In this blog we’re going to share some letters that we recently received from people needing help with estate planning and Medicaid qualification. Below we’ll have each letter followed by our response. Our first letter involves a family who is concerned that their mother has a gambling problem. They’re worried that their mother will spend her entire estate gambling and the family will have to pay for all her expenses.
A Mother with a Gambling Problem
Dear Nursing Home Guy,
My mother is obsessed with winning the Publisher’s Clearing House and she responds to other scammers as well. These people call her all the time telling her that she has won he grand prize, but that she needs to send them $1,000 or more to claim her million dollar prize. She has sent them checks and gift cards over totaling over $20,000. We have spoken to our mother about this and and told her it’s a scam. She will back off for a few weeks and then start back. We have changed her telephone number and monitored her calls, but nothing seems to work. My mother has a durable power of attorney and I am her agent. My brother and sisters have expressed concern to me that mom is quickly running out of money. Mom desperately wants to win so she can give us her prize. We are at our wits end.
Shanghaied by Scammers
Unfortunately you folks are in a really rough spot. You didn’t say this, but I’m reading between the lines. I would question whether your mom is able to manage her financial affairs and her healthcare decisions. Apparently your mom has not been declared incompetent. So even though you are exercising the power of attorney for her benefit, she might not see it that way. If you take her checkbook or reduce her spending, she could get very upset with you. And then she can revoke that power of attorney because she’s not been declared incompetent.
It seems strange that the law allows for someone to gamble away their money, but they can. The question is does she know and understand what she’s doing. According to criteria outlined by the American Psychiatric Association, your mother may have a gambling disorder. Her behavior is causing her significant financial problems.
So according to the American Psychiatric Association, to diagnose your mother with a gambling disorder she must have four of the following criteria.
1. The need to gamble with increasing amounts to achieve the desired excitement.
2. Gets restless or irritable when trying to cut back or stop gambling.
3. Repeated unsuccessful efforts to control, cut back, or stop gambling.
4. Frequent thoughts about gambling and planning future gambling.
5. Gambling when feeling distressed or depressed.
6. After losing money gambling, often returning to “get even.”
7. Lying to hide gambling activity.
8. Risking or losing a close relationship.
9. Relying on others to help with money problems caused by gambling.
You mother may not meet all nine of these criteria. But given the information you provided, I definitely thinks she meets at least four of them. I suggest that you get her evaluated by a licensed psychiatrist or psychologist and see what kind of disorder she may or may not have. You could continue to exercise your power of attorney and risk it being revoked by your mother. Or you could have your mother examined by a licensed professional to diagnose this potential gambling disorder.
If the licensed psychiatrist makes the diagnosis, the next step would be to obtain a conservatorship over her property and maybe a guardianship over her person. Remember a conservator is power over her property, meaning her checkbook. And the guardian is power over her person, meaning her healthcare. A conservatorship would prevent her from having access to her funds to gamble. Get mom evaluated and then contact us and we can then move forward with the conservatorship.
Trying to Get Mom Qualified for Medicaid
Our second letter is from three sisters who have a mom needing nursing home care. They need Medicaid to pay for their mother’s nursing home care, but have made some bad decisions trying to transfer assets from their mom. We see these kinds of messes all the time and are always eager to help.
Dear Nursing Home Guy,
My sisters and I desperately need your help. My mother is in a nursing home and will exhaust her 100-day limit by the end of this month. Four years ago my other “sold” us her farm at a really reduced rate — like very cheap! We have been paying her $200 a month for the past four years. On her death our debt to her estate goes away. The Medicaid worker says mom is disqualified because of this transfer for a lot of reasons including we didn’t pay mom fair market value for the farm. We haven’t always paid mom the $200 each month and the debt goes away when she dies. Our family attorney did this transaction for us, but he can’t help and recommended we see you. Mom needs to be in the nursing home because none of us can take care of her and we cannot pay the $7,300 per month nursing home bill. We need your help.
