My parents are in their 80s and recently updated their will for power of attorney in case of medical needs and willed their assets to me and my wife and grandchildren...whoever is still alive



My question is what if they need to go into a nursing home. Their teacher retirement is worth about 5K a month and they have perhaps 150K in cash and a house


Is there any way to prevent medicaid from coming after everything if one of them ends up in a nursing home that might cost 7K a month in Tx?

Is there a way to preserve any enheritance?

Casey TableTennis said:

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Eldercare/elder law attorneys are likely the best resource, but I have seen some crappy ones that see every situation as the proverbial nail to their preferred solution they like to use as a hammer.

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Sounds like there's a rather sleezy lawyer industry setup around medicaid retirement funding that probably doesn't really work for the clients

jamey said:

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Casey TableTennis said:

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Eldercare/elder law attorneys are likely the best resource, but I have seen some crappy ones that see every situation as the proverbial nail to their preferred solution they like to use as a hammer.

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Sounds like there's a rather sleezy lawyer industry setup around medicaid retirement funding that probably doesn't really work for the clients

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I haven't experienced it being sleezy as much as just an inflexible model/method the specific attorneys operates in. If someone is high volume/low margin seminar driven model, it can be very difficult to customize much.

Does it actually work? How come everyone isn't doing this?

Like others have said, your best bet is to work with an attorney who specializes in elder care. When my parents moved into an assisted home, they put all their assets into a trust (except for their social security and retirement checks). It wasn't a lot but a nursing home can easily run 7K or more a month and that will drain whatever assets they have saved very quickly. From what I remember, they can still own their home (up to 500K value) and that does not count against them. There is a 5-year look back period so if you set the trust up now the assets aren't really protected for 5 years. Not sure where you are located but we worked with an attorney out of Waco and she was very helpful.

Ok..that makes sense. This basically has to be done prior to the 5 year lookback period.


I think its too late for my parents to do anything in that case

So you can put your money in a trust so that you don't have to pay for a retirement home and can just pass that money on to your kids? Or am I misunderstanding?

Who pays for the retirement home in that case?

This seems backwards to me

htxag09 said:

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So you can put your money in a trust so that you don't have to pay for a retirement home and can just pass that money on to your kids? Or am I misunderstanding?

Who pays for the retirement home in that case?

This seems backwards to me

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The basic idea is to keep medicaid from taking the money or house. Medicaid is who pays when resources are exhausted


As I understand they can take almost all of any money but can't take the house.

But I believe the state of Texas has the right to ask for money back from your estate after you die

htxag09 said:

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But I guess my question is why shouldn't that money go to Medicaid to pay for those services? I understand protecting things like a house. But if I have $200k in my account and am receiving the services from a retirement home, shouldn't that $200k pay for those services?

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I think medicaid will come after your assets, remaining money and your house in the estate after death


As far as why try and protect
both. Same as why do companies and individuals use tax laws to their benefit instead of just paying their tax bracket

Medicaid is for those that can't afford care. Medicaid planning is an attempt to stretch out and/protect resources.

Most of the laws around this are built around reasonableness.

A few things from my firsthand experience.

Medicaid will put a lien on the house. We were fortunate that they didn't do this in our case. I didn't ask why. Medicaid is run by the county first and then state. Texas used to be pretty protective of their citizens, but not sure if that has changed due to what the Fed tries to do to hold states accountable.

The $2000 allowance is bull. We gave my mother in law $300 to pay for electricity and prescriptions (Medicaid only pays for 3/mo). We got a call from Medicaid saying she has to pay for the next $300 in medical bills because there is new money in the account. I asked them about the $2000 allowance and was told that isn't how it works. I asked how we were supposed to help pay bills and I was told to pay them directly. It wasn't worth hiring an attorney over $300, so we just paid everything directly.

I forgot about the lien on the house. If they have to spend any significant time in a Medicaid facility you will lose the house anyway. Selling it to pay for care or taking a reverse mortgage to pay expenses if there is a spouse that doesn't require in-patient care likely gets you to the same place, but the journey can be much nicer.

