Question:
If my parents move all assets into some type of trust to own nothing and have no legal binding tax implications to the property. They are needing to move into some type of assisted care facility. So is there a time frame that needs to show that they have not owned the property or have any funds. How long after a transfer or title will my parents be asset less and show that they have any funds? The other question is how can the funds be moved around to pay bills if they need any money to pay bills ?
Response:
The main program paying for nursing home care and in some instances for assisted living care is Medicaid. When applying for benefits, applicants must report all transfers made within the prior five years, the so-called “lookback” period. In most instances, the result is a penalty period of ineligibility for benefits. So, in effect, your parents would not be able to receive Medicaid coverage for the five years following a transfer of their property.
If your parents were to transfer their property to a trust, it would have to provide that they could not receive distributions. Otherwise, Medicaid considers the trust property to still be available which would probably make the ineligible for benefits.
These rules are complex and there are tax consequences as well as Medicaid eligibility ones for transfers of assets. I strongly recommend that you consult with a local elder law attorney. You can find one at www.elderlawanswers.com or www.naela.org.
In terms of paying their bills after they have transferred their assets, your parents have two options. First, they don’t need to transfer everything, instead keeping enough back to pay anticipated expenses during the transfer penalty period. Or if they transferred funds to you and your siblings, you could pay their expenses from the transferred funds.
