Question About Bankruptcy and $$ in the Bank

[Arielle22]

There are legal ways to transfer and put in trust monies so that nursing home care can not bankrupt people (who spent their lives as taxpayers, generally) - which you can certainly be for or against but I don't think it's as simple as you're making it.

Due to the way health care is handled in this country, decent nursing home care generally falls into two categories - private, which can run tens of thousands of dollars a month, or medicare-funded, for which one has to have close to no assets to avail themselves of.

So, first, if you've worked all your life and saved to be able to leave something to your children, your assets (including your home) can be run through in less than a year just so you can have basic nursing home care.

Or, if you fall in the midrange, where the care you could afford would only be either a month or two or a very substandard private institution, you have to somehow dump the money and home you worked for to be able to get any care, because you can't afford any decent private care and are not destitute.

Hence, yes, there are legal avenues to set up trusts and whatnot to allow people - who have generally worked all their lives and paid into the system - to get the benefits of that system. Like I said, think of it what you will, but this isn't generally about multi millionaires hiding assets in island nations and taking advantage of whatnot, it's people trying to protect fairly modest inheritances that wouldn't really matter in a private situation.

cornflake, that is not how it works with nursing homes. If you have funds available you use them and when they are gone you switch to medicare. I have been through this with my two great aunts and my mother in law. Both great aunts had about 50k in the bank which got them roughly 10 months in the nursing home. During that time paperwork was prepared and submitted to medicare. When their funds ran out medicare took over. They did not transfer to a different nursing home or even a different room. My aunts received excellent care at their nursing home and my mother in law receives excellent care at hers. Just because they are on medicare does not mean they receive low levels of care.

 

[Princess Dolly]

There are legal ways to transfer and put in trust monies so that nursing home care can not bankrupt people (who spent their lives as taxpayers, generally) - which you can certainly be for or against but I don't think it's as simple as you're making it.

Due to the way health care is handled in this country, decent nursing home care generally falls into two categories - private, which can run tens of thousands of dollars a month, or medicare-funded, for which one has to have close to no assets to avail themselves of.

So, first, if you've worked all your life and saved to be able to leave something to your children, your assets (including your home) can be run through in less than a year just so you can have basic nursing home care.

Or, if you fall in the midrange, where the care you could afford would only be either a month or two or a very substandard private institution, you have to somehow dump the money and home you worked for to be able to get any care, because you can't afford any decent private care and are not destitute.

Hence, yes, there are legal avenues to set up trusts and whatnot to allow people - who have generally worked all their lives and paid into the system - to get the benefits of that system. Like I said, think of it what you will, but this isn't generally about multi millionaires hiding assets in island nations and taking advantage of whatnot, it's people trying to protect fairly modest inheritances that wouldn't really matter in a private situation.

Exactly.

And MIGrandma, her is money is YOUR money now. In your head it's hers, it the eyes of the law it's yours and whoever else's name is on that account as a joint holder.

Besides the BK attorney, you all need to go to a probate attorney. They are well worth their fees. Estate Planning makes it so much less paperwork to deal with after your loved one passes, at a time when you really don't feel like dealing with all of that.

 

[diznee25]

MIGrandma,

It may vary from state to state, but bankruptcy attorneys request the past 1 to 2 months of any bank accounts the person has in their name. That way they know the person isn't sitting on tons of money and trying to file bankruptcy.

So, from when ever you took your DS's name off your savings account he should wait another 8 to 10 weeks before filing bankruptcy. (He really needs to consult with a bankruptcy attorney about this.)

Everyone has a personal opinion about bankruptcy, but please remember that it's an extremely emotional and difficult process for the person going through it. Just try to be there for him...

diznee25

 

[Uptown Girl]

cornflake, that is not how it works with nursing homes. If you have funds available you use them and when they are gone you switch to medicare. I have been through this with my two great aunts and my mother in law. Both great aunts had about 50k in the bank which got them roughly 10 months in the nursing home. During that time paperwork was prepared and submitted to medicare. When their funds ran out medicare took over. They did not transfer to a different nursing home or even a different room. My aunts received excellent care at their nursing home and my mother in law receives excellent care at hers. Just because they are on medicare does not mean they receive low levels of care.

