Question About Bankruptcy and $$ in the Bank

[Princess Dolly]

Is your appointment with a BK attorney? Ask for a referral to a probate/estate planning lawyer while you are there.

 

[tnmt]

All is good as long as you can sleep well at night, MIgrandma. I still hope you pay your gift taxes on the money that is in YOUR NAME now. Also, if your mom goes into nursing home within 5-7 years, whatever the lookback period is, then she will still lose that money when they find it. Hopefully, she will stay well until that time period but you never know so you better keep good records of where the money went because they will ask for receipts of where it went.

 

[minkydog]

This thread is a great example of why a do-it-yourself will kit is not a great idea for many people. If MIGrandma's parents had obtained the services of a competent estate planner, much, if not all, of this mess could've been avoided.

A good estate plan involves much more than just drafting a will, and a good estate planning attorney can save a ton of headaches by dealing not only with drafting the will but proper planning to pass all assets.

I couldn't agree more! Please, everyone, listen to this piece of advice!

My dad did one of those lousy fill-in-the-blank internet wills. Because he was not an attorney, he was unaware of the laws in his state. When he died he had this "will"(piece of paper, actually) that had no validity. It took us several weeks to get the will qualified, but even then the will was so vague it didn't mean much. My father left assests of over $1 million!! And what a mess it was. It took almost 3 years to get it settled and the assets distributed. The ones who really won out were the attorneys who sorted it all out! When I got home from the funeral, my DH & I went straight to an estate attorney. We had our wills done, with all the right legal language that was missing from dad's will. We had our POAs done and set up a trust account for our youngest son, who is disabled and cannot own money or property in his name. I would *strongly* suggest that anyone who needs to shelter their money look into opening a trust account for your loved one.

And lest anyone think we're trying to beat the system...We plan to leave money in Christian's trust so that his guardian can provide him with warm clothes, dental work, Christmas gifts, summer camp, and new shoes, etc. The trust is overseen by the bank, to prevent someone fraudulently using his account. Christian will never be able to work for a living, so whatever we leave in his trust has to last his entire life, which could be remarkabley long given his good health. And we *don't* want the cost of his care to be a burden to our other kids. If Christian were to come into a sum of money >$2000 he would immediately lose his Medicaid benefit and the money would have to be spent down until he is under $2000, at which time he could re-apply for Medicaid, a process which can take 2-3 months or more. His Medicaid currently pays for all his expensive seizure meds and will very shortly be picking up all of his medical expenses and personal care. Not only that, if he loses Medicaid he loses access to many other govt programs for Medicaid recipients. So you can see, we can't afford for him to lose it.

 

[MIGrandma]

Your mom should not have to pay for the poor financial situation of her son. The sad part is her daughter put her in a position where she might have to pay for her lousy grandson.

Thank you so much for that. I already feel bad about it, thanks for the kick. She wanted it done that way, I thought I was being a good daughter and doing as she wanted. I guess not.

 

[Green Tea]

This post shows why people should consult an attorney regarding estate, inheritance, and ownership issues instead of just assuming that because they think something ought to work one way, that it really does.

 

[Uptown Girl]

Thank you so much for that. I already feel bad about it, thanks for the kick. She wanted it done that way, I thought I was being a good daughter and doing as she wanted. I guess not.

I think you had the right idea doing what you did, you just didn't do it in the proper "format" and it caused more problems than it saved. You have time to get things settled for your mom, and hopefully your son's financial issues won't damage that too much.

 

[Swan4Me]

Is this the son who had a hard time finding a job and got married this summer? With the now 5-6 kids in their blended family? that is too bad-I always thoght when you married, adding the spouses income helped matters?

http://www.disboards.com/showthread.php?t=2767337


Right now we know there will be no inheritance for us. We are spending all Mom's savings on the nursing home. Then we sell her house and use up that $$. It should last 5 years before the state takes over-if she lives that long

 

[Pea-n-Me]

The LTC premiums would be no where near what a year's worth of care would cost so if she can get it, it's still a good idea. $300/day is $108,000/year. Also, it pays for inhome care, not just nursing home care. Medicaid does not pay for any inhome care, only nursing home care. Medicare has 100 day provision after a qualified hospital stay only--but you still have to pay for some of the costs out of pocket.

