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Guarding Your Wealth for Senior Citizens
Many Senior Citizens Worry About How to Leave
Something for the Kids
Biggest fear is spending all of that money on
assisted living and/or nursing home
By Jeffrey D. Voudrie, CFP
 March 7, 2008 - One of the biggest issues seniors
face as they get older is how to preserve an inheritance for their
children. Their biggest fear is spending all of that money on assisted
living and/or nursing home care. As each family situation is different,
so is each solution. Perhaps you can learn something from the experience
of one of my clients.
Here's their situation in their own words, with
their names changed, of course:
"Tom's mom has decided that she wants to move to a
retirement home while she can make her own decisions about where and
when to go. She's on the waiting list at one that's so nice I may go
too!"
"Anyway, we are looking at options of what to do
with her house. She's always wanted the house to go to Tom and his
brother Les even if she has to use up every other asset she has."
"Les is disabled and on Social Security Disability
Income. Mom sends Les about $150.00 a month to help out. Her first
thought was to sell the house and divide the proceeds now. Tom thought
it might be better for her to lease it and then she could still send Les
money each month."
"Also, if she were to sell, we think she should
keep the money in case she ends up needing it to live on. I know there
are tax limits on gifts of money, (and not sure what all that would do
to Les's assistance eligibility). Maybe she could sell, give each
$10,000 and keep the rest for her future living expenses. Anyway, I
think she could well be heading toward some mental issues (lots of
forgetfulness, etc.) so we need to make the right decision."
"What say you, Mr. Financial Guy?"
These are difficult situations. First, you need to
make sure that you have the appropriate legal documents in place to
handle any incapacity that may/may not occur. There should be Powers of
Attorney for Assets and Healthcare and/or a Living Trust. There should
be a Living Will. If she doesn't have a Living Trust you will want to
make sure that her Will is up to date.
There are issues relating to Les receiving an
inheritance in that it might disqualify him from SSDI. It's important
that any inheritance he receives go to a Special Needs Trust. Otherwise,
the government might take the money as pay back for what they've spent.
Be sure and consult a qualified attorney for this kind of trust.
Depending on her income, she may need the money to
cover her assisted living and/or future nursing home care. Some want to
leave an inheritance and try to get the government to pay for their
care. That is done through Medicaid. To qualify, one has to be
indigent--having less than $2k in assets.
So if she sells the home and uses the money for her
care, she will need to spend it down to $2k before qualifying for
Medicaid. There is a 5-year look back period when someone applies for
Medicaid. If they have gifted money within that period, they will be
denied benefits for the amount of time that money would have otherwise
covered.
There are really two unknowns here. First, whether
mom will need all her money for her care and, second, whether that will
occur within 5 years. If she sells the house, she can gift all the money
to her sons now without having to worry about Federal Gift Taxes (other
than filing a form). She should check to see if there will be any state
gift taxes.
As long as her other money lasts for 5 years the
gift wouldn't impact future Medicaid eligibility. Another option is for
her to consider long term care insurance. She has to medically qualify
and her memory issues may keep that from happening.
In short, Mom should make sure she has enough money
to cover her expenses for the next five years. She might need some of
the house proceeds to cover this. Then she could go ahead and gift the
remaining house proceeds to her sons.
If she qualifies, long term care insurance could
help cover future health care expenses. And you're right to not put off
these kinds of difficult decisions. Deal with it now, before it's too
late.
If you have a specific question or would like more
information, give me a call toll-free at 1-877-827-1463 or you can also reach me by email at
jeff@guardingyourwealth.com.
I will answer your financial question FREE.
About Guarding Your Wealth:
Guarding Your Wealth is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive that may not have appeared in
SeniorJournal.com.
Guarding Your Wealth for Seniors, on
SeniorJournal.com, is
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens.
Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to select
private clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For bookings, email
jeff@guardingyourwealth.com.
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