Springtime For Letters! Still Not Correcting Spelling Or Grammatical Errors
(Dubious Analysis, Gratuitous Effluvium, Still Not Legal Advice!)
How can condo be given/ transferred to sister while protecting it from a stepsister who wants to have a claim against it?
My parents in their early 80’s, have a condo, but my mom was the one who spent all her savings to buy the condo as my dad never had a work ethic to keep a job.
We have a stepsister via my dad, who we don’t really know as she comes and goes in my dad’s life. Through other family members, we learned that this stepsister has been inquiring about how she can claim the condo once parents pass away. Not even sure if that’s possible, but my mom would like to give the condo to my sister as she lives in the area and she has been taking care of their health for the last few years, and she doesn’t want any legal problems from my step-sister.
The bank that my mom makes payments to, suggested my mom can have my dad do a quit claim deed and that way my dad is off the deed. Now, my dad has been diagnosed with early signs of dementia and parkinson’s and he has trouble moving so taking him to the bank to do this is very unlikely. Even if he goes, his response is always, ask my wife.
What can be done to make sure that the condo goes to my sister and that my step sister makes no claim against it?
It Is A Tale
Told By An [Ordinary Person], Full Of Sound And Fury Signifying Nothing.
Macbeth (Act 5, Scene 5)
Some Things Matter, Other Things Do Not
Legal consequences usually flow from a few facts. Human life, as Shakespeare (and Macbeth) observed, is full of irrelevant “sound and fury signifying nothing.” Our job: filter out the emotional turmoil. Focus on the facts. Get the desired result. Don’t screw up everything else.
Remember, the unintended consequences of our actions often (usually) exceed the intended consequences.
Things that do not matter:
1. Mom spent her savings to buy the condo. Dad never had a “work ethic.” So what? Dad owns the condo with Mom.
2. Stepsister is a stranger who “comes and goes.” Irrelevant. Blood is thicker than water. And counts in probate.
3. Bank advises action that would cause Mom and Dad to default on mortgage.
Things that matter:
1. Condo is mortgaged.
2. Mom and Dad both own the condo.
3. Stepsister is a blood relation.
4. Mom and Dad are older, in their 80’s. Dad already diagnosed with dementia and Parkinson’s.
5. Mom wants condo to go to one family member, disinheriting all others.
6. Dad defers decisions to Mom.
Is it possible to forge a solution from these facts? But of course!
First, Do Not Do Stupid Stuff
Avoid Ill-Advised Actions
Somebody at the bank says that Dad should “do a quit claim deed.” Yikes. This will trigger a cascade of unfortunate consequences and repercussions.
1. Bank/Finance Problem #1. If Dad deeds the condo to anyone, he triggers the standard “Due On Sale” clause in the mortgage. That means that the entire amount of the mortgage will be due and payable. Right Now. Mom and Dad will have defaulted on their promissory note and mortgage. Will the bank come screaming after Mom and Dad to foreclose? Highly unlikely. But if Mom and Dad have a low, low interest rate and the interest rates continue spiking upwards? Does it matter that Mom and Dad were acting on the bank employee’s advice? Do you think the bank employee will admit to giving that advice? Did you get it in writing? Do you think brightly colored eggs come from a large bunny rabbit?
2. Medicaid Problem. Dad deeds the house to Good Daughter.
- a. Medicaid calls this “Divestment”. As far as Medicaid is concerned, Dad gave away his half of the condo.
- b. Mom or Dad needs long-term care. Mom and Dad cannot afford the $12,000-15,000 per month cost of a skilled nursing facility. So, they take the less costly alternative, an assisted living facility. Assisted living is only $7000-$9000 per month. Cheap! Should Mom and Dad pay for care from an agency? Sure… that’s only $30-$60 per hour; $240 – $480 for an 8-hour shift.
- c. Mom and Dad quickly spend their lifesavings. Then they apply for Medicaid and the fun begins.
- d. Thanks to quit claim deeding Dad’s share to Good Daughter, Medicaid will assess a Penalty Period before paying a nickel.
- e. The Penalty Period is calculated as follows:
- i. Condo is worth $200,000.
- ii. Dad’s share of the condo is worth $100,000.
- iii. Dad gave away (divested) $100,000 by deeding his half of the condo to Good Daughter.