They were lucky they didn't have to transfer but this is not always the case and actually it is rare that they don't have to transfer except in smaller towns. Not all nursing homes are Medicare certified and some just flat out don't take Medicare. I agree that being on Medicare doesn't change the quality of care in a nursing home but some nursing homes that have a large number of Medicare patients are woefully understaffed and just don't have the time to commit to patients like they should.

 

[cornflake]

cornflake, that is not how it works with nursing homes. If you have funds available you use them and when they are gone you switch to medicare. I have been through this with my two great aunts and my mother in law. Both great aunts had about 50k in the bank which got them roughly 10 months in the nursing home. During that time paperwork was prepared and submitted to medicare. When their funds ran out medicare took over. They did not transfer to a different nursing home or even a different room. My aunts received excellent care at their nursing home and my mother in law receives excellent care at hers. Just because they are on medicare does not mean they receive low levels of care.

Yes, that is how it works with nursing homes. The homes your aunts are in are modest ones that accept medicare, so they didn't have to switch over. Plenty don't and they would have.

They did, however, have to bankrupt themselves before they were able to use medicare.

That's the middle ground I was talking about - people with modest inheritances who have to either dump the money or spend it on a few months of nursing home care when they'll end up on medicare regardless, and that money, which they may have been hoping to leave their heirs, is burned through in a few months and they're on medicare anyway.

Hence, many people seek to transfer or shelter that kind of money, through trusts or other legal means of transfer, or through doing what was done in the OP's case (which I'm not saying wasn't legal, just doesn't seem to have been what was intended).

 

[Nancyg56]

Sounds like a plan to hide the fact that Mom has any assets, so she can get the govt. (ie tax-payers) to pay for any care she might need in her old age.

I know that folks do this and they all have their own reasons why the choice is the right one for them but there is always the chance that it will backfire. The OP and her Mom are seeing this now. My ex BIL had an Uncle who "gave" his son the house in order to protect it in the event he needed care in the future. He then went to visit family in FL but when he returned unexpectedly he found his house sold. You see his DS did not expect him back so soon and sold the house and contents out from under him.

 

[tinatark]

the Medicaid/Nursing home situation makes me understand why people save their $$ in a mason jar/mattress/sock drawer, etc.

 

[tar heel]

Some of you are saying "Medicare" when you you mean "Medicaid." Medicare is not need based. It pays for a very limited amount of nursing home care IF the patient is also receiving therapy. It does not cover custodial care. Seniors with no assets are on Medicaid.

 

[ilovemk76]

Yes, that is how it works with nursing homes. The homes your aunts are in are modest ones that accept medicare, so they didn't have to switch over. Plenty don't and they would have.

They did, however, have to bankrupt themselves before they were able to use medicare.

That's the middle ground I was talking about - people with modest inheritances who have to either dump the money or spend it on a few months of nursing home care when they'll end up on medicare regardless, and that money, which they may have been hoping to leave their heirs, is burned through in a few months and they're on medicare anyway.

Hence, many people seek to transfer or shelter that kind of money, through trusts or other legal means of transfer, or through doing what was done in the OP's case (which I'm not saying wasn't legal, just doesn't seem to have been what was intended).

One saves money so they can pay for their old age not give it to others and have the government take care of them. An inheritance is nice but not a requirement of a parent, aunt, uncle, grandparent or another.

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

 

[Pea-n-Me]

Some of you are saying "Medicare" when you you mean "Medicaid." Medicare is not need based. It pays for a very limited amount of nursing home care IF the patient is also receiving therapy. It does not cover custodial care. Seniors with no assets are on Medicaid.

I was going to say the same thing. I think many meant Medicaid when they said Medicare.

 

[tar heel]

I know that folks do this and they all have their own reasons why the choice is the right one for them but there is always the chance that it will backfire. The OP and her Mom are seeing this now. My ex BIL had an Uncle who "gave" his son the house in order to protect it in the event he needed care in the future. He then went to visit family in FL but when he returned unexpectedly he found his house sold. You see his DS did not expect him back so soon and sold the house and contents out from under him.

