The Problem of the Unmarried Siblings (Part 1)

Denise called me regarding her family.  Her mom was one of 10 children.  3 of the siblings had never married but lived together for many years in a home they owned together.  As they reached their 80’s the siblings’ health began to decline and Denise, as the closest family member, geographically and personally, began to wrestle with the long term care issues that we are all facing with elderly loved ones.  The unmarried siblings scenario is one we see often, with its own special set of problems.

 Al, Betty and Carl were, in many respects, like a typical married couple living under one household.  They combined their income to pay many of the bills, holding a joint checking account from which they paid those expenses.  They also combined much of their investments and savings in joint accounts.  This included the home which was titled in all 3 of their names.  Everything worked out fine until Al’s health deteriorated to the point where he needed nursing home care.  That’s when Denise called.

 Al had spent down his retirement accounts in his name alone and some of the money in joint accounts but when Denise went to apply for Medicaid they asked for 5 years of financial records so the caseworker could determine where all of Al’s money went.  And that’s where she ran into a problem because, for so many years, Al, Betty and Carl had combined much of their assets.  So who’s to say what was Al’s, what was Betty’s and what was Carl’s?  Denise thought she could just divide by 3 but the caseworker questioned the transfers into and out of those accounts, suggesting that Al  owned more than 1/3 of these accounts.

 Therein lies the problem we see so often.  By combining their assets the 3 siblings had muddied the paper trail necessary to establish that Al had spent down all his assets. Why is this so important?  Because if Al is spending his money for Betty or Carl’s benefit, that is a transfer for less than fair value and Medicaid will impose a penalty – a period of ineligibility – for benefits.  This applies equally to Betty and Carl should they need Medicaid in the future.  We need to separate their assets and clearly establish that each is paying their expenses from their own assets.

 We were able to help Denise navigate through the Medicaid process and explain all transfers into and out of Al’s accounts – with some difficulty.  We also helped her separate Betty’s and Carl’s assets, so things will go a lot smoother if Betty or Carl needs nursing home care and Medicaid.  

 Oh, and what about Al’s ownership interest in the home, you may ask?  There is an exception in the Medicaid rules that permits the transfer of the home to a sibling who has an equitable interest.  That was no problem here since both Betty and Carl had owned and lived in the home as long as Al.