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socrateaser
socrateaser, Attorney
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I have questions regarding Pooled Income Trust and Irrevocable

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I have questions regarding Pooled Income Trust and Irrevocable Funeral Trust as they relate to NY Medicaid Planning. I live in CA and recently hired a NY Geriatric Care Manager to assist with this. My mother receives approximately $2070 monthly - $1000 comes from the guardianship account (personal & property) I have responsibility for over my father. The amount was approved by the court and is used to cover groceries and household items for both my parents as well as for her personal needs.   The rest of her money comes from Social Security and Pension. Though my mother manages to tend to my father 24x7, she is obese, is deaf in one ear and partially deaf in the other, and suffers from chronic, often debilitating pain from osteoarthritis and osteoporosis. She uses a cane for assistance. My father has ample sums of money while she has little.   To bring relief to my mother the Care Mgr proposes getting her on Medicaid under the disability provision (she’s currently on Medicare A & B with Aetna supplementing). He wants to get her into a Pooled Income Trust and set up an Irrevocable Funeral Trust. I have concerns about both of these. 1.     I believe the minimum monthly allowable income for Medicaid is around $770. Since she’s currently receiving $2070, her excess of $1300 would go to the Pooled Income Trust. It is highly unlikely that she’d be spending this amount regularly on a monthly basis. Bills for the home they live in are covered by rental income and the home is in trust to my brothers. What happens to the money if it doesn’t get spent month to month? Who manages the account? Is it an interest bearing account? Is the interest applied to the master trust or the sub-trust?   As I understand it, upon death, any remaining funds which haven’t been spent remain in the pooled trust. This could potentially end up to be a lot more than I’d care to leave to total strangers. 2.     The Geriatric Mgr advised that to assist my mother with filing claims monthly, we’d also have to set up durable POA which my mother would have to grant to my sister. My sister does not have a credit history and has no credit standing. Will this be an issue for the Pooled Income Trust manager? 3.     I see one very good advantage to an Irrevocable Funeral Trust – everything is paid in advance. But I see more disadvantages. Though my mother has chronic pain, she’s in excellent health. If we prepay her expenses now and she lives another 10 years, what happens if the funeral home goes out of business? If we prepay too much, I understand the excess goes to the county? My parents have an Irrevocable Trust on the house which indicates that their funeral expenses are to be paid from the estate. Does this disallow us from entering into an Irrevocable Funeral Trust? Thank you in advance for any light you can shed on this complex set of issues. Sincerely, xxx
Submitted: 3 years ago.
Category: Estate Law
Expert:  Fran-mod replied 3 years ago.

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Customer: replied 3 years ago.
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Expert:  Fran-mod replied 3 years ago.

Hello,

I’ll try to find an Expert to assist you. Yours is, however, a complex question in multiple parts, and our experts have already flagged it as being underpriced for the amount of work that would be involved in a satisfactory answer.

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Edited by Fran-mod on 10/31/2010 at 4:29 PM EST
Customer: replied 3 years ago.
Thank you Fran for your promptness. I'd be willing to accept each of the answers separately.

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Expert:  Fran-mod replied 3 years ago.
Thanks Luba,

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Expert:  socrateaser replied 3 years ago.
Hi,

Frank asked me to review your question. You wrote:

1. I believe the minimum monthly allowable income for Medicaid is around $770. Since she’s currently receiving $2070, her excess of $1300 would go to the Pooled Income Trust. It is highly unlikely that she’d be spending this amount regularly on a monthly basis. Bills for the home they live in are covered by rental income and the home is in trust to my brothers. What happens to the money if it doesn’t get spent month to month? Who manages the account? Is it an interest bearing account? Is the interest applied to the master trust or the sub-trust? As I understand it, upon death, any remaining funds which haven’t been spent remain in the pooled trust. This could potentially end up to be a lot more than I’d care to leave to total strangers.

A: I assume by "guardianship account," you mean a bank account that is not part of some preexisting trust arrangement, but is rather an account owned by the ward/conservatee, and over which you have control.

