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Minors cared for by guardians

Home Estate Planning Minors cared for by guardians

  • Avatar Snag75 
    Participant
    Status: Physician
    Posts: 179
    Joined: 12/09/2018

    I think many of the questions and scenarios posed here refer to planning for a spouse+kids.  What if it’s just the kids who are left?

    – Do the kids automatically get Medicaid for health insurance?  Do other provisions exist for the family benefits they would lose with loss of all parents?

    – If it’s possible that the guardian(s) would move into the house (with house in name of trust, hopefully) to care for the kids, would the same mortgage continue until the house is sold?

    – Assuming there is a trust for the benefit of the kids, does there need to be a special bank account in the name of the trust where all funds would have to funnel into prior to being spent by the trustee?

     

    Probably many other questions I hadn’t thought of — bring them up and answer if you can, thanks!

    #175337 Reply
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 2059
    Joined: 09/16/2016

    I do not know medicaid rules but I imagine those answers could be found at medicaid.gov

    Every mortgage is different, however most lenders are happy to continue to receive payments from a survivor.  I would read your note to see what terms are provided.  In theory your loan could be called at your death, but generally speaking most lenders are happy so long as the payments continue to be made.  Again you should read your note.

    Your executor and/or trustee will establish whatever accounts are necessary.

    LEVEL 1 WCI FORUM MEMBER.

    #175343 Reply
    Avatar spiritrider 
    Participant
    Status: Small Business Owner
    Posts: 1912
    Joined: 02/01/2016

    These are extremely complex and jurisdiction dependent issues and require professional engagement. With that said, I give some basic opinions on things I am familiar with.

    • Medicaid is means tested and generally considers assets held in trusts.
    • I might be possible for the guardians to move into the trust owned real estate. I am trustee of a trust FBO my ex-wife’s daughter holding my ex-wife’s condo. I never thought of moving in.
    • Almost all recent mortgages are not assumable and the federal law only mandates assumption for direct family members who can qualify. No one would re-finance the condo without me co-signing.  So, I refinanced the mortgage with myself as the lender. Even though it was a potential conflict of interest, the judge approved a note at the AFR.
    • Yes, the trust will have to have bank accounts in the name of the trust. All other assets will have to name the trust as beneficiary, transfer to the trust, UTMA, or managed by a property guardian. With the latter being a a real pain in the ass.
    • Even though it will complicate administration, it is usually better to name separate guardians and trustees or at least a separate co-trustee.
    • This is definitely not a DIY endeavour. I am pretty well versed in a lot of things, but to paraphrase “A person has got to know their limitations.”  and even if you don’t like the man, a more profound quote does not exist:
      • “there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.
    #175346 Reply
    Liked by MPMD
    Avatar Snag75 
    Participant
    Status: Physician
    Posts: 179
    Joined: 12/09/2018

    These are extremely complex and jurisdiction dependent issues and require professional engagement. With that said, I give some basic opinions on things I am familiar with.

    • Medicaid is means tested and generally considers assets held in trusts.
    • I might be possible for the guardians to move into the trust owned real estate. I am trustee of a trust FBO my ex-wife’s daughter holding my ex-wife’s condo. I never thought of moving in.
    • Almost all recent mortgages are not assumable and the federal law only mandates assumption for direct family members who can qualify. No one would re-finance the condo without me co-signing.  So, I refinanced the mortgage with myself as the lender. Even though it was a potential conflict of interest, the judge approved a note at the AFR.
    • Yes, the trust will have to have bank accounts in the name of the trust. All other assets will have to name the trust as beneficiary, transfer to the trust, UTMA, or managed by a property guardian. With the latter being a a real pain in the ass.
    • Even though it will complicate administration, it is usually better to name separate guardians and trustees or at least a separate co-trustee.
    • This is definitely not a DIY endeavour. I am pretty well versed in a lot of things, but to paraphrase “A person has got to know their limitations.”  and even if you don’t like the man, a more profound quote does not exist:
      • “there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.
    Click to expand…

    – Good point about means testing and trust, I will look into that.  I guess the legal guardians would add them as dependents to their own insurance, but I just wanted a back-up since of course I’m not in control of other people’s benefits.

    – Yes, guardians and trustee would likely be different (at least at first), so the point would be the option for guardians to move in for the sake of the children (technically the children own the house, but they need someone to take care of them!).  I’m not sure a trustee could move into a trust-owned property under other circumstances if it wasn’t for the benefit of the beneficiary?

    – I assume for new mortgage, a new human would need to apply, right?  I was just thinking that would the bank keep my mortgage as is if it continued getting paid (I’m assuming yes, since it’s basically my debt, and the house is still owned by the trust).

    – that quote is too profound for me to wrap my head around right now, but at first pass it does seem pretty true

     

    #175369 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2510
    Joined: 05/01/2017

    I think for many of us (esp us PF nerds with big life insurance policies and retirement accounts) the ideal situation is that our designated guardian would adopt minor children and then the health insurance thing would be kind of a non-issue.

    absent that my guess is that the trustee would just have to purchase private health insurance for the minor kids. really if you are even doing a modicum of planning your life insurance policies should prevent the word “medicaid” from ever needing to be uttered assuming the kids don’t have special needs.

    #175372 Reply

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