Q: My uncle is about to have surgery for cancer, and he doesn’t want his children to have his assets as they are estranged, and I have taken care of him for the last several years. How can we avoid paying inheritance tax if we transfer his house to me? (McMurray, PA)
A: Have him consult with an estate planning lawyer as soon as possible. Transferring real estate is easy to do, however, the person making the transfer must be fully advised of the consequences. If he deeds his house to someone and survives one year after the transfer, there will be no inheritance tax. However, he really needs to be apprised of whether this transfer is right for him. He may need his house to sell to pay for nursing assistance or institutional care in the future, among other future scenarios. The attorney will need to know or determine. What is his immediate medical situation? How likely will your uncle need Medicaid in the future? If he transfers this house and within the next five years applies for Medicaid, he may be penalized by Medicaid which could force the sale of the house. Does he have long term disability insurance? Does he have other assets to liquidate in order to sustain medical treatment?
Q: Mom still lives at home. We have someone come in throughout the day but my three siblings and myself stay with her overnight and do 24 hour shifts on weekends. We’ve been caring for her for 3 years and have never paid ourselves because we didn’t know if we can do that. Also, if we are allowed, can we pay ourselves back? In the event she needs to go into a home and runs out of money and goes on Medicaid, will they come back on us to recoup the money that we paid to ourselves for her care? (Pittsburgh, PA)
A: Yes, as it stands now, if you have no written caretaker contract in place and you pay yourself as you go along, or try to pay yourself retroactively, this could potentially make your mother ineligible for Medicaid if she applies within the next five years. Medicaid would look at these payments as transfers for no consideration or fair value unless they are made pursuant to a written caretaker agreement signed by your mother if she is competent or by her Agent under a valid Power of Attorney.
Q: If my parents sell their home to their children within the 5 years? How does the 5-year issue work in Pennsylvania? (Munhall, PA)
A: PA manages its Medicaid program through the PA Department of Human Services. Under Medicaid regulations, any transfer of an asset by a Medicaid applicant for no consideration (i.e., gift, $1.00, under market value, etc.) within 5 years preceding a Medicaid application, can cause the applicant to be ineligible for Medicaid benefits to the extent of the fair market value of the asset transferred. You say your parents sold the home. If it was a legitimate sale for fair market value, it would not rule your parent’s ineligible. If the proceeds of the sale went to your parents for their living expenses, which should be easily documented, there should be no problem. I suggest consulting with an attorney to review this sale before you do it.
Q: Both of my parents have recently passed. first my mother, then my father within an eleven-day span. I am the executor of the will and want to proceed in filing out whatever forms need to be filed and to carry out the will. I just need to know exactly what information to take to the courts to obtain the short certificate and be named legal executor. The only assets that my parents have left is a bank account with about $3000 in it as they were both in an assisted living facility before there death. (Pittsburgh, PA)
A: If there is only one asset as you mention, and it is in your parent’s name, you will not have to open an estate. Per statute, the bank can release less than $10,000.00 to certain next of kin if a paid funeral receipt is produced. There will be inheritance tax owed. Also, you need to be aware that if your parents received Medicaid, this money may not be free and clear to disburse. If this matter is a simple as you state, an attorney can assist you in getting the money and prepare an inheritance tax for you at a modest fee.
Q: The car has been parked in front of his condo (which we will eventually sell) for months. We would like to drive the car and keep it at our house. Do I need to transfer title, or can I just put the car on my own car insurance? I am his financial power of attorney, and do not want to do anything unethical. (Hermine, PA)
A: There is a larger picture here that any lawyer would need to know before giving you a definitive answer on what seems like such a minor thing. We would need to know if your father is incompetent. If so, the transfer would need to be through the POA. Very generally, if your father has any foreseeable need to apply for Medicaid in the next five years, a transfer of this vehicle out of his name could subject him to a Medicaid penalty to the extent of the value of the transfer. If Medicaid is not an issue more information would be needed on who the potential heirs of his estate are. If these heirs would ultimately object to transferring the car into your name via the POA (if the POA authorizes such transfers or gifts), as a gift, then it may be an issue. Even using the car which will ultimately be estate property, could be objected to. If you are confident you have no potential Medicaid issues, and you are the only heir, there is less risk here, but I would still consult with a VA attorney.
