In a recent case in Virginia, a mother transferred her money to her daughter without reservation. Some years later, the daughter filed for bankruptcy and the bankruptcy trustee went after mom’s money as well. Mom claimed the money was really hers and that she only put it in her daughter’s name to “qualify for Medicaid.” The Judge wasn’t impressed by her claim that while the documents said one thing, they really meant something else altogether.
The Court found mom’s transparent desire to cheat Medicaid by giving the money away, and then trying to cheat the bankruptcy court by seeking its return, utterly distasteful.
Medicaid planning is a specialized area of planning best left to those experienced in this area. Mom could have created a trust for the benefit of the daughter; both of them would have been protected from the daughter’s creditors; and five years after the assets were transferred, they would not count for Medicaid eligibility.
We often have this type of discussion with a client and child: “Can’t mom just give me the money?” “No, she can’t just give you the money unless she wants your creditors to become her creditors.” “But, I don’t have any creditors.” “Not today, but what about tomorrow or when you get divorced and your ex-spouse is awarded mom’s money?”
It took nine years after the transfer for this case to explode, but when it did, it was devastating to the mother and daughter, both financially and emotionally.
We’ve seen an influx of non-attorney planners into Medicaid and VA planning who are unqualified to provide advice and likely are engaged in the unauthorized practice of law. This mom and daughter went to Merrill Lynch and then to a CPA with predictable results. A qualified Medicaid attorney could have avoided these problems, embarrassment and financial loss.
To learn more about this important issue, please call Vikki or Pam at 405-562-7409 to request our free report entitled, “Consumer’s Guide to Medicaid Planning and Division of Assets.”
Jerry Shiles
Author, Attorney
Parman & Easterday
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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