Medicaid qualification requires exhaustion of assets

Dear Bruce: I’m 75 and in excellent health. However, I do have a concern about becoming debilitated. If I stayed in an assisted-living facility, my assets would be depleted and my heirs would receive nothing. Can I make an irrevocable trust with my heirs listed and escape the depletion of my assets by Social Security? I’ve also thought of taking a reverse mortgage, getting a lump sum and giving it to my heirs. Would that work without any Social Security problems? – J.C., North Edwards, Calif.

Dear J.C.: I congratulate you on your excellent health, but I worry very much about your priorities. You have mentioned ways to give the money to your heirs. While I realize it would be nice to pass something on to them, do you want to go on welfare? When you spoke of the reverse mortgage, you implied that your home is worth a good deal of money. You also mention the depletion of your assets by Social Security. I believe you mean Medicaid, which is welfare. In order to qualify for Medicaid, you have to have exhausted your assets. What you’re talking about doing is trying to give all of your assets to your heirs so you can go on welfare, and the rest of us can pay the bill. If that’s what you want to do, you have to get it done three years before you need it. This is called the “look back period.” Before you do that, take a look in the mirror. You’ve worked hard for your money. Do you really want to go on welfare so your “heirs” can benefit? I suspect that upon reflection, you may change your point of view.

Dear Bruce: My mom is an 87-year-old widow in “good” health residing in an independent living facility. Her monthly income (Social Security and an annuity) is adequate to cover her current expenses. She has $150,000 in certificates of deposit. Should some or all of these CDs be converted to stocks/bonds/funds? – Gary, Nashville, Tenn.

Dear Gary: An unqualified financial answer to your question very likely would suggest other investments, which could give your mom a better return. On the other hand, she is 87 and getting along on the income that she has. I don’t know that an extra couple thousand a year is worth chasing. If you told me there was a big shortfall, my answer might be a little different. I would then suggest that she continue in the CD area, where she should be able to get about 3-1/2 percent or higher, and whatever the shortfall is, take from her principal. The likelihood is she will not outlive the reductions that I’m suggesting, and her life should be easy and worry-free.

Dear Bruce: My son in North Carolina wants to buy a small house for me. I am 70-1/2 years old and receive $600 in Medicare. He already has a house in the same town. How can he do this without going bankrupt? There seem to be no laws to help him do this for an elderly parent. – T.R., via e-mail

Dear T.R.: You gave me no information about your son’s income. I’m happy for you that he is willing to help you, but whether he can afford it is another matter. Since he is providing you with a home, I would assume that he might very well be able to claim you as a dependent, which may give him a little bit of help from a tax perspective. There are neither laws designed to encourage people to take care of their family nor, in my opinion, should there be. Congratulations on having a son who cares.

Dear Bruce: I really try to have good credit. I pay my bills on time, and I have never had a problem. Recently I applied for a mortgage, and I found out that there was a physician’s bill for service that I supposedly didn’t pay from eight years ago. I suppose that I should keep my checks forever but I didn’t. I know that I had paid that bill, and up until now I have never received so much as a memo. I have had the same address, so it’s not a matter of them not being able to find me. This collection agency was extremely rude, and they said that I have to pay them or they are going to screw up my credit. What are my alternatives? – C.B., via e-mail

Dear C.B.: If everything were as you have described it, I would tell these people that they are going to have to prove beyond any doubt that this bill was unpaid. If they say that it’s up to you to prove that you paid it, I would tell them, “That would be fine if you had come to me right away.” I would have whipped out the canceled check and that would be the end. Do not allow yourself to be held hostage for your credit rating. That’s what they gamble on. Don’t let that happen.

Dear Bruce: I am a 68-year-old retired female. My daughter and son-in-law built an apartment on the back of their house for me. They claim me as a dependent, because they pay my rent and utilities. My Social Security check is $1,055 a month, which isn’t much. My question is, my credit cards are in my name only. If I should die, who is responsible for the balance of these cards? I have no savings. – C.G., Merrimack, N.H.

Dear C.G.: If the cards are in your name and no one else has signed for them, your estate is responsible for the payment upon your demise. If there is no estate, the credit card companies are stuck. The kids have no obligation other than the disbursement of monies from your estate – as long as they are not a signer on your cards.

Bruce Williams is a national radio talk show host and syndicated columnist.