Q: HOW DOES THIS WORK. I HAVE A PARENT WHO IS IN A FACILITY. WE WANT TO APPY FOR MEDICAID. WE WANT TO GIFT MONEY TO 7 GRANDCHILDREN. WE WANT TO APPLY FOR MEDICAID BUT IN ORDER TO DO SO WE HAVE TO SPEND HIS MONEY DOWN TO BELOW A CERTAIN NUMBER. THE PARENT WANTS TO GIFT SOME TO HIS GRANDCHILDREN. HOW DOES THAT LOOK TO WHEN MEDICAID IS LOOKING BACK 5 YEARS INTO HIS ACCOUNTS? WHEN ALL BILLS ARE PAID DOWN AND FUNERAL IS PRE-ARRANGED. IS THAT POSSIBLE? (NEW KENSINGTON, PA)
A: the short answer is do not do this yourself. It sounds like it would be a flagrant violation of medicaid regulations and could cause your parent to be ineligible for medicaid and spend their remaining days in a run-down, flea-ridden, warehouse for the elderly. there are certain ways to spend-down with the procurement of medicaid exempt necessities and perhaps to even shelter some of this money. however, only do this through an attorney versed in medicaid regulations
Q: I am purchasing a piece of property from an individual, he is the youngest of three children. His mother has dementia and is in an assisted living home, he has power of attorney. He has a warranty deed that states that he received the property from his mother for a sum of money. My closing agent has a copy of this deed and is asking for a bill of sale or bank account to show the transfer of money, in case one of the other children try to take the property. Is this necessary or does the warranty deed take care of this? (Pittsburgh, PA)
A: No, it is not required, however, I think your closing agent is exercising due diligence as I would in this situation. Two potential concerns. One, is that it was a transfer without consideration (no actual money paid). If that happened, and his mother needs to apply for Medicaid in the future, or is receiving Medicaid benefits right now, Medicaid would ask for the record of the transfer. If no consideration was paid, there could be a problem and the home could potentially be subject to a Medicaid lien The second concern is that the other children didn’t agree to or don’t even know about the transfer. I think it is best to be cautious.
Q: My parents put their home and property in a life estate with my sister, my deceased sister’s son and myself. They have since been confined to a nursing home and on Medicaid. (life estate set up 10 years prior to Medicaid so the 5- year look-back is not an issue) My main question is who is responsible for the maintenance, upkeep and financial obligations of the property? My sister and I have been keeping it up, but the nephew has refused to do anything. (Baldwin, PA)
A: I would need to review the life estate before advising you adequately. Is the life estate in their will or in a deed? If the life estate is in a deed that was filed 10 years prior to Medicaid eligibility, the only part of the transaction you need to be concerned with would be the value of the life estate. If your parents held a life estate, they had the right to live in the home that you now own, until the conditions which terminate the life estate are fulfilled. Their life estate has value. Maintenance issues would generally fall upon the owners unless the nephew tenant was obligated to do maintenance pursuant to a lease. Again, you need to have the documents reviewed to get a more thorough answer.
Q: My mother has Alzheimer’s and we are looking into placing her into an assisted living facility which deals with her specific needs. If me and my siblings self pay with no charge to her insurance, is the facility entitled to their savings account and or home? (Munhall, PA)
A: I believe your question is whether or not Medicaid potentially has an interest in your parent’s bank accounts or home. The assisted living facility does not care who pays the bill, as long as it is paid. If the bill cannot be paid due to the exhaustion of funds, the facility will advise the next of kin to apply for Medicaid. Once the Medicaid application begins, Medicaid will require the next of kin to report all of mother’s assets. In simple terms, since Medicaid is potentially paying for your mother’s nursing care for the remainder of her life, they expect a contribution of the value of her personal assets. Medicaid looks at all transfer of an applicant’s assets within the five years preceding the application done for less than fair compensation. This normally include gifts to family. Any asset so gifted, can penalize her from Medicaid coverage to the extent of the value of the asset transferred. Since you can afford private pay now, you have some time to prepare for the future when mother’s costs may grow significantly, and you therefore should meet with an attorney.
Q: The surviving parent dies while residing in a nursing home. She has been covered by Medicaid for past 4 years. The Will reads that the only child is her beneficiary. Knowing that Medicaid is entitled to some portion of the parent’s estate (less than $2,000), is Medicaid entitled to the full amount or only a share of the residual estate? (Pittsburgh, PA)
A: Generally, Medicaid will be entitled to a share of probate assets depending on the amount of their claim. If it is necessary to open an estate, the estate is required to notify the PA Department of Human Services (DHS), who manages the federal Medicaid program, of the death. DHS will reply to the estate with an Estate Recovery Statement of Claim, which will inform the estate how much DHS is seeking as a claim. The estate then needs to address DHS in writing regarding settling the claim or explaining with supporting documentation why the claim cannot be settled (i.e., insufficient assets), whether an estate is opened or not. If the remaining estate of this person is $2,000.00, it is doubtful Medicaid will seek a claim, but you never know. You may be able to shelter the money with a funeral related expense. I suggest you consult with an attorney regarding this matter.