I moved my mother to a full assisted Dementia clinic in Colorado about 5 years ago. She lived in Nebraska and owned a home. I was told at that time I could not sell it as the state would take the sale money. Her care is paid for my Medicare and Medicaid of Colorado. Her house has been sitting empty all this time and is deteriorating and got some damage from a hail storm. The homeowners insurance company said I should get the house put in a trust and rent it after I fix it with the insurance claim money. They said by doing this the income would go into the trust and neither Medicaid or Medicare could touch it. I have full power of attorney. I cover all the expenses of my moms house for insurance and property taxes as she ran out of money so I cannot afford to hire an attorney to take care of this. Does anyone know how the trust works and if I do create one and rent the home would the income remain safe in that trust?
1. A. I would be very leary of taking advice from an insurance company, not because it's an insurance company but because (a) they're not as knowledgeable on trust and asset management as are estate planning and elder law attorneys, and (b) in my experience the attorneys working for insurance companies focus on liability and cover issues, not asset protection.
B. After my sister's death I tried to get insurance coverage for her home which had been conveyed to her Trust. I could not. No reliable insurer would ensure a Trust; agents advised that underwriters will only ensure live people, not an entity.
The ONLY way I could get insurance coverage was by ensuring myself and my father, both Trustees, as named insureds.
I would have thought that the insurance agent who advised you would have been aware of this limitation.
More than likely, you would be the named insured.
2. The deed would have to be retitled, or rather conveyed by a quit claim deed from your mother (through you as attorney-in-fact under a DPOA since it seems she wouldn't participate in legal transactions) to the Trust. Some entities consider this transfer of title a "sale".
I had problems with Bank of America on this issue. Some companies don't understand that it technically is NOT a sale.
3. I don't have any experience with a Trust being created by an attorney-in-fact; of all the Trusts I've seen, this has never been a circumstance that was addressed. The attorneys for whom I worked had quite a variety of trusts and situations, but never one created by someone pursuant to a DPOA. That's not to say that it can't be done - I just don't know. This is a question for an attorney.
4. Even if you don't have money, this isn't a situation in which you would want to gamble preparing your own trust or using a boilerplate form. There could be too many complications. If it's worth doing, it's worth doing right, and that means legal counsel.
5. Living Trusts generally are a legal vehicle by which certain assets can be retitled, funded into the trust, and protected from certain tax implications as well as being subject to any restrictions of asset inheritance. My attorney advised that during the lifetime of the Settlor (your mother), income from assets funded into the trust are treated as if they are income to your mother.
I.e. they're reported on a 1040; after death, the Trust becomes irrevocable, and income and deductions are reported on a 1041.
6. Would the income be safe? I.e., from Medicaid? I'll leave this to experts like Igloo. Personally, I suspect that this might be viewed as an attempt to circumvent Medicaid rights, especially since I'm sure you or your mother signed agreements granting Medicaid certain priority rights either when you applied or when your mother began receiving Medicaid.
7. Personally, funds or no funds, I think this could be a volatile issue and you really shouldn't venture into without legal counsel. I'd liken going into this venture w/o qualified legal counsel as akin to walking across an area a few feet just above a sinkhole. You never know when it will open and swallow you up.
Yes, if the house is sold the State Medicaid would take it to pay for your Mom's care. That would happen either way, now or later.
Medicare doesn't put liens on assets, so no worry there. What Medicare doesn't pay, then the bill goes over to Medicaid.
Another option is to find the Nebraska State Bar as well as local county bar associations and check for Estate Planning and/or Elder Law practice areas. There typically are a lot of practice area subgroups with attorneys whose specialties are in those areas.
First I'm surprised that she is eligible for CO medicaid. Owning a home in another state usually is viewed as a nonexempt asset which makes them ineligible for Medicaid. Have you made it clear in her CO application & renewal that she owns property in Nebraska?
Was she on any medicaid funded program in NE? If so, there could be an existing lien or claim on the property from when she she got those benefits. It's not just limited to LTC /NH benefits. Have you checked the NE co courthouse for paoerwork filed on the propert?
So the insurance co is going to pay out a homeowners claim on a vacant, unoccupied property who's owner lives in another state? Really? If this is a traditional homeowner policy, you have to be in compliance for policy & moving & becoming a resident of another state ain't that. Now a vacant dwelling policy, those will cover limited damage (they are pricey & somewhat difficult to get competive pricing on). If the insurance co does an audit on homeowners polcy payouts,expect to have to return the $ as the policy is not valid.
So just why are you continuing to spend $ away on this property?
If either states place claims or liens against moms estate and you cannot do you own claims on the estate, will it matter if you got zero out of the NE property?
See All Answers