I'm beneficiary on mom's life insurance policy, now that she's passed will the nursing home get the money?

My husbands mother had life insurance on her husband. She passed first. My husband was left everything. Does that include this policy?

Hello there,

My mother has had dementia for quite a few years. She was seeing a geriatric Dr. in 2010 who had documented that she Probable Alzheimer's. I have been the beneficiary on her insurance policy for about 12-14 years, last year my sister had gone behind my back and had my mom sign a change of beneficiary form and removed myself from the policy and put herself on it. She has also made this change irrevocable. Is there anything I can do ?

CORRECTION: In the second sentence: You had stated that your Mom was already in the NH, not yet on Medicaid, when her 5-yr look-back was completed.

Dear Laurin, Thank you for your detailed explanation of the financial management by your brother. You had said that your Mother was already on Medicaid when her 5-yr look-back was completed. I did some research on this site under "insurance Matters", and as I understand it, if the 'cash value' (not the death benefit) of an insurance policy is less than $2000, the owner (your Mom) can keep it. (Please also look this up yourself) From what you say, she never transferred ownership (only the owner can initiate any policy changes), she only changed the 'beneficiary' to you. She still owned the policy. It does not matter who the beneficiary is or was. During her lifetime, she could still have cashed that policy in, but evidently was not required to do so. Medicaid would have dictated that she cash in the policy if it was to be counted as an attachable asset during the 5-yr look-back. Evidently that did not happen since the CV was probably too little to count. Also, a $5000 DB policy is very small, and the likelihood of the CV building up even close to $2000 by her date of death is pretty slim. You also mentioned that your brother cashed in other life insurance policies, so I think it's safe to assume he was not trying to hide anything from Medicaid. In my opinion, I still strongly believe the money is yours and you are not responsible for her debt. IF the beneficiary had been the ESTATE, then most certainly the $5000 death benefit would become part of the value of her estate, and then your brother could be expected to use that money to pay down the debt. PLEASE, don't hesitate to ask this question of the insurance company and even the insurance AGENT. I'm sure you will get an accurate answer that way, and it won't cost you a dime. The second avenue would be to get a (hopefully free) consultation with an ElderLaw Attorney - it probably would not take more than 30 minutes to assess the situation and give you the right scoop. Your brother can be a big help to you by getting all the dates in order: when Mom went into the NH, when Medicaid did the look-back, when the beneficiary was changed, etc. That would make a consultation go faster for either the insurance people or the attorney.

I think the NH and Medicaid will try to muscle money out of the family any way they can, hoping you will cave in. So do your 'homework' and arm yourself by knowing your legal rights. If they have no legal recourse, they will just have to write off the balance of the debt, as Igloo mentioned. In all fairness, you deserve this money even just as reimbursement for all you laid out on your Mom's behalf. Good luck, and I hope you get to enjoy your money.

Laurin - as far as the insurance company is concerned the 5K goes to the beneficiary and that person is you.

My suggestion is to when the 5K comes in, place it in a separate bank account in your name - maybe a savings account, They pay pitiful but still something. Then let some time go by, so that both you and your brother have had time to heal and see what the debts do. The NH and other debtors are going to write it all off eventually and your brother - as long as he did not sign off to be personally responsible - can turn a page on all this. Then decide what to do with the money, whether to keep it 100% or divide 50/50 with brother.

It is sad but I know where you're coming from. My mom is mid 90's and really if she had died in her 70's when my dad did, there would have been all sorts of $ to inherit; if she had died in her 80's all grandkids college would have been paid by her. But she's now in her 90;s and not going anywhere soon and in a NH & on Medicaid. If they live long enough, they will run out of money and the caregivers will run out of steam. Medicaid can be a total butt-rash at times to figure out, but really thank goodness it is out there for our parents to be able to count on!.

