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John Elder
John Elder, Estate & Elder Law
Category: Estate Law
Satisfied Customers: 4631
Experience:  Over 14 years experience in Medicaid, Estates, Trust.
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My siblings and I purchased my moms house on a quick deed

Resolved Question:

My siblings and I purchased my mom's house on a quick deed over 8 years ago to protect her funds. Each of us were paid the proceeds from the house when it was sold (approximately $5000 each). Mom went into a nursing home last spring and we all paniced thinking those funds would be needed so we sent them all to my brother (instead of allowing the Medicare process to proceed). Anyway, the funds were all pooled into my brother's account who is the POA. He now pays the bills. It is in a separate fund of his. When mom passes, the remainder will be split up. My concern now is if this was a wise choice. If my brother was audited or sued, that money would not be protected. Are we at risk of fraud? Should we redistribute the funds so it "looks" better and pay bills out of each account?
FYI - we live in Minnesota (Rice Co.)
Submitted: 1 year ago.
Category: Estate Law
Expert:  John Elder replied 1 year ago.
Welcome! Thank you for your question.

Is your mother receiving Medicaid now for her nursing home care? Or is your brother paying privately for the care?

What kind of fraud are you concerned about?
Customer: replied 1 year ago.

Yes, our mother is receiving Medicaid now. After her social security, she is left with the $90.


 


As far as fraud concerns, I don't know if pooling the funds was wise and or if the government would question our tactics. Honestly, I don't know.


 


Basically, would be smarter for us to manage the funds separately?

Expert:  John Elder replied 1 year ago.
Brenda,

Good, just checking your reasoning a bit to make sure I was not missing something. The transfer that you did back when you purchased the property is the only transfer that ever could have raised an issue with the government (Medicaid folks). However, since it was so long ago it was not and is not an issue for your mother. Since the funds have been outside your mother's name for years Medicaid does not care who holds them.

In fact, anyone can use any money they choose to pay for anything they want for your mother, including a private room, and that is not an issue with Medicaid or her future Medicaid benefits. She just cannot receive cash or have assets over the $2,000 cap.

Your brother holding all the money in one account in his name does worry me a bit. There are several concerns. First, if your brother is in a care accident and kills someone then those assets are fully subject to his creditors to take that money. Second, if your brother dies then those assets will pass to his heirs by state law or under his will. Third, there is no legal requirement that your brother share any of this money with his siblings after your mother's death.

The safest way for the money to be held is in a trust. It is possible to create a trust, your brother fund it and the money would be protected from his creditors, the trustee would control the money and the trust would specifically state where the trust money goes after your mother passes. There can be some cost to setting up such a trust with a local attorney so it may be cost prohibitive.

If you choose to forgo a trust the account could be placed in the joint names of the siblings. Please remember that this does make the account subject to the debts and potential creditors of all the siblings then. Without a trust type document there is no way to fully protect against all the risk.

I cannot provide you with legal advise. I have provided you with information about the law related to your question. My answer, and any information that you find online, should not take the place of having a consultation with a lawyer in your area to advise you regarding your specific issues.

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Thank you,

John

John Elder, Estate & Elder Law
Category: Estate Law
Satisfied Customers: 4631
Experience: Over 14 years experience in Medicaid, Estates, Trust.
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