When a parent gets to the point where they consider enlisting personal care, such as home cleaning, cooking, or even more advanced issues such as help bathing or toileting, their children have been considering it for a while. Oh, and the children not only don’t wish to pay for mom and dad’s care: The kids want mom and dad’s money, and want Medicaid to pay for the care.
Children feel entitled to their parent’s money. Believe me, they do, even “perfect children.” And several parents agree with the philosophy of “I’ve worked hard, and I don’t want the government to take my money, so I’ll leave it to my kids instead.”
Let me be clear: When your parents are in need of care they are not necessarily “paying the government.” Some of the best personal care workers are private pay, NOT Medicaid certified. Transferring money at the wrong time (such as before a “look back” period has expired) can actually end up causing more financial discomfort to parent and child alike. And certain assets, such as retirement plan assets, are greatly protected from Medicaid, but an all-too-eager child haphazardly withdraws the funds, causes an income tax burden, and opens the funds up to care expenses.
I just spoke with a person today who did this latter mistake instead of contacting me 2 months ago when I reached out to him – he figured he knew what was best. He was unaware of retirement plan protections, did not know he had 60 days to legally put the money back in the retirement plan, and transferred the funds to himself. And so protected money was instead (1) taxed, (2) the gifting of the funds disqualified his father from receiving Medicaid for a few months, and (3) he can’t back out of this mistake.
So before you do what you think mom and dad want by transferring their property to you, speak to someone who practices Medicaid planning. They may well save you time, taxes and frustration while simultaneously helping your parents get the care they need.