Edward was admitted to a nursing home in November 1999, suffering from dementia. He was a widower and had three sons. He had $138,600 in savings at this time and a monthly income of $1,800. His nursing home and medical expenses were approximately $6,000 per month. In 1991, Edward had created a Last Will and Testament, a General Durable Power of Attorney for Property Management, a Health Care Power of Attorney and a Living Will. His sons were named as agents on these documents, in the order of oldest to youngest, and the children were named as equal beneficiaries under the Will.

The children handled his affairs. Edward’s savings was used to pay for his care at the nursing home per the instructions of the nursing home social worker. In July 2002, the children discussed the near depletion of their father’s savings with the social worker, who informed them that they would have to sell Edward’s house and use the proceeds from the sale to spend on Edward’s $6,000 per month expense until he was down to $10,000.* The house had been rented since January 2000, and the rent had been part of Edward’s $1,800 income since that time.

Feeling that the loss of the house in addition to the $138,600 was unfair, one of the children began searching for an alternate source of advice through the internet, and after reading some of the materials on our website, sent an e-mail with several questions using the E-Mail Response Service. His questions were answered, and after discussion with his brothers, a consultation was arranged with our firm.

We explained that, despite the lost opportunities with respect to the $138,600 already spent, several options were still available with respect to the home, other than that presented by the social worker. A plan was adopted whereby the children agreed to purchase the home from their father for $93,000, which was a permitted percentage of the value for the home assessed by the county in which it was located. The home was later sold by the children at its actual market value for $118,000. The $93,000 was deposited in Edward’s bank account. Within the next seven months, over $54,000 of the $93,000 was set aside by the children using the authority contained in the General Durable Power of Attorney for Property Management into a Precatory Trust. During this time, the other $39,000 was spent on the nursing home and medical bills. At the end of seven months, the children had set aside $79,000 from the value of the house ($54,000 plus the additional $25,000 on the sale of the home to a third party). Medicaid was applied for through our firm and subsequently approved, and the $79,000 saved was available to provide for the EXTRA care and convenience items beyond the $6,000 per month that Medicaid (and Edward’s fixed Social Security income) now paid. The portion of the assets remaining after Edward’s death will be divided equally between the children in conformance to the terms of his Will.

* We can only surmise the thought process was that, once Edward had spent down to $10,000, the social worker would tell the sons to purchase pre-paid funeral arrangements, and stock up on personal items for Edward such as clothing, leaving roughly $1,500.