I’m not surprised to hear that. Children usually have a greater interest in preserving their inheritance than their parents. I wonder if those most likely to use this type of trust are more middle to upper middle income…perhaps to protect the family home, some investments and the like? Or a family business?
However, I would be surprised if wealthy parents were amenable to irrevocably relinquishing all their assets and relying on their kids to take care of them for the rest of their lives. They’re basically becoming indigent voluntarily. That being said each family needs to assess the benefits and risks of using Medicaid Trusts given their situation. Of course, states can always outlaw them if they feel they’re being abused by the wealthy.
Sounds about right. Personally, I look at potential clients in that range differently depending upon whether it is a couple or a single person, and the lower end is more palatable ethically than the higher end. For those who are wondering about Medicaid planning, an essential question to ask an attorney is what assets are exempt from qualification. Next question is what assets are exempt from collection after you pass. And don’t even think about selling a house m (in California anyway, can’t speak to other states) until you have consulted with said attorney.
My favorite clients are the ones who have come to me well before the health crisis happens and consider their quality of life concerns/realistic sources of informal and formal care as part of their estate plans. If you know what Medicaid is and whether it should factor into your plans, and how much care options cost, and whether your daughter will be there for you, you are ahead of the game. You’d be amazed at the number of people who have no plans whatsoever and think the state will just take care of them.
DH’s parents wanted to pass the home onto their kids - they worked extremely hard all their years and it was a visible sign of something that they could ‘pass on’. It turns out one grand-daughter probably will buy the house from the 4 brothers that own the house and that is terrific. We enjoy memories of his home town and that home.
I wonder if, instead of concocting a scheme to give control over your assets to a trustee (no matter how loyal), a better approach for folks like those you are talking about would be to investigate living in a country where the hourly wages for full-time help are much, much lower and decent private health care is affordable. My instinct is that Mexico and Costa Rica would probably fill that bill, maybe Panama. [Note: I really have not researched this, so those countries are a guess]. Maybe they have to fly to Boston or Houston or NY or LA for major surgeries, but otherwise, they preserve capital for their kids and got 24/7 in-home help.
i suppose a less drastic version would be to move to a state with a much lower hourly cost of care and lower real estate costs.
I’ve heard Mexico has very affordable and kind care for elders - in both a location where the elders are together and individually, at home. My concern would be living far from family who could ‘watch the watchers’ and pop in occasionally to see how things were going…
I do wonder how I will feel when the time comes that my house is too much for my husband and I.
Our home value is a small percentage of our net worth now. It’s a house we bought after the kids left for college, in a city that was new to us. Our children have no ties to the area and we have no relatives here.
I do understand how my parents generation is attached to their home. But also my dad has passed away, my feelings are for my mom’s welfare and not for her house. Medicaid nursing home care isn’t at every facility.
That’s an excellent point. I have heard friends talk about their search for nursing home for parents, with that as a factor in case their parents run out of savings. Ideally there is an option that parents/family like AND will someday take Medicaid if needed.
People definitely do this, and it works pretty well, as long as you don’t have family you will miss. Although, apparently one of the causes of the first big covid waves in So Cal (per an ER doc I know who works at a hospital in a county on the border) were people driving back to the US for medical care. Not sure what to make of that little nugget of info.
If people buy property in a foreign country, they will probably have to deal with a probate there, as many don’t honor US trusts. In another language. That can be a huge hassle for your executor.
Definitely something we’ve been pondering for my mother, since my brother and I both live far away. All her neighbors have at least one of their kids nearby. Her mother (my grandmother) moved close to us growing up once she was widowed. So does she move close to my brother (in a much more expensive part of the country, which creates complications of its own) or stay in the place she’s lived for 50 years?
Likewise we know the chances of any of our kids coming back here after college are low, it’s just too expensive. Would we plan to move closer to one of them eventually?
I’m still contemplating living in London when I get to an age where I can’t drive, public transportation is excellent. Nursing home care is not as expensive, not sure how much though.
Possibly to rent out my house and use the rent to pay for living in London. However my husband loves the nice sunny weather here, just contemplating, not actively planning.
I think it depends on the relationships between the parents and kids. And people who have a family business often have more complex pictures. Honestly, the more money involved the more planning involved, IMO. And some families have great relationships and trust. My spouse comes from a family of five. They have taken care of MIL, FIL, aunts who never married and even a sibling who can’t work and didn’t save. That would not work in our family but it works great in theirs.
Wealthy people often move to tax favorable states ( like FL) so their estates won’t have to pay very high rates. Is this unethical? I don’t think so. I have no problem at all with following legal guidelines. Many, IMO, need to be changed but I’ve been the beneficiary of them and so do most others. Many laws change over the years, some of the trust rules could change also. So, it’s totally dependent on the family. IMO, if you don’t think the rules are ethical then don’t use that legal framework.
Europe does old age better than the US. Costs are lower even in very expensive places like London, Switzerland etc. Even as a foreign person, you might benefit from retirement elsewhere.
Some countries require that you have a particular amount of assets if you don’t hold a passport which seems very fair.
I’d have zero interest in living in a low cost nation where people are paid very low wages and there are wealthy people and all the rest. Taking advantage of those people wouldn’t fit my ethical framework.
nyc10023 - I’d be interested in what the requirements are for living in a care home in, say, London (or Costa Rica).
Htas - I understand what you are saying. I think it might be relative though. Just speculating, but perhaps people caring for elderly in - say, Mexico - aren’t being paid less than others working comparable jobs and that work may provide a relatively good living.
That could be contrasted to the United States where I have seen - first-hand, again and again and again - that people caring for the elderly are paid some of the lowest wages in our society, with the least benefits, and the absolute lowest social regard. That despite the high costs to the user. I’ll say that creates a pretty significant ethical concern, in addition to the practical issues.
That might suggest a less expensive US place (like NM or AL?). One thing was certain. There was a problem with Covid vaccines (and maybe Remdesivir) only being available in the US and not elsewhere at the beginning.
With respect to property abroad, it may well work to own it via a corporation – or have the trust own a corporation. We own a house in Canada. We looked at setting up a company and I believe one could transfer the shares of a company owning the house without triggering probate.
My husband and I also love Spain, it’s like California when you just step off the plane. That’s another possibility.
The problem I’m not thinking seriously yet is paying income tax to both systems, more headache to deal with. Not sure I want to deal with that in old age.
