Each state manages their Medicaid policies. There are many facilities that medicaid pays for that one would not want to live in (at least where I live). That said, I think it’s wrong to shelter money/give it to heirs so it’s not used for the senior’s care and instead the senior ends up on Medicaid. JMO
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I think Medicaid is a very important safety net. I do think it’s unethical (and it may be even Medicaid fraud) to give away all your assets so the government can pay for your care. However, it’s sad for people to sock away huge sums of money, thinking they could need several million dollars for someone to take care of them in the future. My mom is unwilling to spend much at all to make her living situation better, and she lives as if she was poor. If I was her, I’d start gifting to my grandkids and do whatever fun thing I wanted to, without worrying about spending some money. She could live forever with what she has, in addition to pensions and social security.
But important in the Medicaid equation is having someone who understands how to utilize it. My grandmother ran out of her money, they overspent throughout their lives and then she went on cruises when my grandfather died. She had dementia, instability and incontinence. Fortunately for her, my mother found a lovely adult family home that Medicaid paid for. Having an advocate was critical, no matter how much or little money she had.
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Yup. That’s why Medicaid has a 5 year “lookback period.”’
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I have a somewhat negative experience with inherited money, it can cause a lot of dumb fights. But that’s usually with a family that is somewhat dysfunctional to begin with, and money just exacerbates it.
My plan is to not run out of money and be a burden on my kids, so I’m going to be somewhat cautious in my retirement planning and that will likely lead to there being some money left over for them. But the goal will be to set them up for their own success while I’m still alive, and if that means helping them out here and there, then I’ll do that. And I want to enjoy my time with them and if I have grandkids with them as well, so as long as it fits in my financial plan, I’ll take them on vacations, and do fun things with them. But I don’t want them expecting or planning on inheriting some set of money.
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Dad- there are even dumb fights when there is NO money.
A set of dishes- “mom wanted me to have these”. (You can buy service for 12 in the exact same pattern at Macy’s for under $500). Dad’s desk (not an antique, not valuable, will cost hundreds to ship across the country with the expectation that the other siblings will kick in to pay shipping costs). And the classic fights over a car which costs more to insure and ship than it’s worth; modest pieces of jewelry which one kid only wants to spite the others. and one sibling retaining his/her own lawyer even when there are practically no assets with any value and no evidence that the parent was coerced into signing the latest will.
Ask any estate or family law attorney how much gets spent in legal fees and aggravation over nothing with any monetary value…fights over who needs to be present when the safe deposit box is opened (it contains a passport and the title to a car which was sold in 1998).
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Why? There are many folks who deed their homes to their kids, and same with other assets. There is nothing unethical about this if it’s done prior to the lookback period.
Agree,but maybe one way to deal with the wealthy vs non wealthy child is through gifts or “help” during our lifetimes when the less wealthy kid has to struggle to save for a down payment or pay for their kids’ education.
The other interesting issue is if one child has many children and the other has few/none.
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Our two kids will have substantial funds come their way from us (our trust), which they know about, and more from their grandparents (trust also), that they are not aware of. Currently, they are gifted the max from us (cash) and from grandparents (stock) each year.
We have taught both of our kids, from a young age, to be financially aware. They evolved from a piggy bank when very young, to a bank savings account (grade school), and finally to a brokerage account in middle school. At each step we discussed the pros and cons of secure deposits and riskier investments. Our D (still in college) filed her first income tax after her summer internships (funny how she reacted to that). Our S has been employed for about two years and is very secure - full year emergency fund, 401k, IRA, and brokerage account. He’s currently investigating investing some of his money in private equity.
Their financial education has been much different than mine, but I think it has put them in good shape to manage their money in the future.
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I think that knowingly giving away your assets so they don’t have to be used to pay for your care, and purposefully doing that so the taxpayers have to pay for you when you had plenty of money to take care of yourself is unethical. There are certainly cases where people gave away assets and ended up on Medicaid without planning to do so. Medicaid is there as a safety net to take care of people who truly need it.
I suspect that quite often when this happens, it’s the beneficiaries of these gifts who set it up, in a case I know of, the kids set it up with the lawyer, and mom had no clue what was going on, because like many, she had lost her mind. Then the state had to take care of her until she died, and the kids standard of living went way up. Just seemed wrong.
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In most cases the medicaid senior living situations are not as nice as the private ones. If that’s what people want, then that’s what they get. In most cases those giving away substantial assets paid a lot in taxes so they are entitled to the benefits they paid for. Anyone can use public school, whether they are rich or poor, use public transportation, and public health care.
In some of the cases above with people saying private assisted living care costs $40k/mo, should a family pay the entire life savings of $200k for 5 months and then have to move granny to the medicaid facility with no money left for her at all? Is it best to have granny move twice when moving is hard on her? To me it would be good planning to transfer the money before the 5 year mark, let her spend some, have a few luxuries. Maybe the family ends up with some left over but maybe not.
My parents died without any money left. A brother had owned the house with my mother and she quit claimed it to him several years before she died. It wasn’t to qualify for medicaid assisted living, it was because she could no longer afford to pay for half the mortgage and half the expenses. None of us resent that transfer as he took the risk buying the house with her so reaps the reward of increased equity. She continued to live in the house, paid him what she could, and he paid the rest (and had always paid half the mortgage, taxes, and some upkeep).
The house probably had about $400k in equity when she quit claimed it, so I’m glad it went to my brother rather than the govt. She never went into assisted living, but she would have had to if she didn’t die after a fall (broke her neck, so wouldn’t have been able to return home) and it would have been a medicaid facility.
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Generally speaking, how did their assets impact their financial packages when starting college?
This is an area that I am unfamiliar with.
100% agree with this. People ask me about this all the time and I refuse to discuss it. As you said, oftentimes, it’s the 50+ year old children who want to protect their inheritance.
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I don’t advocate giving away huge chunks of assets to game Medicaid. Just to think about sharing some small chunks early if savings seem ample. When/if you run out of funds (hopefully not until years into nursing home situation) you could end up on Medicaid anyway.
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It never came to that. We were/are full pay for both kids. We were fortunate to be in a position where they graduate debt fee. Thanks to 529 and sound investing.
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Makes sense. Fortune built on restraint and thoughtfulness.
In our family’s case, I viewed merit as a large part of the decision process, since we had spent our kid’s life investing in ECs, sports, etc. (like some other parents do). My parents raised me on skills-building, and I did the same.
The kid had good stats and achievements in sport, with some hobby-level skill in art. Gambled on a couple of private reach school tuition merit scholarships and a state school. There’s some good options and we have been having solid discussions about where the family money is best invested.
Whatever our kid brings to the pot means that there is more to help with a car, potential out-of-state internships, first job offers. Etc. Along with applying for outside scholarships, the aim is to graduate debt-free and no loans.
My biggest hope is that my kid finds a cohort of work smart-and-hard friends at school who have good family relationships, if possible. It would be difficult for me to have a kid hate me/cut me off but still want an inheritance.
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This. Spot on
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Yes. My mother disclaimed part of her inheritance from her brother and it went directly to us ( he never married or had children). We disclaimed all of my husbands inheritance from his parents and it went right to our kids. You avoid generation skipping taxes that way.
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The estate pays the taxes, not the beneficiaries unless you live in one of 6 states that taxes your inheritance. You owe no federal taxes on inheritance.
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My daughter is inheriting our 1917 6’-4" Steinway piano (it’s written into the will as part of her share) because she is a talented jazz pianist. I hope there’s enough left that each of our sons gets the equivalent value!
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