Last week, I had a call from my friend Terri. She sounded worried. She and Mom spent the night in the emergency room: Mom had a stroke.
Terri and her mom moved in together a few months ago. Mom sold her house in Milburn, Terri rented her house in Morristown, and Mom bought a townhouse in Randolph, where they could live together on different floors so they each could have some privacy. Terri is 55 years old, divorced, with no kids, but has a very busy job working mostly from home, and she has an active social life with many friends and serves on the boards of a number of charitable organizations. She travels for her job about once a month or so, too. Mom is 81 years old, still drives her own car, but for the most part, is a traditional Italian woman. She likes to cook, especially for the Holidays, and she keeps an immaculate house. She has been divorced for some time, and her son died a few years ago. Mom is a bit of a postol too. She has very definite likes and dislikes about everything, and she can be a little hard-headed. She didn’t want to lose her independence and didn’t want to give up control of her life or her finances.
At this point, the family is just Terri and Mom. Together, their intention was that Terri would be able to take care of her mom when the need arose. That need came sooner than they expected.
Now that Mom was home from the ER, she was very worried. She has some other health issues, which are complicating the treatment for this mini-stroke she just had. The doctors would like to do a surgical procedure, but they aren’t sure she can handle it.
Terri was already starting to worry about how she would care for Mom. She was probably going to need some help, especially when she has to travel for work. So, now, she wanted ot talk about care options. She also wanted to discuss Mom’s finances and to protect Mom’s house from Medicaid.
We discussed having a home health aid come to the house when needed and what this might cost. We also discussed hiring a cleaning service to clean the house starting right away.
Mom owned the home they now lived in. She did not want to add Terri’s name to the deed of the house when she bought it. And, since she just purchased it only a few months ago, that was good news. If we were to apply for Medicaid, this arrangement would not cause any immediate issues. Mom also had about $200,000 in various financial investments.
The future, as far as what level of care Mom would be needing, was uncertain at this point, but it was clear to see that Terri’s job of caring for Mom would start to be more and more demanding as time went along.
As a starting point, I recommended that Mom and Terri enter into a Caregiver Agreement. This would set down in writing exactly how Terri would care for Mom: doctor's visits, cooking, dressing, bathing, and toileting when that became necessary. In return, Mom would pay Terri the going rate per hour for her care. The purpose of the agreement is to do two things: give Mom comfort in knowing she will be cared for as she expects. And, start transferring some of her $200,000 out of her name and into Terri’s name as a way of spending down assets in the event a Medicaid application is necessary in the future. I recommended Terri open a savings account to accept payment from Mom and not to touch those funds just in case needed in the future. The second thing was to start the clock running on a two-year window to transfer Mom’s home to Terri without incurring a penalty period for Medicaid purposes. During that two-year period, a large portion of Mom’s $200,000 would be paid to Terri into her savings account. At the end of two years, we could transfer Mom’s house to Terri. This strategy will protect Mom’s entire estate for Terri after two years.
Mom’s needs for care are uncertain today, but this first step, entering into a Care Agreement, will start lining things up so that Terri can respond to whatever Mom eventually needs and prepare financially in the event a Medicaid application is needed in the future.
You can learn more about Care Giver Agreements on my website at www.Dublinpackard.com.
Todd Murphy, Esq. is an Elder Law and Estate Planning lawyer in Morristown, NJ.
This newsletter provides tips for caring for your elderly mom or dad and strategies to protect assets, qualify for Medicaid, and other financial strategies to pay for care
By incorporating these tips and tricks into your routine, you, the caregiver, can have a better quality of life with less stress, knowing that you are doing the best job you possibly can, caring for your mom or dad.
Until next time :)