[WSBAPT] Estate Planning/ Medicaid question

[Marcus Fry]

My 2 cents: Your client needs to acknowledge in writing the debt to avoid statute of limitations issue.  I don’t see any issue is doing this in the promissory note.  You should also obtain bank records that document the loans, i.e., cancelled checks, bank statements showing wire transfers, etc. and I would attach them to the acknowledgement of debt/promissory note.  This will help demonstrate that these were bona fide loans to her and expected to be repaid as opposed to gifts.   Of course, the aforementioned assumes that the kids did not consider these gifts, e.g., they did not file 709 returns stating that these funds were gifts.

Marcus J. Fry
Lyon, Weigand & Gustafson, P.S.

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Sara M
Sent: Monday, March 12, 2018 3:48 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Estate Planning/ Medicaid question

I am doing some estate planning for a single lady in her late seventies.   She doesn't have much in assets, except her home, worth at least $500,000 and owned outright.  EXCEPT, she has this handwritten note that shows 3 of the kids gave her money for the house 14 years ago: 80,000, 80,000, and 20,000 and she intends to pay them back when the house is sold.  She is the only one on the title of the house.

We can deal with repayment in the will by percentage of what is left (if any).  But what if she has to go into long term care and sell the home?  If we draw up a proper promissory note now that allows the kids to be paid back with interest upon the sale of her home, is that going to be considered a problematic transfer for qualifying for Medicaid?

Any other suggestions, thoughts, recommendations?


Sara McCulloch
Estate Planning, Probate, and Guardianship
Sara McCulloch Law PLLC
PO Box 4519  Rollingbay, WA 98061
(206) 842-5841  desk
(206) 428-6107  fax
www.saramccullochlaw.com<http://www.saramccullochlaw.com/>
sara at saramccullochlaw.com<mailto:sara at saramccullochlaw.com>

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