Betty and Tom met with me the other day to discuss a very difficult situation that was developing around health care for Tom’s mother, Rita Jones, who is 78 years old. It has become increasing clear that mom will need skilled nursing care in the near future. Tom and his brother, Mike, disagree on what to do with mom’s assets. Mike wants to transfer everything out of mom’s name now and find a way to hide the assets. Tom wants to preserve assets but doesn’t want to do anything that is dishonest. Betty and Tom recently moved in with Rita and they don’t want to move again. They would like to buy the house but they have limited funds. They asked me if there was any way that they could get the house and qualify mom for Medicaid.

I looked over the financial facts and this is what I found:

House $190,000
Checking/Savings – joint with Mike and Tom $80,000
IRA – Mike/Tom equal beneficiaries $100,000
Life Insurance – Mike/Tom beneficiaries Full Value – $1,500 $3,500

Total            $373,500.00    

I told them there is a way to qualify mom for Medicaid  and preserve these assets. This was my suggestion:

Mom has a resource allowance when she goes on Medicaid    $14,850
FV of life insurance it is not > $1,500.00, the CSV is exempt    $ 3,500
The IRA is in payout status, so that is exempt $100,000
Pre-pay mom’s funeral    $10,000
Pre-pay Mike, Tom and their wives’ funerals/$7,500 each $30,000

That leaves them with excess resources of                                     $ 215,150
(Resources are the House plus $35,150.00 cash on hand)

Here’s where it gets interesting:

Tom and Rita can buy a ½ interest in mom’s house as Joint Tenants with Right of Survivorship, converting $190,000 resource into a cash asset of
The ½ interest still owned by mom has a legal impediment so it doesn’t count as a resource



The cash for the house is added to the cash on hand


The available resources are reduced from $215,150.00 to


They can make a gift of $30,000 each to Mike and Tom


That leaves them with $60,000 to pay the NH


If everyone agrees, instead of spending $215,150 on mom’s care, they can spend $60,000 and preserve $313,500 (which includes mom’s home for Tom and Betty).

We’re starting work on the case tomorrow.