Three Stressed Sisters
Y’all are in luck because fixing messes like this is right up my alley. This is my specialty. Because we’re nearing the end of this 100 days, the first thing we need to do is get mom qualified for Medicaid. We need to untangle that web created four years ago. Each sister needs to deed their interest in the farm back to mom.
I realize you think that means the nursing home will take the farm. That would be a big no. Why is the nursing home not going to take the farm? Because the Medicaid rules say the farm is where she lives. It’s her homestead and principal residence. As such, it is exempt from Medicaid eligibility rules. It is still subject to estate recovery, also known as the Medicaid lien. But we’re going to take care of that Medicaid lien as well.
All is not lost because one of the sisters has been living with mom for the past five years. This sister has been taking care of mom, taking her to doctor appointments, cooking, cleaning, giving her medications, providing transportation to get her hair done, and more. Since the stressed sister lived with mom for more than two years, your mom can transfer the farm and home to her. The Medicaid rules allow for that.
That takes care of the Medicaid lien. Now let’s talk a little bit about this caretaker child exception and discuss the fairness of this whole situation. This couldn’t happen if we had a caretaker niece, nephew, cousin, or grandchild. The Federal law and State law clearly states “caretaker child.” The rule is clear. It only applies to a caretaker child — your sister.
Let’s get to the fairness part. Ultimately, your stressed sister can deed interest to the other sisters to comply with your mother’s wishes. That’s how we make this process fair to all three sisters. The property goes to the sister who took care of mom and now she has the property. She can then deed an interest in the property to her other two sisters. Although this is a mess, we can get it fixed.
A Trust Preventing Medicaid Qualification
Our third letter is from someone whose dad needs nursing home care. He needs to qualify for Medicaid, but the nursing home is telling him that he can’t. This is pretty common in my line of work. Nursing homes try to play attorney and tell people what they can and can’t do.
Dear Nursing Home Guy,
About 12-15 years ago my parents spent a lot of money on their estate plan. The attorney that wrote their plan said that the assets put into their revocable trust could not be touched by the nursing home. My mother can no longer take care of my dad as he is bedridden. It hurts me and my family to admit it. But for mom’s health and in order to get the best care for dad, he needs to go into a nursing home. We contacted the nursing home and they told us that mom and dad’s revocable trust was no good. They said that mom and dad would have to private pay until their assets were below $2,000. I have attached a list of their assets which includes their house, IRAs, savings and checking accounts, and their one car. I am so mad that the attorney that I could just spit. We need your help getting dad qualified for Medicaid.
One thing I don’t care for is nursing homes giving legal advise and telling you that the trust is no good. The trust is still good. It just is not good for what we need in this case. If the trust was drafted by who I think it was, then the nursing home is right. But the nursing home doesn’t need to scare you about it. It’s fixable. This is my speciality — fixing messes.
Now let’s talk about the house. The house is your mom and dad’s homestead. That’s their principal residence. That is an exempt asset for Medicaid eligibility, so let’s take that out the equation. What about your mom’s will? It says everything goes to your dad. So we probably need to change your mom’s will so that everything doesn’t go to your dad if your mom predeceases him.
We can amend the trust or we can just redo the will. I think it’s easier to redo the will and basically disinherit your father, or put everything in trust for him so these assets aren’t spent down for his care. Now let’s talk a little bit about your mom and dad’s checking or savings account. As I saw the list, the value of these two accounts combined is below $138,500. So they’re good there.
Their IRAs exceed the maximum allowable amount, but this doesn’t matter. In many states including Georgia, IRAs and 401ks are not counted. The asset itself isn’t counted, but the required minimum distribution is counted. That solves the problem as far as the assets go. We still need to look at your dad’s income because we want to get as much of your dad’s income transferred over to your mother during her lifetime. This is all perfectly legal, but get back with us soon because time is ticking.
Contact Us So We Can Help!
These are actually three live client situations and we were happy to help all of them. If you’re in Georgia or Florida and need help with estate planning or Medicaid qualification, you can complete this form or give us a call at (229) 226-8183. We’ll ensure that you have all the proper documents that you need in case you prematurely pass away.
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