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My mother passed away in April 2014, and had designated my father as the primary beneficiary of her life insurance policies, stocks, and annuities. I'm an only child, and I was the secondary beneficiary for those items.

Am I correct in thinking that ALL of this money that my father has received as a beneficiary must be spent down before he is able to receive Medicaid? Is there any way at all to protect these funds?

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GardenArtist - ohhh, I didn't mean to impy they could be transferred without there being Medicaid implications. It's just there seems to be done "in a panic total spend-down" which doesn't benefit the elder (all just goes to the NH) rather than take a couple of months to plan out a better-spend down (like a fully prepaid funeral & burial, NCV small term insurance policy, new hearing aids, walkers, eyeglasses and extra pairs; dental work). Really is no way to hide securities, or should you try, as it is all tied into their SS# but if you can liquidate and then use 10K to do a prepaid funeral or other OK4Medicaid spend-downs then that is better than just forking it over to Our Lady of the Helpless Nursing Home, imho.
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Is your father still healthy? Why are you thinking of Medicaid? The stock annuities are for him to continue to live a comfortable life. There may come a time he will need to go into Assisted Living or a Memory Care Facility and they are mighty expensive.
Schedule a meeting with your father, an Elder Care Attorney, and his finance person for they all need to be on the same page in helping navigate the paperwork. Make sure he has his funeral expenses taken care of and if not pay that expense now because the cost keeps rising.
Remember that money is to take care of him first and believe me as much as we love our parents it is less of a heart break or stress if when the time comes for them to be placed in a facility to do it. Don't be heroic and have them live in your home and you be their caregiver and interrupt your life for you will regret that.
Good luck in this new phase of life for it will be stressful, but when you research and follow through you will be glad you did t.
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To a certain extent the answer depends on your location. He may be able to set up a pooled trust with a charitable organization approved by your state Medicaid agency. If you anticipate he will need Medicaid while he is living at home, he may also be able to transfer the stocks to a trust or an individual without incurring a penalty -- certain community-based Medicaid programs do not penalize transfers. Proceed with extreme caution, however, if you believe your father will need nursing home care within the next 5 years: that transfer will prevent him from receiving nursing home Medicaid benefits. You really need to consult an expert before you proceed.
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Make an appt with an Elder Law Atty..

In the mean time don't go spending it willy nilly!! If Dad needs to apply for medicaid in the next 5 years you'll have to account for your spending and probably have to pay it back..
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If he has the financial means to pay for his care, why would he need medicaid?
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Igloo, I've read your post twice but am still wondering how the stocks and mutuals could be transferred without being a spenddown which would be prevented under the 5 year lookback period. Or were you thinking that divestiture now would be appropriate, then the family can consider the 5 year period to begin?

Thanks for any explanations.
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I would suggest that you schedule a meeting with your parents stockbroker & be sure to let them know in advance that you need to do a portfolio review so they can schedule the time and do a current asset list. Now I hope & pray that they were with a traditional wire-house firm as they will be able to co-ordinate the multitude of details that will need to be done with closing out &/or changing their portfolio and making sure there are no margin calls, etc. that can be an issue. If your folks were investing on their own, this is going to be problematic.

One word of caution in all this is if instead of your folks having a true stockbroker wire-house firm (Series 7 type of broker) they instead were with a firm which is more of a insurance company who also does "investments". Those tend to steer to putting monies into an annuity (annuities are an insurance product & with a hefty commission & withdrawal penalties). For Medicaid, most annuities are not "Medicaid compliant". Personally I would get Mr Heiser's book as it explains what this means. There are pretty specific guidelines for them to be Medicaid compliant which varies by state as each state administers uniquely their Medicaid program. In general one big item is that the state is the beneficiary of the annuity and often requires reporting to the state of the annuities invested funds, interest earned, sales commission paid, etc. Most insurance companies aren't selling product that can pass Medicaid review & terms.

Whatever you do please try to be super organized & keep track of all your parents documentation and details. What I've found is that the initial Medicaid caseworker (assuming you do apply for Medicaid for Dad) just does not have the training to evaluate investments or insurance products. If Dad's zip code is viewed as affluent & he has investments, it is my belief that his application will be red-flagged for a detailed review. The secondary reviewer has some degree of forensic training and will find something that you will need to provide details on (& justifies why a secondary review is needed!). So you want to be able to find whatever Medicaid asks for in short order. For my mom's TX Medicaid NH application, she had an insurance issue because her policy was super old, like 30 pages in length & also was paid up and so produces a dividend. Now under the policy, the dividend gets plowed back into the policy. Mom cannot get a check for the dividend, it has to go back into the policy. Medicaid review picked up on this and I had 72 hours to provide documentation that it was fully a NCV term policy. I got my broker who is Louisiana - but who also holds a TX insurance license - to review & do a letter stating it was term & no cash value so all was good. But it is things like this, that will drive you loco in dealing with the mice-maze that is Medicaid.

If you all have the ability to private pay for Dad @ the NH or to keep Dad @ home for maybe 3 - 4 months, that should give you enough time to get a handle on his investments, liquidating them and meeting with both their stockbroker and an elder law attorney to come up with a game plan on how best to provide for Dad that is kosher for Medicaid.Personally I would not apply for Medicaid now as it totally exposes Dad's financials (as you sign off to allow the state an all-access pass to anything tied into Dad's name or SS #) and doing this now sets him up for transfer penalty review. Good luck... none of this is simple or easy.
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If you can keep him off Medicaid until 2019 you can transfer the money, because Medicaid is a five-year look back. If he was a veteran, you can get help from the VA if the assets are small. Go to the Money and Legal tab above and click on Paying for Care.
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At this point, your father must deplete the total value of the assets he received as a result of your mother's death, to less than $2,000 in value. However, that does not mean he has to spend it all down. There are a number of ways he can reduce his countable assets without giving them away, such as purchasing a Medicaid-friendly annuity, purchasing exempt assets, pre-paying a funeral/burial fund, etc. I explore these options in great detail in my book Medicaid Secrets. Perhaps other readers of this column will also chime in with more specific ideas from their own experience.
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YES, THERE IS. YOU NEED TO GET A LAWYER THAT SPECIALIZES IN THESE MATTERS.
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