That said, NY law provides a 60 month lookback period on the establishment of any trust arrangement. So, despite moving a portion of the guardianship account money into a trust, the income will be considered available to the participant, and it will disqualify your mother from Medicaid eligibility -- unless she is over 65 at the time of the transfer. However, be aware that all trust arrangements, no matter how characterized, must either pay the State back for Medicaid reimbursement after the participant's death, and any additional amounts not paid out must be gifted to a nonprofit organization that creates the trust, in the one exception to this rule. So, under no circumstances can any money placed into the pooled income trust ever be designated to the heirs/beneficiaries of the participant. In short, once the money goes in to the pooled trust, it's gone forever. See 42 U.S.C. § 1396p(d)(4).
socrateaser, Attorney
Category: Estate Law
Satisfied Customers: 33779
Experience: Retired (mostly)
socrateaser and other Estate Law Specialists are ready to help you
Expert:  socrateaser replied 3 years ago.

2. The Geriatric Mgr advised that to assist my mother with filing claims monthly, we’d also have to set up durable POA which my mother would have to grant to my sister. My sister does not have a credit history and has no credit standing. Will this be an issue for the Pooled Income Trust manager?

A: Assuming that you actually agreed to create the pooled income trust, then a POA would have zero authority over the funds in that trust. Only the trustee has authority to act on trust assets and income.
socrateaser, Attorney
Category: Estate Law
Satisfied Customers: 33779
Experience: Retired (mostly)
socrateaser and other Estate Law Specialists are ready to help you
Expert:  socrateaser replied 3 years ago.
3. I see one very good advantage to an Irrevocable Funeral Trust – everything is paid in advance. But I see more disadvantages. Though my mother has chronic pain, she’s in excellent health. If we prepay her expenses now and she lives another 10 years, what happens if the funeral home goes out of business?

A: This sort of trust is a waste of resources. You are tying up the money unnecessarily, in my view.

If we prepay too much, I understand the excess goes to the county?

A: Once again, I see no value in tying up money in a funeral trust. You can by an insurance policy to cover final expenses, and then use the money however you wish. Or you can just set some money aside in a separate account.

My parents have an Irrevocable Trust on the house which indicates that their funeral expenses are to be paid from the estate. Does this disallow us from entering into an Irrevocable Funeral Trust?


A: A trust instrument cannot force outcomes external to the trust holdings. The statement concerning final expenses is unenforceable, except to the extent that it prohibits use of the irrevocable trust assets from being used to pay final expenses.

Note: I get the feeling that this "geriatric manager" is not an attorney, and may sell insurance. If so, then that is a conflict of interest, because the goal may be to sell insurance, rather than to assist your mother. Moreover, a person who advises about about estate planning is practicing law. So, if the geriatric manager is not an attorney, then making suggestions about how to structure your parent's estate is unlawful.

Not that I have anything personally against this person -- but my antenna is up, so I feel disposed to go a little beyond your question.

One more thing. Once upon a time, estate planning was a very viable means of avoiding taxes and putting more money into the hands of family beneficiaries. Modernly, however, federal law has managed to evicerate almost all of the estate planning mechanisms, except for those provisions which double the Uniform Estate Tax Exemption and avoid the cost of an expensive probate.

Other creative estate plans can generally be shown to fail, unless their purpose is to donate money to a charity. If your parents are not planning to donate their assets to charity, then in my view, the sort of asset protection that you are attempting to effect is largely a waste of time and money. And, if you parents are seeking to donate assets, then they need to sit down with an estate planning attorney and work out a comprehensive plan to effect that outcome.

Regardless, there is no absolute escape from paying back Medicaid, unless assets are deposited into an irrevocable trust at least 60 months prior to the receipt of Medicaid benefits. Since it appears that your mother needs help now, the proposed trusts will not produce the expected outcome.

P.S. A little bird told me that you might be willing to pay for each answer separately. If you choose to do this, you can accomplish the same result

Hope this helps.
socrateaser, Attorney
Category: Estate Law
Satisfied Customers: 33779
Experience: Retired (mostly)
socrateaser and other Estate Law Specialists are ready to help you

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