Speaker: Maritess Bott
Maritess:
Thank you so much for joining us today in our podcast or watching one of our YouTube videos. We appreciate it.
Today’s topic is about do-it-yourself estate planning. There are all sorts of different ways you could do estate planning yourself. You can create your own will or Powers of Attorney and do it online or purchase a software program. They have WillMaker, of course, or you could get on LegalZoom. I know there are plenty of ways you could prepare your own estate plan.
I’m going to talk particularly about something else that also has some consequences—do-it-yourself Medicaid planning.
Medicaid planning is very important for clients because when you get to an older age—or even at any age where you might need long-term care—it’s pretty scary to think about how you’re going to pay for that care. I will tell you, from personal experience and through clients, that if you want at-home care, it can cost anywhere from $10,000 to $15,000 a month just for 24/7 at-home caregivers. It’s a lot of money. Your savings will run out really fast.
The other option is to go into a nursing home. A nursing home will run anywhere from $10,000 to $12,000 to $15,000 a month as well in the Chicagoland area. Either option is expensive. People ask me, “How do I protect my assets?” That’s always one of the biggest topics. I share with them that there are ways to plan around it, but you have to be on top of it, and you have to do it early.
The reason why this topic is really on my mind is because last week I had a conversation with a prospective client—actually the daughter of prospective clients. The parents are in their 70s and both have had some health challenges. Not so much that they need to go into a nursing home, but they are at home and need care here and there. The daughter went to live with the parents quite a while ago—about 15 years—because they started to show some challenges even back then. She has lived with them all along.
A few years ago, in 2020, the daughter was talking to them about their care and how to take care of them. Most people, once they hit 65, sign up for Medicare. That’s automatic. You do get that as someone who is in the United States. Medicare covers hospitalizations, some medication, and some other things, but that’s pretty much it.
Medicaid is certainly different. Medicaid is needs-based, and you have to have a certain level of assets and income in order to qualify. It’s also state by state. The State of Illinois does cover Medicaid expenses if you qualify.
The daughter thought, “Okay, we have Medicare, but we also need to have this Medicare supplement.” The Medicare supplement costs money out of pocket. Mom and Dad only own the house they bought in the 60s and paid off. The house is worth about $350,000 today. That’s where they live, and that’s where the daughter lives now. They didn’t have any savings or retirement accounts—just some Social Security income.
The daughter said, “You’re paying for this Medicare supplement, but it’s expensive, and it’s reducing the amount you’re able to use for your own expenses.” She went ahead, did her own research, and found out that they could probably qualify for Medicaid.
Therein lies the issue of do-it-yourself. It’s very easy in today’s technology world to go on YouTube, visit websites, do all the research, and essentially try to become your own self-educated attorney. It sounds fairly straightforward: “I’ll just apply for Medicaid. I’ll fill out the paperwork. It should be fine.” That’s what she did.
You can have a home and still qualify for Medicaid. That’s a given. She disclosed that they have the home and minimal income coming in. They were actually approved fairly quickly and have been receiving Medicaid since 2020.
What have they received from Medicaid? Well, they’re getting the Medicare supplement paid for, which was the one thing they wanted. They also get some caregiver time—three hours a week—not a whole lot, but at least it’s something. I’m sure they receive other benefits as well, but those are the two that stand out.
Fast forward three years later, and the daughter is in a panic. She’s asking me, “What do I do next with the house? How can I protect the house?” It sounds like a simple question: “Can we put it into what is called a Medicaid trust? Can we gift it out of the estate and give it to the children?” There are all sorts of thoughts running through her head, because certainly $350,000 is nothing to sneeze at. It’s a lot of money.
Mom and Dad came to the United States as immigrants and paid that house off with their blood, sweat, and tears. Now she’s wondering how to protect the house for her parents and make sure that the value is preserved.
I knew deep down it was not going to be a good conversation. I chatted with her, and I did check again to see if there was anything we could do. But the bottom line is: there’s nothing you can do. Why? Because she should have consulted an attorney—either myself or someone else—prior to filing that application.
The minute you file that application for Medicaid, they know everything you’ve disclosed. You’ve disclosed you have a house. You’ve disclosed the assets and income. Now they’re qualified based on those application terms. Every single year—and I think she said even every six months—there is a disclosure or renewal form for Medicaid where you have to reaffirm that this is all they have and all they’re receiving.
You’re constantly reassuring the State of Illinois that this is the complete financial picture. The bottom line is, it’s too late to do anything with the house.
In the State of Illinois—as in many states—we have a recovery law that allows the State to recover assets at the time of the parents’ death. When both of them have passed and the house is on the market, the State of Illinois can put a lien on the property and receive back everything they’ve provided to Mom and Dad.
So, if the house is worth $350,000 and Mom and Dad live another five or ten years, and the State has provided about $300,000 worth of care, then that money goes to the State first. The kids would inherit any leftover funds—if there are any. If the amount of care exceeds the sale proceeds, they can’t ask for more, but they can get up to 100% of the sale value.
When I say this do-it-yourself advice, this “Do your own research, it’s simple, I don’t need a lawyer”—that mistake could essentially cost the family $350,000. That’s how much it could cost them. It’s a lot of money. Unfortunately, there’s nothing we can help her with.
I’m using this particular story to share with everyone who’s listening: please talk to lawyers. Get the advice you need. What seems simple could have massive consequences.
This is the Medicaid planning application—a big deal. Even when you create your own Power of Attorney, or when you say, “I’m going to download this will and write it out”—almost always, when I see a do-it-yourself document, I see litigation. I see lots of money going to lawyers. I see years of fighting among family members. And it’s not worth it.
What seems so simple to you as a consumer is not typically simple in the eyes of the legal world. The laws are very complex when it comes to dealing with a Medicaid application, dealing with probate, or when you create your own will. It’s more complex than you realize, even with some simple research.
So please—if there’s one thing I ask after you listen to this podcast—it’s this: anyone you know who’s thinking about doing documents on their own, let them get some advice first, before doing anything.
That old phrase, “Penny wise, pound foolish”—it’s well worth the money that you will pay the attorney for the advice and for the documents to be done right, versus doing it wrong and possibly losing a $350,000 asset that Mom and Dad have paid for over the years.
Again, be careful. Doing it yourself, your own research—it’s always good to do some research, but turn to someone who knows, someone with experience and case knowledge. We know there’s more to it than just a simple form.
Thank you so much for coming to our podcast, watching, or listening. We really appreciate it. If you have questions, definitely call us anytime or check out our website. We have plenty of information as well as seminars you can attend.
Hope you have a great day. Thank you.
