final years are the best.
I don't understand why you don't think her money should be used for these things? Doesn't your mother expect to pay her own way? Isn't that what she and your Dad saved for? Money provides a lot of options. Why shouldn't she have the benefit of those options? Personally, I think EVERYONE should have access to Medicaid, just as they do to Medicare at a certain age. But that is not how it works.
If your Mom goes through all of her own money on her own care and her own pleasures, then she will be eligible for Medicaid.
Do see a professional estate planner. But I hope what you will be asking about is how to make her money last as long as it can for her ... not how to hide it for heirs.
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