LTCI premiums for someone in their 80s (covering $300 per day nursing home costs for 2 years) can run $1000 per month (5 years, $2000 per month - I just ran these numbers for my own mother on my own work subsidized plan last week - which I carry for DH and myself and premiums are nowhere near that, so I do believe in LTCI but again, it's best to get when you're young.) I don't know too many elderly who can or want to pay that. If they don't have it and have a good amount of assets and can and want to pay the premiums, then I agree it's a good idea.

There are 3 way to pay for a nursing home: private pay, LTCI and Medicaid. It's got to be one or the three.

I have not heard that it is changing to "forever"--that would NEVER work. There is a 5 year look back standard being adopted by most states. Those states that were at less then 5 years are gradually increasing their lookbacks until they get to 5 years (our state is at 4 1/2 years now I think). Some states have a 7 year look back. Florida was considering a 10 year but I don't know what happened to that.

I think our attorney knows what he's talking about. He said that in reality, they will more than likely still only look back 3 to 5 years, but they CAN look back forever - as of next week. This could be a MA only law, that I'm not sure about.

 

[ilovejack02]

LTC insurance it a must in your retirement and estate planning.

AMEN : ) We just got my Mom set up with LTC... At least she is doing it now . Estate meeting set up with lawyer for next week.

 

[ilovejack02]

LTCI premiums for someone in their 80s (covering $300 per day nursing home costs for 2 years) can run $1000 per month (5 years, $2000 per month - I just ran these numbers for my own mother on my own work subsidized plan last week - which I carry for DH and myself and premiums are nowhere near that, so I do believe in LTCI but again, it's best to get when you're young.) I don't know too many elderly who can or want to pay that. If they don't have it and have a good amount of assets and can and want to pay the premiums, then I agree it's a good idea.

.

MOm turns 70 next week, she is going to be paying 2,700 a year on an great plan.. we looked and looked , met with several different people and finally went with the best one,so much to explain and so many different plans, but trust me , this is a good one.. It is a bit cheaper to pay for the year up front.. yes it will be more expensive because your MOm is older, but look around , you may find a better plan.

 

[Uptown Girl]

LTCI premiums for someone in their 80s (covering $300 per day nursing home costs for 2 years) can run $1000 per month (5 years, $2000 per month - I just ran these numbers for my own mother on my own work subsidized plan last week - which I carry for DH and myself and premiums are nowhere near that, so I do believe in LTCI but again, it's best to get when you're young.) I don't know too many elderly who can or want to pay that. If they don't have it and have a good amount of assets and can and want to pay the premiums, then I agree it's a good idea.

There are 3 way to pay for a nursing home: private pay, LTCI and Medicaid. It's got to be one or the three.


I think our attorney knows what he's talking about. He said that in reality, they will more than likely still only look back 3 to 5 years, but they CAN look back forever - as of next week. This could be a MA only law, that I'm not sure about.

What all do you have on that plan that it is THAT much/month??? That is REALLY high, especially for a plan that only pays out for 5 years. Even at $2000/month, that is still less then the $9000/month the care would cost out of pocket AND she gets to keep all of her retirement money AND you get your inheritance.

 

[Uptown Girl]

AMEN : ) We just got my Mom set up with LTC... At least she is doing it now . Estate meeting set up with lawyer for next week.

Did you buy some for yourself too?? We have our policies already--all $65/month for $180/day lifetime coverage . The $180/day is the average inhome care cost in our area and the way the policies work you "bank" the money you don't spend (say you start with 3 hours/care 2 days/week) you are only spending say $60 of that $180 and the rest can be tacked on to more expensive care later.

 

[Swan4Me]

MOm turns 70 next week, she is going to be paying 2,700 a year on an great plan.. we looked and looked , met with several different people and finally went with the best one,so much to explain and so many different plans, but trust me , this is a good one.. It is a bit cheaper to pay for the year up front.. yes it will be more expensive because your MOm is older, but look around , you may find a better plan.

