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ShawnA
ShawnA, CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
Category: Tax
Satisfied Customers: 2884
Experience:  CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
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My mother is 84 years old is wants to stay at home until her

Customer Question

My mother is 84 years old is wants to stay at home until her death. She has a 25,000.00 life insurance policy with a 817.00 cash surrender value and two $2,500.00 smaller policies, one with about 540.00 cash value and the other with about 890.00. We need to get her Mass Health to cover frail and elder care services to have someone take care of her in her home. She has outlived her reverse mortgage and has about 150.00 to her name i a checking acct. The only income she has is her SS check-approx 1400.00/mth. To qualify for MAHealth she can not have over 2,000.00 in assets . These three pay-outs exceed that by just a few hundred dollars. What do we do to get that figure down? Should she assign ownership of the smaller policy over to one of us children or what?.....trying to avoid anyone from getting taxed etc.
Submitted: 1 year ago.
Category: Tax
Expert:  ShawnA replied 1 year ago.
Hello. My specialty is focusing on YOUR Financial needs. Financial Planner/Business Owner for 20 years. Retired CPA
Buy her insurance policy from her . Give her 900 and get yourself named as the owner.
same with other policies.
Expert:  Lane replied 1 year ago.
Hi,I have a different answer...
Selling the policy to someone only changes the cash value in the contract to cash in her name....
Her net Worth remains exactly the same EXCEPT that now she would have no death benefit available to help with last expenses...Net worth doesn't change.
The above recommendation just moves it from life cash value to the cash she would receive from someone in a sale ... still in her net worth, still on her balance sheet, still counts toward the medicaid issue ...
... and if you simply transfer it to someone in the family, you'd be coming up against the issue that they will still look back 5 years and pull it back into the analysis ...
I'd recommend that you EITHER (1) use the cash value for medicine or something else that she truly needs (as a spend-down) or (2) assign it to a funeral home (they all have forms or this) so that it will be REMOVED from her net worth/resources and STILL provide for last expenses when they're needed.
Let me know if you have questions ...
lane
Expert:  ShawnA replied 1 year ago.
I disagree completely.
If you own it, she stays as the insured, you make yourself the beneficiary.
She now has the cash value of the policy and can spend down a tiny bit but when she dies you use the tax free money to bury her.

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