Is This Illegal? Immoral? Both???

KillarneyRose · #1 08-28-2006, 08:43 PM

Okay legal-minded Greekchatters; have a look-see at this situation and tell me what's up:

Suppose that a woman, lets call her Thelma, is 70 years old with failing health and knows she'll need to go into a nursing home in the near future. Thelma is LOADED. Between her home, her stock portfolio, her savings account and other real estate she owns, Thelma is worth close to $2.5 million.

Thelma knows that she has a couple of years left and she also knows that the cost of staying in a nursing home will pretty effectively suck up up all of her assets. So, she signs all of her assets over to her (adult) son.

When she enters the nursing home, she claims that she has nothing. Nada. Zilch. Therefore, Medicare kicks in and pays for all her medical care.

Two years later, Thelma passes away and her son is now worth an additional $2.5 million.

My jaw was on the floor when I heard this. Is this sort of maneuver legal? I don't like to see people having to liquidate all of their assets to pay for medical care, but this just doesn't seem right to me.

preciousjeni · #2 08-28-2006, 09:27 PM

How else do you think money stays in families?

macallan25 · #3 08-28-2006, 09:29 PM

2.5 $ Mil is LOADED?

I kid...I kid.

KillarneyRose · #4 08-28-2006, 09:37 PM

Quote:

Originally Posted by macallan25

2.5 $ Mil is LOADED?

I kid...I kid.

Certainly loaded enough that the broad should be footing her own bill for her Depends undergarments.

texas*princess · #5 08-28-2006, 09:44 PM

for sure.

I don't really think that's fair. But as taxpayers we pay for all kinds of crazy stuff, so this doesn't really come as a surprise to me.

Munchkin03 · #6 08-28-2006, 09:48 PM

I don't know. It's a stealth trick, but I'm sure Thelma and her husband put a ton into the system, so why can't they get something out of it? Plus, this way she was able to give money to her son without having to deal with those pesky estate taxes, and they were able to avoid the hell of probate.

Elder care is so expensive that a good chunk of her assets would have been liquidated to pay for it. The place where my grandmother stayed for the last year or so of her life was something around $25K a month--that was 10 years ago and in an inexpensive part of the country, so I'm sure it's a lot more now. Luckily, my father and several of his siblings had insurance on her for that sort of thing so it was nothing out of their pockets.

MysticCat · #7 08-29-2006, 08:48 AM

Quote:

Originally Posted by Munchkin03

Plus, this way she was able to give money to her son without having to deal with those pesky estate taxes, and they were able to avoid the hell of probate.

She may have avoided pesky estate taxes, but I would imagine there were some hefty gift and income taxes involved.

#8 08-28-2006, 10:04 PM

A lot of these retirement/nursing/assisted living facilities are set up like that. either 1) you go into their facility with nothing or 2) you turn it all over to them.

Really it is her money and how she disposes of it legally (gifting or inheritance given early) she knew what she was doing and was in her right mind when giving of it. She is of medicare age so ,why not? Though Medicare only covers 80%. The remaining 20% is covered by the facility or her son will have to fork out the remaining 20% if so inclined now that he is a rich $2.5 millionaire.

I have heard many ppl , even my parents , say that when they reach a point and they cannot take care of the everyday functions of a house, medical issues, and what-nots they are going to give us our inheritence early, sign over the house, etc... and they are going into the Masonic home here in So. California.

From what i have seen at the Masonic home in So Cal from what i have seen it is resort living.

Again, There are different types of facilities....Nursing/Assisted Living, Retirement homes, etc..... I would wager a bet it would be 100% legal. It comes down to how she wants her wishes excuted and how to doll out her money and property.

Again, now this is from what i have seen and been thru as this is has been a very close topic within our family. Any GC lawyer care to take a stab at it.

Tippiechick · #9 08-28-2006, 10:54 PM

Yeah, I agree with what other people have said. People work their entire lives to be somewhat comfortable in old age. Then, when the time comes, the nursing home tells you that you are no longer able to keep any of what YOU have accumulated for yourself. It happened to both my great-grandmother and my great-aunt. It was so sad to see them having to think about giving everything away.

In the end, they both signed everything over to my dad. He, in turn, distributed their heirlooms among the family and then sold their houses (per their wishes). He ended up being able to put aside the profits on the houses, etc. Then, whenever they needed anything, he was able to get it for them.

If he had not done this, they would have literally had nothing. The nursing home would have taken everything away from them. The family would have had to pick up the tab for anything they needed. We're talking UNDERGARMENTS, NIGHTGOWNS, SOCKS, SLIPPERS, ETC. They would have not have had anything left to get the basic necessities of life that are not provided by the nursing home who would have taken it all. This way, they were, in a sense, still able to provide for themselves. When someone is unable to even leave a nursing home, or take care of themselves, you would think they should at least be left with the simple dignity of being able to afford their own socks.

RU OX Alum · #10 08-29-2006, 10:16 AM

Quote:

Originally Posted by KillarneyRose

Okay legal-minded Greekchatters; have a look-see at this situation and tell me what's up:

Suppose that a woman, lets call her Thelma, is 70 years old with failing health and knows she'll need to go into a nursing home in the near future. Thelma is LOADED. Between her home, her stock portfolio, her savings account and other real estate she owns, Thelma is worth close to $2.5 million.

Thelma knows that she has a couple of years left and she also knows that the cost of staying in a nursing home will pretty effectively suck up up all of her assets. So, she signs all of her assets over to her (adult) son.

When she enters the nursing home, she claims that she has nothing. Nada. Zilch. Therefore, Medicare kicks in and pays for all her medical care.

Two years later, Thelma passes away and her son is now worth an additional $2.5 million.

My jaw was on the floor when I heard this. Is this sort of maneuver legal? I don't like to see people having to liquidate all of their assets to pay for medical care, but this just doesn't seem right to me.

I don't know if it's legal, but I would not that it was immoral. There was a 50/50 chance that even if the nursing home wouldn't have cost her that much, they would have found some way to de-fraud her of it.

I heard a story on news, local i think, about that. About nursing homes arraning it so basically, you owe them rent and rent can be adjusted at any time (like if they think you have money).

What she was smart

The only illegal/immoral thing about it is that it also evades the Estate Tax.