Question About Bankruptcy and $$ in the Bank

[minkydog]

Well we hit the jackpot for my Mom

It is the retirement home(all women) for a group of nuns who started the hospital next door(1/3 are nuns-the rest lay people=ladies). many are just old-not senile-so if anybody doesnt 'do right" by the patients , theres a whole group of nuns they have to answer to

We did too. My MIL lives in a nice, but not swanky nursing home about 4 miles from my SIL, her daughter. It certainly is BY FAR the nicest place my MIL ever lived. The staff is great and the place is clean. I have NEVER smelled "old people urine/feces smell" (you know that smell!) They have pet birds, a nice little garden, monthly wine tastings, manicures, hair stylists who volunteer their time, bingo and other stuff. it's all there for the taking, if the residents choose to go. I have NEVER witnessed a nurse or CNA sitting down. Not even once. Those ladies and gents are some hard working people. They go out of their way to do the best for MIL, even though she is quite the complainer. She's 91 and she just wants to go home. Not going to happen. She is very frail and mostly confined to her wheelchair or bed. MIL is also incontinent. I suppose she could be managed at home--if one of us were able to give up our life to bring her into our home and devote all of our time to her care. Personally, I think she gets better care and more social stimulation living in her nursing home than she would ever get in one of our homes.

I hope that when the time comes my children will find a nice little place like this for me to live in. I would never want my kids to be burdened with my care

 

[Princess Dolly]

It's too bad CLASS didn't get worked out so that Long Term Care Insurance was more affordable. As you can see from posts on this thread, that insurance is all over the place and I have to admit the benefit is not always easily understood. Maybe it will be taken up again in the future.

 

[Pea-n-Me]

It's too bad CLASS didn't get worked out so that Long Term Care Insurance was more affordable. As you can see from posts on this thread, that insurance is all over the place and I have to admit not the benefit is not always easily understood. Maybe it will be taken up again in the future.

I believe they are still working on it.

 

[Princess Dolly]

I believe they are still working on it.

Thanks! I haven't been following too closely lately.

 

[tvguy]

Because it would boggle my mind, that someone could die and then the spouse would have to pay back the cost for care, with money that *didn't exist* before the person died.
.

Of course the money existed. The life insurance policy is a contract where you pay premiums, and they pay a predetermined death benefit.
People borrow against their life insurance all the time, so that's no different than the government going after the estate for money they paid out after the person's death. Same thing with reverse mortgage, you get a monthly check, but when you die and the house is sold, the estate has to pay back the money that was paid out.

Here in California with the budget crisis the state is demanding repayment of welfare benefits paid decades ago to people .....the people are dead, and in some instances the state is demanding the money from the grandchildren of the person who received the money.....and in more than one case, the grandchildren weren't even alive when the benefit was paid, and they were born after the person died. And so far, the courts have ruled this is perfectly legal. They all tend to be well off financially.

 

[marybet]

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.

I hope you have someone else checking on his trust because someone at the bank could fraudulently use his account. Not everyone that works at a bank is trustworhty, same goes for lawyers too. You may already have someone auditing his accounts, to often we read of people taking advantage of someone's trust account. You have probably already done this but thought I'd mention it just in case.

 

[CowboyCO]

Of course the money existed. The life insurance policy is a contract where you pay premiums, and they pay a predetermined death benefit.
People borrow against their life insurance all the time, so that's no different than the government going after the estate for money they paid out after the person's death. Same thing with reverse mortgage, you get a monthly check, but when you die and the house is sold, the estate has to pay back the money that was paid out.

Whole Life has cash value before death and can be recovered after the spouse dies by medicaid. However, term life has no value prior to death, and cannot be recovered by Medicaid unless the beneficiary is also under long-term care from Medicaid.

 

[ccgirl]

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.

Yes. This is actually fraud. She is hiding her money so she can get taxpayer money. People go to jail for this. But, since your names are on it; it is no longer her money it is your's now. If you ever get audited by the IRS and have not paid gift tax you may be forced to (with penalty). Your DS was absolutely correct wanting his name off that money! Bankruptcy attorney's may still find it though and may come after a portion of it.

 

[beaucoup]

OP, I am curious as to what the atty said to do about the situation? Any answers from yesterdays appointment?

 

[tvguy]

Whole Life has cash value before death and can be recovered after the spouse dies by medicaid. However, term life has no value prior to death, and cannot be recovered by Medicaid unless the beneficiary is also under long-term care from Medicaid.

OP did not specific what type of life insurance it was. You very well could be right, but like I posted earlier she needs an attorney.
And there are plenty of third party companies out there that will loan you money in advance of death on a term life insurance company.....the same ones that will buy out structured settlements....you know, the company that advertising on TV "It's my money and I want it now".

 

[minkydog]

I hope you have someone else checking on his trust because someone at the bank could fraudulently use his account. Not everyone that works at a bank is trustworhty, same goes for lawyers too. You may already have someone auditing his accounts, to often we read of people taking advantage of someone's trust account. You have probably already done this but thought I'd mention it just in case.

