I recently worked with Liz and Bob, who had been appointed Guardians for their 82-year old Grandmother, who suffers from Parkinson’s and is also in the early stages of Alzheimer’s disease. She has been living in a skilled nursing facility for eighteen months. Liz and Bob came to see me because their grandmother’s living arrangements were of concern to them because the home is not rated very highly. It is also far from grandma’s lifelong neighborhood and not at all convenient to Liz and Bob’s homes. Their concern is that their grandmother’s assets, while significant, will be depleted soon in a facility that is not working well for the family anyway.

Liz is the property guardian because she is a financial whiz and Bob, who is a registered nurse, is the Guardian of Granma’s person. The nursing home bill is $198,000 and increasing at $11,000 every month. They are concerned that Grandma’s assets of $790,000, will be gone in a few years and that none of her wishes will be carried out. They thought they were sunk.

First, I explained that Grandma could be moved to another facility whether she was private paying or on Medicaid. I explained the process and Bob immediately started contacting nursing homes that were more suitable and much closer to Grandma’s old neighborhood and to their homes. That took quite a load off of their minds.

Next, I reviewed Grandma’s assets and determined that, with proper planning, a significant portion of her assets will be preserved. I also examined the order appointing them Guardians of Grandma’s person and property. Unfortunately, it did not specifically provide for Medicaid Planning. I explained that in cases like this, the Order must allow the Guardians to plan or they are stuck spending down all of the resources even though they both know that Grandma would never want that to happen.

Here’s what we did.

We started a proceeding to modify the Order appointing Liz and Bob Guardians of their grandmother’s Person and Property, to allow them to engage in Medicaid Planning. That took two months to change the order. In a dollar sense, they paid an additional $22,000.00 to the nursing home while the proceeding was pending.
After paying the nursing home, my fee and other expenses Grandma incurred while the amendment to the order was pending, Grandma had $660,000 remaining. Of that, $330,000 was in an investment account Grandma had inherited from her brother; $200,000 in a house that Grandma had given to Liz and Bob 6 years ago and retained a life estate for herself, $110,000 in a retirement account, and $20,000 in the Guardianship Bank Account. Bob and Liz had been advised that, at the current Nursing Home rates, the funds and her $1,600.00 a month in income, would last approximately 6 years and then she would be eligible for Medicaid. If she died before that time, any funds she had left at the time of her death would be distributed in accordance with her will.

They asked me if anything else could be done to prevent a complete spend-down of her assets. This was my recommended option from an asset preservation perspective. It is the plan that was ultimately approved by the Court:

Grandma kept $14,850.00 for herself as a resource allowance; she prepaid her burial $12,150.00; the life estate in the house was exempt and there was no penalty for transferring it because the transfer was more than 60 months before the application date; the retirement account was exempt, but Grandma would have to increase the monthly payment to $1,082.25 based on her life expectancy. After deducting her resource allowance and the burial that left $303,000 in the investment account and $20,000 in the Guardianship account. With those funds, the Court approved a transfer of $161,500 into an irrevocable trust naming the beneficiaries under her will as the beneficiaries of the trust creating a penalty of 17.1 months and a loan of $161,500 which provided for monthly payments to the Nursing Home to offset the 17 Month penalty.

The net cost to Grandma under the approved plan is $161,500. Thus, the family will preserve $498,500.

We were pleased that, through our expertise and experience, we were able to preserve Grandma’s assets, while providing her the opportunity for her final wishes to be carried out and to help the family make adjustments to improve her living situation.