Is This Illegal? Immoral? Both???

[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.

[preciousjeni]

How else do you think money stays in families?

[macallan25]

2.5 $ Mil is LOADED?


I kid...I kid.

[KillarneyRose]

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]

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]

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.

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]

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.

[CutiePie2000]

This makes me think of that "Holiday Inn" email......(as below)

With the average cost for a nursing home reaching $188.00 per day, there is a better way to spend our savings, when we get old and feeble.
I have already checked on reservations at the Holiday Inn for a combined long term stay discount and a senior discount. It comes to only $49.23 per night. That leaves $138.77 a day for:

1. Breakfast, lunch and dinner in any restaurant I want, or room service.

2. Laundry, gratuities and special TV movies. Plus, they provide a swimming pool, a workout room, a lounge, washer, dryer,etc. Most have free toothpaste and razors, and all have free shampoo and soap.

3. They treat you like a customer, not a patient. $5 worth of tips a day will have the entire staff scrambling to help you.

4. There is a City Bus Stop out front, and seniors ride free. The Handicap bus will also pick you up (if you fake a decent limp).

5. To meet other nice people, call a Church bus on Sundays. For a change of scenery, take the Airport shuttle Bus and eat at one of the nice restaurants there. While you're at the airport, fly somewhere. Otherwise the cash keeps building up.

6. It takes months to get into decent nursing homes. Holiday Inn will take your reservation today. And - you are not stuck in one place forever, you can move from Inn to Inn, or even from city to city. Want to see Hawaii? They have a Holiday Inn there too.

7. TV broken? Light bulbs need changing? Need a mattress replaced? No problem. They fix everything, and apologize for the inconvenience.

8. The Inn has a night security person and daily room service. The maid checks to see if you are OK. If not, they will call the undertaker or an ambulance. If you fall and break a hip, Medicare will pay for the hip, and Holiday Inn will upgrade you to a suite for the rest of your life.

9. And no worries about visits from family. They will always be glad to find you, and will probably check in for a few days mini-vacation. The grandkids can use the pool.

What more can you ask for?

So . . .

When I reach the Golden Age, I'll face it with a grin-- Just forward all my email to: me@Holiday_Inn!

[honeychile]

The law differs from state to state. If Thelma signs over all of her assets within a certain amount of time before going into a home, it will be noted, and both she & the son can be hit with incredible taxes. Also, the care received by someone who goes to a home indigent and someone who at least has a good pension or other assets is HUGE!

In most thought-out cases, the Thelmas of the world will go into a home with a certain amount of money - enough to realistically show that she has an income of sorts. After the home nickle and dimes her to death (Tippiechick is right, they are charged for every depends, laxative, aspirin, etc), she becomes a Medicare case, and usually then moves to the dreaded Medicare floor. If you think pictures of puppy mills are bad, you should see (and smell) these floors! No one is fed by hand, even if they need it, no stimulation, no tv in the room, nothing. Frankly, before I'd go to a Medicare floor, I'd use the Smith & Wesson plan.

[shinerbock]

Good points. If you have an estate worth several million dollars, chances are you've probably paid some significant taxes and have recieved rather insignificant benefits. I still think its wrong, but the system is wrong, too.

[Kevin]

I'm assuming that Thelma used a trust as a vehicle to mover her assets to the son? Otherwise, I'm thinking that there's still enormous tax liability in receiving a 2.5 million dollar "gift."

Smart estate planning is one way the rich stay rich.

[AGDee]

Everybody, once they reach retirement age, is eligible for Medicare regardless of income, just as they receive Social Security. Medicare is the federal retirement health care insurance.

Medicaid however, varies by state and is for the indigent only. In Michigan, they will look back 5 years for moving assets like that.

If you have that much money, you're better off buying Long Term Care Insurance out of pocket or a Medigap insurance policy that will cover your needs.

Lastly, the most you can give any relative in a given year is $12,000 without paying a gift tax. That's a federal thing. It was 10,000 in '04, went up to 11,000 in '05 and to 12,000 in '06.

(Can you tell I have an aging parent for whom we've had to look into all this?)

[Munchkin03]

Originally Posted by CutiePie2000

This makes me think of that "Holiday Inn" email......(as below)

With the average cost for a nursing home reaching $188.00 per day, there is a better way to spend our savings, when we get old and feeble.

Wow, $188/day is really a lowball estimate and probably includes state-assisted facilities (shudder). Like I said, my grandmother was in an assisted private living center, and it was something over $500/day--and that was 10 years ago. I suspect it's far, far over that now...and that wasn't even the most expensive option then! Two years at a $500/day facility is close to $600,000.

[MysticCat]

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.