That's awful. I have a childless elderly relative whose asset transfers led to a big extended family squabble among her nieces and nephews. It was like something out of Shakespeare or the TV show "Dallas." The end result is that the nephew who got all the property doesn't even speak to her or to most of his siblings. Her plan was for him to take care of her in exchange for the farm, but it sure hasn't worked out that way.

 

[Pea-n-Me]

And there is a look back period (of 5 years) for transferred assets when you are dealing with Medicaid.

As of January 2, 2012, the lookback period is changing to "forever". (Sorry, can't find a link but I was told this by our estate planning attorney recently.)

Re Long Term Care Insurance for OP's mom. If Mom is in her late 70s or 80s the premiums will be astronomical to cover an average of $300/day nursing home care, so this may or may not be possible or plausible for her. The time to get it is when you're younger.

 

[Arielle22]

Yes, that is how it works with nursing homes. The homes your aunts are in are modest ones that accept medicare, so they didn't have to switch over. Plenty don't and they would have.

They did, however, have to bankrupt themselves before they were able to use medicare.

That's the middle ground I was talking about - people with modest inheritances who have to either dump the money or spend it on a few months of nursing home care when they'll end up on medicare regardless, and that money, which they may have been hoping to leave their heirs, is burned through in a few months and they're on medicare anyway.

Hence, many people seek to transfer or shelter that kind of money, through trusts or other legal means of transfer, or through doing what was done in the OP's case (which I'm not saying wasn't legal, just doesn't seem to have been what was intended).

I was grateful that they had the money since it got them a bed quicker than having to wait for medicare paperwork to be complete.

I have more familiarity with nursing homes then I would like and have heard of circumstances that you describe. I do think it varies depending on the state. I have heard MA has more regulations than other states so perhaps that is why my experiences are different.

I have mixed thoughts on sheltering money. I have seen my MIL do so with a small inheritance. It is in a trust for her in case she needs care outside the system. I do believe that inheritances are something that should be money left after your care. No one thinks an elderly person should have free care and housing prior to entering a nursing home. If an elderly person dies at home without any funds left for an inheritance. no one rallies at the system but once a person enters the nursing home it seems the rules change.

 

[Princess Dolly]

I was going to say the same thing. I think many meant Medicaid when they said Medicare.

You're right. I did. Sorry my eyes glazed over which program was being mentioned. Thanks to you and tar heel for clarifying.

 

[Nancyg56]

That's awful. I have a childless elderly relative whose asset transfers led to a big extended family squabble among her nieces and nephews. It was like something out of Shakespeare or the TV show "Dallas." The end result is that the nephew who got all the property doesn't even speak to her or to most of his siblings. Her plan was for him to take care of her in exchange for the farm, but it sure hasn't worked out that way.

It happens. I believe that one should use your own assets to pay for your own care. When those assets are gone then the "State" will pay. But I htink those who try to protect their assets in order to avoid paying for care first leave that bill to my kids and my DGD to pay. They also take a chance that thiose assets will be lost for any of a multitude of reasons. You never know.

 

[Princess Dolly]

It happens. I believe that one should use your own assets to pay for your own care. When those assets are gone then the "State" will pay. But I htink those who try to protect their assets in order to avoid paying for care first leave that bill to my kids and my DGD to pay. They also take a chance that thiose assets will be lost for any of a multitude of reasons. You never know.

Not if you do it through proper, legal means. As long as such options exist people will use them.

Medicaid should also consider paying for care other than nursing home care which is much more expensive than assisted living or even in home care. I know there are some pilot programs in certain areas that have tested/testing home care, but they are few and far between.

 

[MIGrandma]

OP here.

Went to the bank and closed out the 2 savings accounts our son's name was on, and re-opened them with just mine and DH's names on them.

And we have a 2:00 appointment with a lawyer to discuss anything else that needs to, or can be, done to ensure our son's creditors can not reach into Mom's money.