How can that pay for itself? she probably will need to move into one in 15 years-so the policy will have only collected about $40,000

We pay 4300 a MONTH for the nursing home ($51000 a year)

 

[Uptown Girl]

How can that pay for itself? she probably will need to move into one in 15 years-so the policy will have only collected about $40,000

We pay 4300 a MONTH for the nursing home ($51000 a year)

It's insurance, the money you put in isn't the money you have to spend-it's not like a savings account. Say you bought a policy today and next month got into a car accident and had to stay in a nursing home and you had lifetime coverage, you would pay for that one month and have the rest of your life paid for by the insurance company. The trick is finding a GOOD company to get your policy from.

 

[RitaE]

I agree with all the others. This money is skipping all around to various names and ownerships - and the person who should own the money is fully at the mercy of everybody else to have it go for her benefit.

I would guess at this point what needs to be done is - find out the look back period for the bankruptcy and have the son wait that out.

Figure out what sort of gift tax issues were triggered that were apparently never paid

and most importantly, assuming we are talking about a material amount of money here -

Look into various Trust and Estate planning vehicles which would legally lock the money into paying for your Mothers care and benefit. Since you and your husband legally own the money right now I would assume you could set up some sort of a Trust for her that dictates the money be spent for her care with you as Trustees. You do need to make sure your lawyer is qualified to do this because a badly written Trust document is about the same as no trust as all.

In this case it is your son who has put your Mother's money at risk by wanting to file bankruptcy. However it could have been you or your husband. One of you could have your own health crises and find yourselves required to spend down that money before filing for your own Medicaid coverage - or you could have a car accident and a personal judgement filed against you. This whole changing names on the bank accounts to try and "protect the money" is extremely ill advised.

 

[j's m]

Having been through the medicaid process with my father 15 years ago, and now my mother last month, I have a question about the life insurance policy. Before my dad was eligible for medicaid, his assets had to be below 2000 and my mom had to be below 72,000. He was REQUIRED to cash in all his life insurance policies since whole life policies are assets. He only lived about another year later, and my mom lost so much of the face value of the policies.

When I applied for my mom last month, one of the requirements still was to cash in the life insurance policies. I had to show proof of the insurance check and proof of where it was deposited.

My MIL is in the same NH as my mom. It's 294 a day and the money goes fast. Medicaid fraud bothers me, especially since all four of my parents and inlaws have been in nursing homes, and I'm the POA that has to write all the outrageous checks. Neither set of parents gave us any money beforehand and by the time it shakes out, well over a million will have been spent on their care.

 

[Uptown Girl]

Having been through the medicaid process with my father 15 years ago, and now my mother last month, I have a question about the life insurance policy. Before my dad was eligible for medicaid, his assets had to be below 2000 and my mom had to be below 72,000. He was REQUIRED to cash in all his life insurance policies since whole life policies are assets. He only lived about another year later, and my mom lost so much of the face value of the policies.

When I applied for my mom last month, one of the requirements still was to cash in the life insurance policies. I had to show proof of the insurance check and proof of where it was deposited.

My MIL is in the same NH as my mom. It's 294 a day and the money goes fast. Medicaid fraud bothers me, especially since all four of my parents and inlaws have been in nursing homes, and I'm the POA that has to write all the outrageous checks. Neither set of parents gave us any money beforehand and by the time it shakes out, well over a million will have been spent on their care.

Whole life policies are an asset but term life policies, since there is no cash value to them, are not. They can't be "cashed in" for the cash value like a whole life policy can. I am guessing that the OP's Dad probably had a term life policy from work and that is where this money came from.

 

[USMC0193]

I've decided I don't like being put in this position with Mom's money.

I'm an only child so there is no one else to deal with it, unfortunately.

Dad had Alzheimer's, and Mom took care of him at home for several years, until he started getting violent at night. They called it "sundown syndrome." He got physical with her and she feared for her life. As a family it was decided he needed to be put into a nursing home. He worked all his life, the last 25 years at General Motors. They were not good at saving money. They sold their home and moved into a senior citizen apartment building. It was determined they could not afford, on their own, to pay Dad's way in the nursing home and the home started the paperwork for Medicaid. They advised her to speak to a lawyer. She (and I went with her) spoke with the lawyer at the Commission on Aging and the lawyer recommended "spending down" any assets.

