Today I agreed to place my 95 yo mother in hospice due to a medical condition that has no possible positive outcome or outlook for quality of living.
As was popular about a decade ago, my mother placed the title of her home (owned free and clear) in a Trust. I am named the trustee of the Trust. I now need, and I mean need, to sell her place in order to afford her care (thus she doesn't qualify for Medicaid until all $ is spent down). However, in order for the trust to be 'activated' and me being able to do anything, she would need to pass. I am meeting with an attorney next week, but was wondering if anyone has gone through this? The attorneys in our area are running about $400-500/hour to handle these types of legal situations involving Trusts/medicaid spend downs, etc. I would just like to limit the amount of time I have to pay for the attorney by being somewhat prepared with questions and some knowledge. I tried researching on the internet but can't seem to find any information.
Any words of advice or guidance?
Here are some of the pertinent verbiage I found.
"The Medicaid rules provide a special “safe harbor” for testamentary trusts created by a deceased spouse for the benefit of a surviving spouse. A “testamentary” trust is a trust created in a will rather than through a stand-alone document. Unlike a trust created during life for a spouse, the assets of these trusts are treated as available to the Medicaid applicant only to the extent that the trustee has an obligation to pay for the applicant’s support. If payments are solely at the trustee’s discretion, they are considered unavailable to the Medicaid applicant."
You can read more at
https://askharry.info/the-magic-of-testamentary-trusts-in-medicaid-planning/#:~:text=A%20%E2%80%9Ctestamentary%E2%80%9D%20trust%20is%20a%20trust%20created%20in,an%20obligation%20to%20pay%20for%20the%20applicant%E2%80%99s%20support.
After you meet with the attorney, please do share what you find out so we can learn from your situation.
Confirm that you are the current trustee.
Confirm that the trust does not give you the authority to sell the property.
Does the trust give you the authority to transfer ownership from the trust back to your mother and does the POA give you the authority to sell the property? My 2012 trust has a section on medicaid planning that gives my trustee this authority.
If it is still in your mother's name, then you'll be back to working under the POA.
My folks did this when my dad was diagnosed with cancer and was given about two months to live. Mom wasn't 100% competent to do it, but she trusted Dad's decision, and their attorney OK'd it after deciding I wasn't going to steal their money. It was a huge help, because I was able to take over before the shock of Dad's death and I was able to confer with him when he was still around. (He was always competent.)
Talk to a trust and estate attorney.
So, is the person entering a Hospice home or nursing facility?
I don't know Washington's specific Medicaid rules, but usually homes don't need to be sold before qualifying for Medicaid, so I suggest calling Washington Department of Social and Health Services to find out if you actually need to sell the house quickly. Typically, the websites of those state departments provide a lot of good information that can help navigate requirements for their services.
Best wishes for you and your mom during this difficult time.
Dad had to formally resign as trustee in order for me to become successor trustee. And it had to be notarized (you can get a traveling notary). Once he did that then an attorney had to draw up a new summary of the trust in order for the title company to accept that I could sell the house. I had a certificate of trust but the trust is many years old and the title company needed a very recent one. So it cost some bucks to get that legal work done and I would get that going right away.
Now, if your mom isn't in her right mind, I'm not sure what you do then... but again, an attorney might be able to help you. You may have to get guardianship or something to sell the house as trustee. Sometimes even if someone has dementia they still are deemed to be capable of making some decisions so it's still possible she could resign as trustee.
NOW THIS IS REALLY IMPORTANT: I wish dad hadn't resigned but had made me co-trustee and stayed on this trust as a co-trustee himself. The reason I wish that is that once he is off the trust, there can be no changes made to the trust because it becomes "frozen" as is. Turns out he now wishes to do something else as far as inheritance but he cannot. I so wish I had gotten an attorney involved from the beginning. All I did was write up a two sentence resignation as trustee and have it notarized, and then I had to inform the other beneficiaries that I had taken over (a law in our state). BUT an attorney would have probably made us co-trustees which would have made it possible to change the beneficiaries for dad.
Hospice is often 100% covered by medicare, unless you are hiring other 24/7 care not a part of hospice. Do explore that.
As to spending down, a home doesn't count with medicaid. Money would have to be spent down, but not a home sold.
You definitely need this Lawyer visit, so I am glad that it is covered. I think the average is about 400.00 an hour at this point, but have your questions, take your trust. You will likely have to pay at LEAST an hour or two for them to read the trust and advice. As you are Trustee, do know that the TRUST pays for this attorney consult, not you, yourself. This is part of acting as your Mother's Trustee of Trust for her.
I was Trustee of Trust for my brother when he was diagnosed with probable early Lewy's Dementia. He asked me to take over all financial stuff from bill paying to Trustee of Trust and POA. I had full rights to sell anything "including the gold out of his teeth" as his Lawyer warned him. At the same time I was his "fiduciary", worn under law to work in his best interest and to keep meticulous records to prove I was acting in his interest.
" I don't understand how a house can be in a trust that isn't yet activated, so there might be a misunderstanding about that. "
This should help explain the difference:
"A testamentary trust is created in your last will and testament. Thus, unlike a living trust, a testamentary trust will not take effect until you die. "
https://www.baronlawcleveland.com/wills-and-trusts/living-trusts-vs-testamentary-trust/
Frebrowser wrote:
"It wouldn't hurt to confirm that the house has actually been titled to the trust. Sometimes this step, called funding the trust, is performed separately from the lawyer's office visit."
It would seem that a house, or other assets, can't be funded into the Testamentary Trust until death occurs.
And thanks are owed to Polar Bear for the initial research and explaining the difference between trusts. This sparked me to do some research, and learn more about Testamentary Trusts. Personally, I'm not sure of the benefits, and would never consider creating one. I would want to fund the trust before my death.
Notwithstanding, there may be some way to address the restrictions, even though your mother has ALZ. Is the power of attorney a Durable one? When you meet with the attorney, ask about the authority created under that to sell the house. You may have that authority already, but it depends on the type and wording in the existing POA.
Call a title company and pay them to see whether the deed to the house is in your mother's name or in the name of the trust. If the funding-the-trust-step was missed, call an experienced real estate agent who knows the area well and hire them to sell the house. The housing market is HOT HOT HOT right now. My neighbor got 5 offers on his house in less than a week and 2 of them came from people who the agent had on speed dial because she knew they were looking in this area. He got $20,000 over listing price.
Trust types 1 and 2 (and others) can be revoked while the grantor is still alive and competent, but as Frebrowser pointed out, it is uncommon for an adult child to be the original trustee of the 1st type (although my sister had herself assigned to that role when she took my mid-stage AD dad to have a trust created). But bottom line, I still don't think the State of Washington will require you to sell your mom's house quickly (and maybe never), unless the trust wording (or type of trust) requires that it be sold to pay for her care prior to receiving any Medicaid assistance, which I think would have the opposite effect of most trusts. But even if that is the case, there might be away around the immediacy of the requirement to at least ease the rush of it. As always, best wishes.