Inheritance and Property Rights/protecting 84 yr old mothers money
QUESTION: Hi Lee.
I have a brother whom is very sick and has no will. His house is in his name. Should something happen to him should he put someone else's name on the house? My mother just helped him buy it. It's in Michigan, she's 84 and she doesn't want her name on it. I need answers on what to do let alone all of his belongings. There's a good chance that he is going to a nursing home. He has a bad heart they can't operate no wife no kids. I am looking forward to have any suggestions.
ANSWER: I would suggest at the least that he hand-write out a will, what he wants done upon his death, with the house, any personal property, etc, who is to be in charge, I recommend he also says "no bond is required" of whoever is in charge, and sign it and date it. This only works if it's entirely in his handwriting, not partially printed then signed -- in those cases witnesses are needed.
It doesn't have to be in any special form either -- it should say this is my will and I revoke any prior wills. Then he spells out what major items he owns & what is to happen to them.
Keep in mind if he's on medi-caid, that is a loan, not insurance, and upon his death the medi-caid folks will come at the estate for all their money back and if he's transferred the house to someone, they'll go after that someone to get it back.
There is no law that says he has to leave his property to anyone -- I would suggest he mention he's unmarried and has no kids.
He can leave the house to a friend, charity, etc; without a will the state says who gets it.
I hope that helps. My first choice is always to put property like that in a living trust to avoid probate but it may not be cost effective here.
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QUESTION: Hi Lee and thank you for the answer to the first question.
Now I have my mom whom lives with my sister. She has $100,000 sitting in the bank. How does she protect this money should she have to go on Medicaid and/or go to a nursing home. What should she do with this money so that there is no inheritance tax? She has six kids She is handicapped and will eventually need nursing care at my sisters house. Please let me know what should be done. She is on Medicare now.
I wish I had better news but the answer is nothing. There is a 5 year lookback on transfers of large assets like this -- she could transfer it now to relatives BUT if she were to die within that 5 year period, medicaid WILL come after whoever got the money to pay whatever medicaid paid out -- it is a loan not insurance. You may have seen ads with a picture of a rolls royce and a million dollar mansion and the tag line is "you can keep all this and still get medicaid" -- that's true but just part of the story. Upon your passing medicaid will demand repayment and force the sale of assets to do so. We had a Calif estate where we just paid back medicaid $179,000; fortunately there was enough money to do that but I've also seen where after the costs of administering the estate are paid, they gobble up the rest.
Medicare -- different story. It is insurance and there is no pay back. Does she happen to have long term care insurance? If so, that would pay for the nursing home -- you might want to find out.
Inheritance tax -- no such thing (federal anyway) -- there is a federal estate tax that kicks in at $5 million; if the estate is below that, there is no estate tax and the money should come to the heirs tax free.
The important thing is she get proper care and if that eats up all of the 100k, oh well.