This website does a good job of giving a high level view.

https://www.payingforseniorcare.com/medicaid/when-spouse-enters-nursing-home

Aggiewes '87

OP - good advice on here. Though you might also want to find Apache over on F16. He owns a couple of nursing homes and might be able to help you out with the system

@DallasAg2 This is on my to-do list for my mother-in-law as well, do you have someone you have used to set this up?

DallasAg2 said:

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If you are in Texas and Florida, I would get a lady bird deed (Special Warranty Deed) for the house.
Otherwise, a trust is needed for everything else.

After I learned about a lady bird deed, I am not sure why everyone does not have one. I do not believe there is a downside.

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Good explanation
https://www.kfernandezlaw.com/ladybird-deeds-advantages-disadvantages/

https://www.livensreed.com/ is who I used to create the lady bird deed.

Can anyone else think of helpful things to do?

- Spend down the money by buying a burial package/plot
- As stated above, the states try to recoup the money through MERP, Medicaid Estate Recovery Program

- Medicaid assisted with
*32 hours of assistance at home at $7.5-$9 a hour. I paid her the remainder
Thankfully, she was willing to work for an agency for 1/2 the money
*Meals on Wheels, but there was a waitlist
*Medical devices (wheelchair, walker) and things needed daily like gloves

Good information on the disadvantages

My wife died 3 years ago, we were in a fully paid house in Parker county, deed in our names. I went to the courthouse to get her name off the deed, knowing it would cause problems when I sold. Simple enough, right? Nope, Parker county required me to go thru full probate. For a house in joint name with one of the joint owners dead. Bottom line for OP is he needs to start giving the parents assets away and have them gone 5 years prior to placing them somewhere (good luck doing that). Put the house in the will, no need for any trust or LB Deed. And believe me, if your county wants you to go thru probate, you're going thru probate.

OldArmyCT said:

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My wife died 3 years ago, we were in a fully paid house in Parker county, deed in our names. I went to the courthouse to get her name off the deed, knowing it would cause problems when I sold. Simple enough, right? Nope, Parker county required me to go thru full probate. For a house in joint name with one of the joint owners dead. Bottom line for OP is he needs to start giving the parents assets away and have them gone 5 years prior to placing them somewhere (good luck doing that). Put the house in the will, no need for any trust or LB Deed. And believe me, if your county wants you to go thru probate, you're going thru probate.

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Just heard about exact same scenario with a friend. His FIL died a few years ago and his MIL thinks she owns the house outright now....but she doesn't. Had to go through full probate.

We just moved some remaining assets of my FIL into his trust to avoid this. MIL died 8 years ago. Everything is locked down at this point so hopefully we avoid all of that.

OldArmyCT said:

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My wife died 3 years ago, we were in a fully paid house in Parker county, deed in our names. I went to the courthouse to get her name off the deed, knowing it would cause problems when I sold. Simple enough, right? Nope, Parker county required me to go thru full probate. For a house in joint name with one of the joint owners dead. Bottom line for OP is he needs to start giving the parents assets away and have them gone 5 years prior to placing them somewhere (good luck doing that). Put the house in the will, no need for any trust or LB Deed. And believe me, if your county wants you to go thru probate, you're going thru probate.

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So the lady bird deed won't make any difference?

