My mother passed away this week and I am staying with my father. After some power of attorney problems with my sister, my parents elder law attorney appointed a third party senior financial management service to hold POA. I have pretty much been out of the loop, my father doesn't share, the third party POA doesn't share. I found some paper work from last year where the elder law attorney describes how my parents are over-resourced for Medicaid (by $800,000) and she recommended a Medicaid trust expert to help. How does this work? Is this different from a 'spend down'? Does this mean any inheritance is gone? From what I read, the trust is setup with the state as beneficiary. Just as a side note, the POA firm has been very polite to me during this mourning period, and keep suggesting I go out shopping with my father to get some presents for my children (computers, phones, toys) - is this possibly connected? Guilt? Spend down?
What level of care does your dad need right now? Does he have income aside from the income stream created by those assets?
However, my concern was triggered by the statement that the attorney appointed a third party financial service to be proxy.
An attorney can recommend, but, and unless I'm wrong, the attorney couldn't select or appoint anyone to be proxy unless that attorney held the position and was granted authority to select and/or appoint others, by specific wording in a POA.
I also wonder about the recommendation to spend and buy presents for the children. Perhaps the attorney is just being cordial, but whose money would be paying for these presents? If it's your parents' money, I'd think twice if you're really serious about getting Medicaid.
Is there some reason though why you want to pursue this route, since with $800K in assets, I wouldn't think there would be any need. Medicaid is designed to help people with inadequate assets.
As another aside, from my experience, financial asset management companies charge a flat rate annually to manage someone's portfolio. I vaguely recall that one company a client used charged 7% of the portfolio value.
Answer-any presents bought for your children would NOT be part of a Medicaid spend-down. In fact, they would be gifting which incurs a penalty. There is a 5 year look-back by Medicaid on gifts given to family members/friends/churches etc. The federal and state thinking is that Medicaid is a program for those who have exhausted resources and are impoverished. If you have money to gift, you are not really impoverished in the eyes of the government.
Note: The Medicaid planning from last year when both spouses/your parents were alive is not a valid planning tool any more. You need to get updated Medicaid planning done - the amount allowed to be kept by one spouse in the community is not a factor any more and the asset limits for spouses are significantly higher than the asset for a widow/widower.
When you ask if any inheritance is gone, do you mean YOU or your parent? There will be no inheritance for YOU at this time outside of anything left directly by the mother directly to you. If Medicaid becomes involved in payment for care, there is seldom any inheritance left for children when parents pass.
1) What level of care does your dad need right now?
- My father is 84 and in and independent living facility. His cognitive and physical abilities are good. He even still has a car which he drives occasionally.
2) Does he have income aside from the income stream created by those assets?
- I only know that he had a mix of assets (IRAs, stock investments etc) plus in 2014 he sold his home for $550,000. These are the assets that I assumed made him 'over resourced' for Medicaid
3) Consult with an Elder Law attorney
- Yes that would be the best route to clarify. However I am only asking because I found this paperwork while staying in my father's place. It was carried out by my father's own elder law attorney in 2016 in consultation with an an expert in Medicaid trusts. So I look at this as a done deal, not something that I am planning nor challenging.
4) What state
- we are in Washington state
5) Attorney appointed a third party financial service to be proxy
- Well I suppose the third party financial service wasn't appointed, but recommended but it was the ONLY service recommended to my parents. They had just gone through a very traumatic experience where my sister overstepped her role as caregiver and POA, where she was forced out of her role following an Adult Protection Services investigation. At that point, the lawyer suggested to them the third party financial services firm that the lawyer had worked with in the past. Having been burned by family already, my parents were happy to work with a third party firm.