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By David Inabinett, Attorney at Law

Most families, whether parents assisting children or adult children assisting aging parents, are doing so for “all the right reasons.”  As a result, most are not considering and, therefore tracking, day to day whether it’s Mom’s money being used to pay for each and every item Mom may need if adult child is at the grocery picking up food or medications for the parent, or if receipts are brought back when Mom insists on repaying adult child for using their money to purchase the necessary items.  Going a step further, once aging parent becomes incapable of managing day to day finances and bill paying, family members who are invariably busy and stretched to the limits already are concerned more with efficiency and ease of handling not only their own family’s financial decisions but how to best manage the overlay of Mom or Dad’s income/resources without duplication.  These “best practices” in the world of efficiency may include putting adult child’s name on aging parent(s) accounts, setting up automatic drafts and deposits, online banking for adult child to manage parent(s) resources from their desk, to even transferring monies from parent over to adult child in order to simply manage them from one single account that adult child is already utilizing for their own bills.

Fast forward to the day when aging parent requires institutionalization and their resources are not sufficient to privately pay, so adult child, acting as attorney-in-fact, submits a Medicaid application and is asked by a Department of Social Services caseworker for five (5) years worth of aging parent(s)’ bank statements and proof of expenditures…what?

NC Medicaid Manual Section 2230 says, “To qualify for Medicaid, countable resources must be equal to or less than $2,000 for an individual, $3,000 for a married couple, subject to the applicable “community spouse resource allowance” for a stay-at-home spouse equal to a maximum of $119,220.  Countable resources includes real property (land), personal property (tangible items), and liquid assets (money/investments).  NC Medicaid Manual Section 2240 says, “when an individual or spouse transfers any asset for less than current market value, a transfer of assets sanction may be imposed.  If a sanction is imposed, the individual is ineligible for certain Medicaid covered services, including institutional or in-home health services and supplies.”

So imagine the difficulty of proving that aging parent(s)’ countable resources have not been improperly transferred for less than market value some 1-2-3 or more years after the fact.  If you, as an adult child or just a caregiver, are taking care of an older person’s finances, consider keeping those finances completely separate and apart from your own.  Also retain receipts for any reimbursement you might receive from that person in repayment for an item or service you paid for on their behalf.  If you seek to be paid for your services, that must be agreed upon in writing between you and the older person before such payments are made or, if you are acting as an attorney-in-fact for them, must typically be pre-approved by the clerk of superior court in the older person’s county of residence unless the power of attorney document expressly authorizes such payment and the amount.  This will not only help avoid problems should you assist the older person in applying for Medicaid later on at a time when their money is nearly depleted, it will also better protect you from any allegations of mishandling of their finances by other family members or future heirs.

Questions about Medicaid planning? Schedule an appointment with one of our attorneys today.