The house is in the will to me, wife and kids

Youre saying if it comes to a nursing home thru medicaid, it will still go thru probate and medicaid will get their money after
death whether they have a lady bird deed or not

All I can tell you is the county told me the only way they were taking my deceased wife's name off the deed was after full probate. There are a lot of estate rules most people do not know:
-Powers of Attorney are no longer valid once the grantor dies.
-If you own an IRA and go comatose and your relatives need that money to care for you (or even do your RMD) the custodian will likely not give you any money, even if you walk in with a PoA. Merrill requires retirement account PoA's be annotated in the plating before they will recognize them.
-Put Transfers on Death on every account you can, they will bypass probate and get the money wherever it needs to go as soon as a Death Certificate is produced.
-The best way to distribute an IRA after death its to (1) Distribute the RMD. (2) Open an IRA account with the current firm for each beneficiary. (3) divide the IRA equally amongst the beneficiaries. (4) Beneficiaries can then choose to either keep the IRA, transfer the IRA, sell the investments and take the money. Keeps stuff clean so the IRS isn't after the beneficiaries. As an FA I had a lawyer beneficiary tell me he was a lawyer and he wasn't about to open an IRA with Merrill no matter what we said. "Do you understand I am a lawyer and can sue you?" "Do you know how many lawyers work for Merrill Lynch?" It took him a year to get his money and then it went into his new Merrill IRA.

The primary purpose of the LadyBird deed is to eliminate the need to have to go through probate and thus shield the home from Medicaid clawbacks, so it still serves an important role in estate planning. A Will does not protect the home in this way.

I would consult an estate attorney to make your plan as there are a lot of unique factors that will impact your best path forward. I am going through this now with my mother-in-law and certainly willing to share what I learn.

OldArmyCT said:

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All I can tell you is the county told me the only way they were taking my deceased wife's name off the deed was after full probate. There are a lot of estate rules most people do not know:
-Powers of Attorney are no longer valid once the grantor dies.
-If you own an IRA and go comatose and your relatives need that money to care for you (or even do your RMD) the custodian will likely not give you any money, even if you walk in with a PoA. Merrill requires retirement account PoA's be annotated in the plating before they will recognize them.
-Put Transfers on Death on every account you can, they will bypass probate and get the money wherever it needs to go as soon as a Death Certificate is produced.
-The best way to distribute an IRA after death its to (1) Distribute the RMD. (2) Open an IRA account with the current firm for each beneficiary. (3) divide the IRA equally amongst the beneficiaries. (4) Beneficiaries can then choose to either keep the IRA, transfer the IRA, sell the investments and take the money. Keeps stuff clean so the IRS isn't after the beneficiaries. As an FA I had a lawyer beneficiary tell me he was a lawyer and he wasn't about to open an IRA with Merrill no matter what we said. "Do you understand I am a lawyer and can sue you?" "Do you know how many lawyers work for Merrill Lynch?" It took him a year to get his money and then it went into his new Merrill IRA.

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Think this one isn't a probate rule, its just a banks covering their ass and not giving one **** about the consequences rule (and Merrill seems to be one of the absolute worst of them).

In all seriousness, you could have them move in with you, sell their hard assets, and pay for a sitter when you can't be there to help them while at work, etc…. My beautiful, wonderful wife did the lion's share of care for my mom for nearly two years, with an autistic kid, and her father and aunt dying. It was hard, but we did it, and saved a ton of money then for her future needs when we could no longer care for her (Alzheimer's).

I've thought about that and that may happen. Unfortunately my 43 year old wife is sick so i may have 2 family members going thru something like this at some point. We have a 5 year old too. The future is full of many questions

Regarding Medicaid getting you into a low end facility which pays staff poorly.

My experience is most facilities underpay their staff no matter how much you pay. In addition they are short staffed because they can't find employees so service sucks no matter if your at a facility not using Medicaid. Obviously high end facilities probably have a different environment but you're talking super expensive .

Bottom line is no matter if Medicaid is paying or if your paying out of pocket and are middle class, assisted living or nursing homes are no place to be. But it can be inevitable. If you have a level of care that is extreme and you live beyond 80, it's pretty naive to think Medicaid is for the poor only.

My parents were middle class but knew they did not have the funds to last for their care. They distributed a lot of their assets (which was minimal)to us in their 70's knowing that at least one would outlive their ability to pay for their care. We are unfortunately at that stage right now to where we have to start paying out of pocket or allow for the state to take over. Tough decision that I hope few have to experience.