Ask the Expert: Why Can’t Mom Just Transfer her Assets to her Children?

Published: Fri, 06/14/13


 
 

          Ask the Expert- Your Elder Law Questions Answered by Evan H. Farr, CELA
 
Ask the Expert: Why Can't Mom Just Transfer her Assets to her Children?
 

Q.  My mother, Sally, is 65 years old and has had Parkinson's for ten years. She does not qualify for long-term care insurance due to her diagnosis. I don't foresee her needing Nursing Home Care for at least another 5-10 years, as her medications seem to be working well, she is independent, and is doing everything she did before. But Parkinson's is a debilitating disease, and things can change.

Mom doesn't want to think about her disease getting worse and potentially having to go into a nursing home in the future. One of her biggest concerns about it is the cost of the nursing home, which can be more than $15,000 a month where we live. She has worked hard for 40 years as a nurse, paid off her home, and has saved a lot of money. She has dreams of helping put her grandchildren through college, and doesn't want all of her hard earned assets going towards the costs of nursing home care. She read about Living Trust Plus(TM) on your website and was intrigued, but had a few concerns about whether it was right for her. Who are the typical clients who use Living Trust Plus(TM), and why can't mom just transfer her assets to me and my brother if she hopes to qualify for Medicaid in the future?
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Answer excerpted from Evan H. Farr's book How to Protect Your Assets From Probate PLUS Lawsuits PLUS Nursing Home Expenses with the Living Trust Plus(TM)Buy the book on June 21 and get $1,250 in special bonuses.

A. The typical clients who use the Living Trust Plus(TM) are in their mid-60s to mid-80s, already retired, and worried about the potential catastrophic cost of long-term care, like your mother. They want to protect the nest egg that they've been saving for a rainy day.
 
The rainiest day possible is the day when your mother needs nursing home care, and has to pay the $15,000 a month to the facility you described. Like most people, your mother wants to protect her hard-earned assets and needs to do something to protect that money. For the vast majority of Americans, the Living Trust Plus(TM) is the best way to get this much-needed protection.
 
The Living Trust Plus(TM) is a means by which you can transfer the assets you wish to protect to a trust rather than directly to your children. Why?
  • Transfers to trusts provide protection, whereas transfers to
    adult children are outright gifts;
  • Trusts provide a sense of dignity and security; gifts to
    children leave you at the mercy of your children and at the mercy
    of any present or future creditors of your children;
  • Transfer to a Living Trust Plus(TM) are subject to the Medicaid
    five-year look back period. The Look-back Period for Medicaid is
    five years from the date of application. This means that when you
    file an application for Medicaid, you are asked whether you made
    any gifts (including charitable donations) or other uncompensated
    transfers during the five years prior to applying for Medicaid.
    (See page 82 of my book for more details about this.)
By transferring assets to a Living Trust Plus(TM), income is paid directly to your mother (if desired), allowing her to maintain greater financial independence. When her real estate is transferred to a Living Trust Plus(TM), she retains the ability to live in the real estate or receive the rental income from the property
 
Transferring assets to a Living Trust Plus(TM) is a wise solution for anyone in your mom's situation because in any family, when assets are transferred directly to a child, there are risks involved. These risks can include creditors claims against the child; divorce of a child; bad habits of a child; need for financial aid; loss of step-up in basis. A transfer to a Living Trust Plus(TM) avoids all of these risks.

  • Money that is protected through proper planning, such as a Living Trust Plus(TM), can be used to provide your mother with an enhanced level of care when she needs it, and a better quality of life while in a nursing home and receiving Medicaid benefits.

    To thank you for your question about Living Trust Plus(TM), I am enclosing a copy of my book, How to Protect Your Assets From Probate PLUS Lawsuits PLUS Nursing Home Expenses with the Living Trust Plus(TM) .  It offers readers expert advice on how to use the Living Trust Plus(TM) to avoid the problems of probate and the risks of lawsuits and nursing home care. He examines why Wills are not a good solution, and discusses in detail living trusts - both the regular living trust (i.e., the revocable living trust designed primarily to protect your assets from probate) and more importantly, the Living Trust Plus(TM), designed to protect your assets from probate PLUS lawsuits PLUS nursing home expenses.  We also encourage your mother to call The Fairfax Asset Protection Law Firm of Evan H. Farr, P.C. at 703-691-1888 to set up an appointment for a no-cost consultation.
  • -----
  • Dear Commander Bun Bun,

    I am 55 and single. Since I have never been married and don't have any children, why would I need estate planning documents for myself?

    Noah Stringgs- Attached
    -----
    Being in the office next to the seminar room with the big TV, I get to watch re-runs at night when no one is around. Remember that episode of "Seinfeld" where Jerry convinces Elaine, Kramer, and George to meet with an estate planning attorney and plan in the event something should happen to them? Of course you don't, because it never happened. The reason I bring this up is that most singles, like the ones in our Seinfeld example, overlook the importance of estate planning.

  • In reality, estate planning is just as important for single people as it is for couples and families. In fact, many estate planning attorneys believe that singles need it more. For married people, it is pretty much assumed that a spouse, even in the absence of any planning, is going to be the person that the court is going to appoint as the guardian over your personal and health care decisions and conservator over your financial matters. But, if you're single, you need to appoint someone to make your personal, health care and financial decisions or the court will decide for you, and it may not be the person you would want. 

    A common misconception among most singles is that they don't have much money, so they don't need estate planning. But often they find they have more assets than they think. Singles often have a life insurance policy through an employer, perhaps a retirement account fed by their paychecks, equity if they own a home, and sometimes accidental death benefits from credit cards. Once their estate has been settled, a parent, a sibling, a niece or nephew will most likely end up with this modest inheritance. 

    It is important for anyone, single or married, to plan in order to designate who will be responsible for our health care and financial decisions when we are no longer able to do so ourselves. You may have every intention of leaving your nephew your Mickey Mantle autographed baseball card, but without estate planning in place, the court may sell it off in an estate sale so the money can be distributed. 

    To start your planning, you can make an appointment for a no-cost consultation with the Fairfax Estate Planning Law Firm of Evan H. Farr, P.C. at 703-691-1888. Be sure to visit and pet me and the other adorable animals while you are here! 


  • About Commander Bun Bun

  • Commander Bun Bun is a Holland Lop rabbit that belongs to Grace Everitt, one of our Asset Protection Paralegals at the Farr Law Firm. In the past, Grace used to raise rabbits for pets and show in Florida, and Commander Bun Bun was the runt of her last litter. As a baby, Commander Bun Bun's mother accidentally bit off her tail and then stopped feeding her. After being hand-reared by Grace, she is now a completely happy and healthy little bunny. Commander Bun Bun loves to be held like a baby and to have her tummy rubbed. You can often find her resting under Gracie's printer table. She enjoys all of the attention (and, of course treats) she gets from staff and friendly clients at the firm. We encourage you to visit us and meet her and our other extraordinary critters.

  •  

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