Source of Pay and Powers of Attorney Can Cause Unanticipated Problems.

Question: My father (79 and suffering from dementia) became too much for Mother to handle. Although Mother wanted to continue to keep him at home, the emotional and physical drain on her was obvious. So my sister and I stepped in and helped find a suitable nursing facility. At the time of admission six months ago, Mother was required to disclose all of her assets and income because he would be a private pay patient and to guarantee the bill. Now we have realized that at a rate of more than $4,000 per month for his care, unless we try to get Dad assistance from Medicaid, Mother will have spent all of their life savings in the next eight months. We tried to talk to the facility, but the administrator told us that they have no Medicaid beds, that the facility relied on Mother's application, and that if we can't pay privately, we must take Dad back home. We don't know what to do. Can the nursing home prevent us from trying to make sure our mother is protected?

Answer: No. Making financial disclosure at the time of admission does not commit your mother and father to using all of their assets to pay for his care. If your father meets the Medicaid medical level of care requirements and if your parents meet the income and asset limitations in your state, a Medicaid application is appropriate. Once admitted, a facility can not discharge a resident for changing the source of payment. You should see an elder law attorney in your area.

Question: After my mother's death five years ago, my father changed his will to leave everything to his three children. He also appointed my sister as his power of attorney. Since she lived near him, she was the logical choice, and she told us that she would handle everything for him. Trusting that she would, my brother and I did not check behind her. He became incompetent nearly close to four years ago, and now she is admitting him to a nursing home, telling us he is destitute. We know for a fact that in addition to his home (valued at more than $100,000), he had at least $150,000 in certificates of deposit. Neither my sister nor the banks will give us any information. We had a lawyer check the real estate records and found that she used the power of attorney to gift herself the house three years ago. Is there anything we can do?

Answer: First, have the lawyer check the public records to see if the power of attorney is on file. If it is, find out if it is "durable" -- meaning that it continues in effect after your father's incapacity. If it is, find out if the document contains gifting provisions as, without specific gifting provisions, an agent acting under a power of attorney can not make gifts. If there are no gifting provisions, then the transfer of the house to your sister is invalid, as are any transfers from bank accounts.

Your remedy is to bring a guardianship and conservatorship proceeding in the county probate court where your father lives. Once you or your brother is appointed conservator, you will have the authority to secure your father's banking information and to bring such action as may be necessary against your sister to recover the assets. Should the assets be recovered, your father probably will not qualify for Medicaid because of the $2,000 asset limitation.

Question: My sister has been handling our mother's finances for years, and we have recently learned that there is very little left. She tells us that she paid herself for providing care for Mom to the tune of $30,000 per year. Is there anything we can do?

Answer: If your sister was paid as a caregiver, then she has received taxable income which should have been reported on her federal and state tax returns. In addition, under the tax rules, your mother should have been filing quarterly employee reports and withholding Social Security. Once she learns this, your sister may change her story and claim that these payments were gifts. If gifts made under a power of attorney, the power of attorney must have specific gifting provisions. And if the gifts exceed $10,000 per year, your mother should have been filing gift tax returns. It appears that you too should consider a guardianship and convervatorship action.

Taking the NextStep: Plan ahead for long term care. Avoid later family disputes by making sure everyone is informed of the plan.

Jan Collins is an award-winning writer and editor. Jan Warner is a matrimonial, elder law, and tax attorney. Both are based in Columbia, South Carolina.

Please send your questions to P.O.Box 11704, Columbia, S.C. 29211 or send your questions by email to janwarner@nextsteps.net.


Posted: August 15, 1999