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Author: dharmadollars Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: Aldzheimers& a Trust Fund Date: 4/17/1999 9:04 PM
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Several questions: Who has power of attorney for the money managed by the financial planner? Is he/she commission or fee compensated? Does the trust include language stating that the turstees have absolute discretion, or does the language state that the income and corpus of the trust are to be spent for the care of your father? After your father dies, who is the beneficiary of any trust residue? Who are beneficiaries under your father's will? Of what?

I agree with JABoa that the amount being talked about sounds like a lot, but nursing homes can consume it all very quickly. I would assume that your paramount concern is the care and keeping of your father. I would also assume that once this issue has been addressed, the ultimate beneficiaries of both the trust and your father's estate would want things done in the most efficient manner. That said, here are some considerations.

If the trust was constructed to provide maximum flexibility in providing for your father it would contain provisions that the trustee(s) have absolute discretion regarding disposition of both income and corpus. In that situation, once your father's assets had been exhausted, he would qualify for medicaid. In most states, once he has been admitted to a facility, even a facility that does not accept new (in the door) medicaid patients, he cannot be turned out if he becomes medicaid eligible. Once on medicaid his social security would be applied toward the total cost of his care. Medicaid would then plac a lien against his residence for the amount expended on his behalf. Upon his death, when the property is sold, they would recover their outlays to the extent of available equity. (Depending on the answers to my questions above, this may be a good reason for NOT paying off the mortgage.)

The trustees of the trust could disburse monies from the trust to assure that your father's needs are taken care of. If these disbursements are totally discretionary they would not count against your father's medicaid eligibility. These assets could then be administered in a manner which would virtually guarantee that they would remain available throughout your father's lifetime, regardless of how long that took.

Your father would be taken care of in every detail. The nursing home may consume the $200,000. Medicaid may lien the available equity in the property. The remaining corpus in the trust would be available to the ultimate beneficiaries. This money could be passed without any misgivings that it was money that should have been spent on your father.

The keys are the trust provisions. All after that is simply careful financial planning and asset management. Hope this helps.
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