- iv. Medicaid does not care about giving stuff away, until Mom or Dad is otherwise eligible for Medicaid. Medicaid eligible means being flat busted broke. And needing long-term care.
- v. When Mom or Dad is Medicaid eligible (flat busted broke) then Medicaid assesses the Penalty Period.
- vi. For every $10,000 that was given away, Medicaid will not pay for a month of care.
- vii. Medicaid will not pay for the first ten (10) months of care for Mom or Dad. After Mom or Dad is “otherwise eligible” for Medicaid.
- viii. So the long-term care facility will not get paid for the first 10 months of Mom or Dad’s care.
- f. Business Office Managers at long-term care facilities like to pay their staff, nurses, administrators, laundry people, grocery bills, utilities, and other expenses. Is it easy to pay others when you do not get paid yourself? That’s why the Business Office Manager will sue Mom, Dad, and Good Daughter. And win. And there goes the condo.
3. Medicaid Non-problem. Dad deeds condo to Mom. Transfers between spouses are not divestment. Dad deeding to Mom still violates the Due on Sale clause, but it would not be a Medicaid problem.
4. Probate Problem. Dad deeds condo to Mom. Mom establishes will to give condo to Good Daughter. Mom dies first. Who gets condo? But Dad still has rights to his marital allowances in probate. Dad still gets his marital share. And he is still on the mortgage.
But he has dementia and Parkinson’s. Stepsister shows up in probate court asking to be appointed Guardian and Conservator for Dad. Maybe she wins because it looks like Mom, Son, and Good Daughter were trying to take Dad’s share of the condo away from him. Maybe the judge is convinced. And now Stepsister is in charge. And Dad does a new Will. Uh-oh.
5. Bank/Finance Problem #2. Mom dies. Then Dad dies. Stepsister remains out of the picture. Condo goes to Good Daughter, subject to the existing mortgage. Usually, Good Daughter could continue to make payments on the mortgage and keep Mom and Dad’s low interest rate. But. Because the “Due On Sale” clause was violated by Dad’s quit claim deed, the bank forecloses and Good Sister must refinance.
Avoid Nursing Home Poverty
You can get long-term care benefits without going broke. Medicaid wants you broke. But you do not have to accept what Medicaid wants. You can protect what you have earned. Here’s how:
How Medicaid Works
What If You Give Away Your Stuff?
What if you give away your stuff and then apply for Medicaid benefits? Medicaid will say, “We will not help you. You had stuff and gave it away. And so we will not pay.” This is called the “Penalty Period.” Medicaid will excuse itself for a period of time. The more you gave away, the longer Medicaid will not pay. Right now, for every $10,000 you give away, Medicaid will not pay for a month. Give away $120,000, Medicaid will not pay for an entire year! But then Medicaid will pay.
In the meantime, while Medicaid is not paying, the nursing home is suing you. And your kids. And your friends, And your first-grade teacher. And anyone else you gave stuff to. You thought you could keep the house? Ha-ha. You thought you could keep an automobile. Yuk- yuk. Whoops!
Funny thing, though. What if you gave away your stuff more than five (5) years ago? What if sixty-one (61) months ago you gave all that stuff away? Then you applied for Medicaid? Things are different. Now Medicaid does not care that you ever had that stuff at all. Does not matter.
So perhaps you should give all your stuff away. Right now. To the kids. Your neighbors. Your first-grade teacher. Then wait for five (5) years. And if you ever need long-term care after that, no problem! Medicaid does not care that you had that stuff and gave it away. Great Plan!
By now, the sharpest knives in the drawer have spotted the problem with this brilliant approach, right? If you give your stuff away, then you have no stuff. And you like your stuff. What to do?
What If You Give Away Your Stuff Without Giving Away Your Stuff?
How can you give away your stuff without giving away your stuff? By using a particular kind of trust, that’s how. For Medicaid purposes, you gave your stuff away. For federal tax purposes, state tax purposes, common sense purposes, you did not give your stuff away.
The IRS doesn’t think you did anything when you put your assets in this type of trust. Medicaid says you “divested” those assets. Medicaid says you gave those assets away. Medicaid starts the Five-Year Clock. Five (5) years after putting those assets into that trust, Medicaid will not count those assets as yours. And you will qualify for the Medicaid benefits you have paid for. Without sacrificing your lifesavings, cottage, other stuff.