In our case, the state of Georgia monitors the account. There are rules regarding what his money can be used for(personal expenses.) Every year they audit the account and we have to explain any withdrawals. So far, there haven't been any withdrawals since we are still living and paying for the things he needs. But the day will come when he will have a legal guardian who will monitor his needs and will make withdrawals according to the rules. The bank will be the guardian of his trust. We also have financial guy who helps us manage all our accounts and taxes, Christian's included. I'm sure if someone really wanted to get his money, they could find a way. But I think we have enough safeguards in place that it wouldn't go unnoticed.

 

[Wadecool]

Yes. This is actually fraud. She is hiding her money so she can get taxpayer money. People go to jail for this. But, since your names are on it; it is no longer her money it is your's now. If you ever get audited by the IRS and have not paid gift tax you may be forced to (with penalty). Your DS was absolutely correct wanting his name off that money! Bankruptcy attorney's may still find it though and may come after a portion of it.

Chances are good that the grandmother will get caught hiding this money too. Many states are cracking down on Medicaid fraud.

 

[DisneyBill]

Whole Life has cash value before death and can be recovered after the spouse dies by medicaid. However, term life has no value prior to death, and cannot be recovered by Medicaid unless the beneficiary is also under long-term care from Medicaid.

Any cash value in a whole life policy goes away upon death of the insured. The insurer only pays the face value of the policy at death, to the named beneficiary. Hence the reason why medicaid pursues any CV upfront, because at death medicaid won't get anything from the policy. Exactly the same as term insurance. (unless, I suppose the insured could name the state as beneficiary)

 

[ccgirl]

From what I understand, both the father and mother were receiving Medicaid; correct? When the father died the mother got life insurance. So, while the gov't could not take that for use on the father they certainly could have for the mother. Since, she now had money and no longer needed Medcaid. However, to hide the money - the insurance money paid out upon the father's death was "hid" in a bank account in the daughter/son in law's name so the mother could still use Medicaid while also using the life insurance money. Did I understand correctly or am I confused?

 

[Acklander]

From what I understand, both the father and mother were receiving Medicaid; correct? When the father died the mother got life insurance. So, while the gov't could not take that for use on the father they certainly could have for the mother. Since, she now had money and no longer needed Medcaid. However, to hide the money - the insurance money paid out upon the father's death was "hid" in a bank account in the daughter/son in law's name so the mother could still use Medicaid while also using the life insurance money. Did I understand correctly or am I confused?

I took it as just the dad was receiving the Medicaid and because of all the hassle of 1) needing to spend down their assets before he could get the Medicaid and 2) having to pay the filing fees just to get back the 2k he had in his bank account they thought it would be easier just to put the $ in the OP's name, so they wouldn't have to go through the hassle.
From what I take of it, the person the money belongs to (but isn't on the account) is doing just fine and paying he own expenses accordingly, and all that other stuff was done as a "just in case" thing.

 

[ccgirl]

I took it as just the dad was receiving the Medicaid and because of all the hassle of 1) needing to spend down their assets before he could get the Medicaid and 2) having to pay the filing fees just to get back the 2k he had in his bank account they thought it would be easier just to put the $ in the OP's name, so they wouldn't have to go through the hassle.
From what I take of it, the person the money belongs to (but isn't on the account) is doing just fine and paying he own expenses accordingly, and all that other stuff was done as a "just in case" thing.

Oh...I thought the momther was receiving Medicaid as well. Would be interested to hear from the OP if that was the case or not.

 

[cornflake]

Wait, the way I read it - the OP's father needed nursing home care. The OP's parents didn't have a lot of assets and did spend down those (save the $2000 you're allowed to save) so he was placed in a nursing home on mediwhichever's bill (for people with no funds).

He later passed away. The OP's mother was the beneficiary of his life insurance policy. In order that, in case she needed the same type of care, she not be forced to spend down that insurance policy money, she gave it to the OP to place in the OP's name to 'hold' for her.

Thus, in case the OP's mother needed the money for other expenses, the OP would return it, but in case the OP needed a nursing home, the money would not be counted as her asset that would need to be exhausted before she could get the same mediwhatever (for people with no funds) care her husband had.

She has not yet needed nursing home care.

The mediwhatever for all older people that is not dependent on funds, and that she is probably availing herself of, is immaterial to this story. This is about shifting the life insurance asset to the OP so that, if she needed the mediwhichever for the destitute, that covers nursing home care, the money would be there to be passed on to the kids, like the OP.

I think.

 

[Pea-n-Me]

You can't really say Mediwhatever. Medicare and Medicaid are not interchangeable. Medicaid is public assistance.

 

[cornflake]

You can't really say Mediwhatever. Medicare and Medicaid are not interchangeable. Medicaid is public assistance.

I know they're not, I was saying that because I can never keep them straight and didn't want to use the wrong one, so I went for vagueness. I thought that was preferable, guess not, heh.

 

[Pea-n-Me]

I know they're not, I was saying that because I can never keep them straight and didn't want to use the wrong one, so I went for vagueness. I thought that was preferable, guess not, heh.

I figured as much, but the difference is crucial to the story.