They didn't have much $$ in the bank so there wasn't much to "spend down." The nursing home said she could put $2,000 into a savings account in Dad's name for incidentals (hair cuts, clothes, anything personal he needed) so we did that, with my name only being on the account as having power of attorney.

So, when he died we tried to transfer his savings (he still had the original $2,000, as he died 6 months after going into the nursing home) to her account and it wasn't allowed since my POA was no longer valid after his passing. We had to go through probate to get the money transferred, and pay fees to do that.

So, when Mom cashed in the life insurance policy she wanted to put it into the bank in my name only so her name wasn't tied to it. Yes, just in case she had to go to a nursing home. If some of you think that's wrong, so be it. It's what she wanted to do. I never thought there would be any kind of issues because to me it is HER money, NOT mine. I guess to the law that's not the case.

This is just proving to be more trouble than it's worth and I'm wishing I would have said no when she asked to put it in my name. But I never thought there would be issues so I had no problem with it.

I thought I was protecting my Mom's money, so nobody would have to pay to have it transferred to another account if DH and I were killed in an auto accident or something. And here I may be just causing more headaches.

I bolded some statements that really struck me as odd . . . you and your mother are trying to have the tax payers foot the bill for your mom's potential nursing home care. Do you not see this? You are scamming the system.

The spend down is intended for long term nursing care. You stated your parents didn't have much money, so they did the spend down and also put aside $2000 in savings. Any person that is familar with Medicaid long term care, the person in a facility has all of their retirement and social security taken with the exception of $34 a month. This $34 a month is to be used for personal care, i.e. hair cuts, shampoo, etc.

Let's say your Dad had a $500,000 policy that was cashed in. First of all, you would have had to pay the difference out on his nursing care - lets say the state paid $1500 a month, so you would have had to pay back the state $9,000 leaving $491,000. You are scamming the system if your mom applies for Long Term Nursing Care - Medicaid. If this is found out, then fraud charges will be brought against you and your mom.

Remember every action has a reaction. The issue isn't about your son, it is about you and your Mom trying to get one over on the State of Michigan in the case your mother needs long term nursing care.

Remember, Karma is a witch and this will come back and get you one way or another.

 

[ilovejack02]

How can that pay for itself? she probably will need to move into one in 15 years-so the policy will have only collected about $40,000

We pay 4300 a MONTH for the nursing home ($51000 a year)

LTC policy is insurance, kinda like car or home owners. If she falls next week, breaks a hip and has to go into a home say for rehab, she is covered until she gets out . If she doesn't go into a home until 10 years from now and stays 5 years she is covered. It also pays for in home care .. also has inflation clause in it.. It does only cover for a certain amount of time, say if she is in a nursing home for 10 years it won't cover the whole time of course, but quite honestly , that rarely happens. Nursing home patients usually don't live that long .: ( There are so many different polices out there , as a pp said , you must do yur homework and find the best for you .

Now if she never needs it then "we " lose the money, but honestly no one loses .. it isn't my money it is hers to take care of herself .


Someone else asked If I bought myself some, no I sure didn't but it is on the list this year to get done. My father just turned 86 and doing great , but we are really concentrating on helping take care of my parents right now , he is very worried about my mother being safe and cared for when he is gone. Getting all the bills in order, finding insurance plans , cleaning out the house, ( Dad doesn't want her to have to deal with cleaning it up to put it on the market, as she wants to move near me when he passes ) , making sure she knows where money is invested etc .. tying up any loose ends .

We will for sure get us LTC this year : ) I don't want my children to have to worry about caring for us when the time comes.

 

[mefordis]

I just read that gift tax is paid by the gift giver, and doesn't kick in until the gifts exceed $1 million.

Here is the Website I got the info from:

http://harborfi.typepad.com/tax/understanding-the-federal-gift-tax-laws.html

It either is her money and would count towards assets for Medicaid or it's not. It can't be 'her money' for gift tax purposes and 'your money' for Medicaid purposes. You can't have it both ways. Since she was the benificiary for the insurance, she didn't have to pay income tax on the benefit. However, once she transferred the money to you, that is considered a gift to you and would be subject to the IRS gift tax laws.