Quote:
Originally Posted by alnorth
I guess if her two pensions have a cashout option, then she can take whatever the present value of her pension is as a lump sum payment (which eliminates her future income), then give away all that money plus whatever else she has, wait a few years for the clawback period, and THEN she might qualify for assistance...
... but if you do that then you are (legally) ripping off the taxpayers, and I feel dirty just for bringing it up. Hopefully her pensions do not allow her to cash out so that this is not even an option.
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Generally this isn't the case with government pensions, which these are. What you're talking about sounds alot more like annuities.
What would happen in two situations, assuming you can't do what you're suggesting (which I'm pretty positive is the case).
Assumptions: $250K in assets and $3,300/month in pension/SS, etc. income.
1. she goes into a nursing home with no planning. Assume $10K/month. She is responsible for the entire $10K per month and will get no medicare/medicaid/state help until she spends all her assets down to near zero (in Mass. the amount is $2,000 or less), then Medicaid kicks in. So every month you would pay $3,300 of her income, plus almost $7K of her assets, meaning the entire $250K is spent down in 36 months. After that, the government pays for the nursing home, and takes the entire $3,300/month to offset that.
If she owns a home, the government would likely put a lien on it as well. They don't usually force a sale, but they will have a lien based on the amount they pay.
2. Proper estate planning would probably involve re-titling the house (if any) to a trust and/or the kids, and moving the liquid assets into a trust as well. She is the beneficiary of the trust, but it specifies that the principal (the res) cannot be touched. After she dies, the beneficiaries are the heirs. There is a look-back period of some time (several years at least). Once the look-back period is exhausted, then the transfer of assets to the kids/trust cannot be touched by the government. Congrats, you have made her legally poor enough for the government to pay the entire amount of the nursing home.
NOTE: LEGAL ADVICE ON CHIEFSPLANET IS FREE FOR A REASON, AND WORTH WHAT YOU PAID FOR IT.