Why Should You Want To Qualify For Medicaid Benefits And Keep Your Stuff?
Why? Do you like paying for the same thing twice? Are you opposed to getting any return on your tax dollars? Does the government know what to do with your money better than you do? Would it be dreadful to receive the government benefits you’ve paid for? And to have additional lifesavings to purchase additional goods and services? Is it awful to get the same deal from the government that irresponsible folks get? Would you prefer to be flat, busted broke and forced to go to a nursing home than to supplement at-home Medicaid with lifesavings to remain at home? Are your kids and grandchildren so undeserving and ungrateful that you’d rather give your money to the government?
This Is Too Good To Be True! Tricksy Stuff Like This Never Works For Regular Folks! Plus, It Must Be Wrong Or Immoral Or Something Else That’s Bad Or My Planners Would Have Told Me All About It! And What If I Move Out Of State? And Give Me A Minute And I’ll Think Of Something Else…
On February 8, 2006, Congress overhauled the Medicaid system. Congress replaced 50 states going in 50 different directions with some general principles that apply to everybody. Seventeen years ago, I was shocked when this happened. The Medicaid landscape was rewritten, much to the distress of our long-term care clients. Tools and techniques that had been proven reliable were wiped out. But there was a silver lining to this dark cloud of Medicaid reform.
No longer did it make sense to wait-and-see. The environment was different. Now we had some assurance that a Michigan plan could work in Florida. Or Texas. Or South Carolina. But not California, nothing works in California.
Not only did we have a legal structure that worked from coast to coast, but we could also rely on that structure to be stable. And so, it has proved. Over the last 17 years, thousands of these LifePlanning™ trusts have been implemented by regular folks. And they have worked. Every time. Saving millions of dollars. For regular folks. To maintain dignity. To preserve families. To keep the promise that hard work, saving, planning, and doing the right things will have good consequences for you, your spouse, your family.
For every Medicaid application involving these trusts, we submit a full copy of the trust and all the supporting documents. Total disclosure. Candid honesty. Written evidence. Full documentation. This stuff works because we scrupulously, thoroughly, exhaustively comply with every law, rule, precept, and policy.
Going broke is a choice. Your choice. It is not chance, bad luck, or misfortune.
Why Do You Want To Spend Your Last Nickel On Long-Term Care?
Why Don’t You Deserve A Little Payback For All The Taxes You Paid In? Why Shouldn’t The Government Spend Your Money For You?
Traditional estate planning is concerned with avoiding probate, saving taxes, and dumping your leftover stuff on your beneficiaries. After you die. Nobody cares what happens to you while you are alive. How does that help anyone? Stupid.
Traditional estate planning fails because the overwhelming majority of us will need long-term skilled care. 70% of us. For an average of 3 years. And we will go broke paying for it.
Is it surprising that thousands of recreation properties: cottages, cabins, hunting land, are lost to pay for long-term care? Why is your estate planner hurting you and your family? It is evil intent? Or stupidity?
LifePlanning™ defeats Nursing Home Poverty. Keep your stuff. Get the care you have already paid for. Good for you. Good for your family. Good example for society,
When my mother suffered from the dementia which led to her death, over 10 years ago, their estate plan preserved their lifesavings. Mom’s months in the nursing home did not mean Dad’s impoverishment. Dad spent the last years with security and peace of mind.
Is Now A Bad Time For A Real Solution?
Perhaps you think you already have an answer to this problem. Maybe you do not see this as a problem at all. It is possible that you do not believe in the passage of time or its effects on you.
Peace of mind and financial security are waiting for everyone who practices LifePlanning™. You know that peace only begins with financial security. Are legal documents the most important? Is avoiding probate the best you can do for yourself or your loved ones? Is family about inheritance? Or are these things only significant to support the foundation of your family?
Do you think finding the best care is easy? Do you want to get lost in the overwhelming flood of claims and promises? Or would you like straight answers?
Well, here you are. Now you know. No excuses. Get information, insight, inspiration. It is your turn. Ignore the message? Invite poverty? Or get the freely offered information. To make wise decisions. For you. For your loved ones.
The LifePlan™ Workshop has been the first step on the path to security and peace for thousands of families. Why not your family?