I was very glad she had this small "nest egg" when General Motors was in such dire financial straits a couple of years ago. We worried Dad's pension would be cut, or eliminated altogether and the "nest egg" would be there for her to draw upon to pay her bills so she could continue living on her own and not have to move in with us for financial reasons.

Yes, my Dad worked all his life, and paid his taxes year after year. I don't feel it's wrong for her to have this money for herself in her old age. With the way health care costs are soaring she may need it for things like that, if more cuts to her health insurance are made and she keeps having to pay more and more out of her pocket for medical care and her prescriptions, etc.
It is not a huge amount of money that we're talking about either.

I just don't want it taken away by creditors of our son, who has made some extremely poor financial choices. I don't think she should have to pay for his mistakes. Hopefully the lawyer this afternoon will help us out with that.

 

[Uptown Girl]

As of January 2, 2012, the lookback period is changing to "forever". (Sorry, can't find a link but I was told this by our estate planning attorney recently.)

Re Long Term Care Insurance for OP's mom. If Mom is in her late 70s or 80s the premiums will be astronomical to cover an average of $300/day nursing home care, so this may or may not be possible or plausible for her. The time to get it is when you're younger.

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.

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.

 

[ilovemk76]

OP here.

Went to the bank and closed out the 2 savings accounts our son's name was on, and re-opened them with just mine and DH's names on them.

And we have a 2:00 appointment with a lawyer to discuss anything else that needs to, or can be, done to ensure our son's creditors can not reach into Mom's money.

I was very glad she had this small "nest egg" when General Motors was in such dire financial straits a couple of years ago. We worried Dad's pension would be cut, or eliminated altogether and the "nest egg" would be there for her to draw upon to pay her bills so she could continue living on her own and not have to move in with us for financial reasons.

Yes, my Dad worked all his life, and paid his taxes year after year. I don't feel it's wrong for her to have this money for herself in her old age. With the way health care costs are soaring she may need it for things like that, if more cuts to her health insurance are made and she keeps having to pay more and more out of her pocket for medical care and her prescriptions, etc.
It is not a huge amount of money that we're talking about either.

I just don't want it taken away by creditors of our son, who has made some extremely poor financial choices. I don't think she should have to pay for his mistakes. Hopefully the lawyer this afternoon will help us out with that.

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.

 

[sookie]

OP here.

Went to the bank and closed out the 2 savings accounts our son's name was on, and re-opened them with just mine and DH's names on them.

And we have a 2:00 appointment with a lawyer to discuss anything else that needs to, or can be, done to ensure our son's creditors can not reach into Mom's money.

I was very glad she had this small "nest egg" when General Motors was in such dire financial straits a couple of years ago. We worried Dad's pension would be cut, or eliminated altogether and the "nest egg" would be there for her to draw upon to pay her bills so she could continue living on her own and not have to move in with us for financial reasons.

Yes, my Dad worked all his life, and paid his taxes year after year. I don't feel it's wrong for her to have this money for herself in her old age. With the way health care costs are soaring she may need it for things like that, if more cuts to her health insurance are made and she keeps having to pay more and more out of her pocket for medical care and her prescriptions, etc.
It is not a huge amount of money that we're talking about either.

I just don't want it taken away by creditors of our son, who has made some extremely poor financial choices. I don't think she should have to pay for his mistakes. Hopefully the lawyer this afternoon will help us out with that.

she won't be paying for the mistakes - you would be - the money is in your name.
call a spade a spade, my friend.

please, please learn that if you have a family member that makes poor money choices - it is not a good idea to add them onto anything financial. ever. not your will. not your bank accounts. nothing.

because i promise - even if that person does not mean for anything to happen... something like this can always occur.

your removing him off of the accounts could really look like sheltering from the BK, and honestly they could still grab at it. people who are going into BK try to "hide" stuff all the time - and the lawyers for both sides are good at finding out what has been "hidden". that is their job! people have been sneaky for too long and in these times... they will do a thorough search to find out what has occurred.

why did your mom give you all the money in your name again if it is her money? i'm still trying to figure that out because i am confused. if you had said that you were on moms account so that if she were sick you could pay her bills - i would get that. the other stuff - i just don't get.