The background on all of this started when my Mom had a fall and needed to go into a nursing home to heal. She was private pay at that point. She went home briefly but had several other falls. It was determined that she needed 24 hours care. Neither my parents wanted someone they didn't know in the house for 24 hours. So, it was determined that Mom would stay in the nursing home. My Dad joined her a year later. I am in a different state than my family. My bro was made POA, handling all of their financial matters. I stayed out of that part of their care. Mom was in the process of becoming eligible for medicaid when Dad entered. They had missed the opportunity to put the house in my bro and my name as they were 98 and 93 and 5 years was doubtful.they were live 5 yrs. Finally, we convinced Dad that the house needed to be sold as he was on private pay and their bank account was running out of money. The house was sold and the money used to pay down the NH bill that had accumulated. Mom was was on medicaid at that point. Dad died first just as they were qualifying him for medicaid. I don't know all of their other assests during the 5 year look back. I do know that they had stock and the life insurance policies. I also know that my bro used dividends to pay off some of the NH bill and cashed in some life insurances. I don't have any reason to believe that the funds were mishandled at all. At this late date it has been difficult to question the financial matters when I didn't when they were alive. I know there was a lot of jockeying back and forth with Medicaid on dates. Now that they are gone owing the nursing home around $30,000. The stocks have been sold and as far as I know the only thing left is my Mom's life insurance which is only $5000.00 and I am the beneficiery. I have put in a claim to the insurance company for it. Even if we wanted to, we could never pay their debt. I am having financial problems myself. The question is still whether the NH or medicaid were contacted about the change in beneficiary done after the look back. I haven't been able to get an answer to that question. All my bro says is that Medicaid told him that the nursing home will be expecting that money. If that were true, shouldn't they have told my Mom to make the beneficary the nursing home? To answer assandache7, moraly I agree with you. But in reality, my parents were 2 people who did every right except live to be in their 90's and not keep up on changes in the medicaid laws for look back (they thought it was still 3 years). They both worked, put money away and never collected any federal assistance. They paid off their house and expected it would go to us. They were not rich. When they died they felt like they lost everything they worked so hard for. If my brother and I had gotten thousands of dollars upon their passing, there is no question of paying back the NH even though it isn't my debt. However, the money is very small. My financial state is due to traveling, cleaning out thehouse, funeral arrangements over the last 2 years. i am behind on all bills and just managing to come up with rent every month. That $5000 would help me more than the nursing home.

A&A, I'm curious what the POA brother did with parents money while they were living, especially if he sold their home. Laurin has not elaborated on that. If he mismanaged their assets (and I also wonder if he got any LI ins $ from one the the policies), then why should Laurin have to pay up? She said she was never involved in any of the arrangements to begin with. It should be interesting to see how this plays out after Laurin gets her beneficiary payment - I hope we hear back from her.

POA is only in effect while the person is alive,once they die POA is void.

If your parents owe the NH why wouldn't you use the life insurance to pay for it? I don't think your brother should be personally responsible to pay the nursing home...

I believe that if the benefiary was named as "estate" or "estate of the insured", then the death benefit would become part of the disposable assets of the estate and your Bro (if he is the Executor of the Estate) could use that money to pay the NH. But if a person (anybody) is named as the beneficiary, that money belongs to them. I do not think your Bro can demand it from you. I would not give up a penny until the issue is resolved with legal advice. I would strongly suggest that when you submit your claim to the ins co., also call them up and speak to a life claims rep and tell them about this situation. I am quite sure they will be able to set the record straight as to your rights and responsibilities for the money. They might even refer you to their own legal dept., or at least steer you in the right direction. If it turns out you are responsible to help pay your parents debt, then the ins. co. can make a check payable to the NH on your authorization, or they will give you a checkbook account to pay what you need to out of the death benefit proceeds. Just as an aside, even the money from the sale of your parents' house would have been an attachable asset your Bro could have used to pay their debts and their personal needs only. Another thing I heard about on this site involves certain states that mandate a "filial responsibility" for family members to resolve their parents debts. In that case, then personal assets (such as the death benefit you were awarded) might be at risk. I really don't know exactly how that works, and you are also in a different state than your Brother. I guess you have some homework to do. Please keep us posted!

Thank you for all your answers. i will admit I donlt have all the answers to your question. I live in a different state than my parents did. My bro was given POA and handled all of the financial aspects. I didn't really question anything that was done so I don't what happened. My brother is under the impression that because Mom and Dad "owned" the policy, it has to go to ay their bills irregardless of who is benefriciary. Whether he agreed to give the money to settle up their NH debts, I donlt know. But even with POA if I am the benefriciary it seems that I would have control over what happens to it. I will be filing a claim on Monday for the money, so I guess I'll just have to wait and see what comes out after I receive the check.

First of all, were the policies whole life (builds cash value), or term life (no cash value)? Medicaid allows a person to keep $2000 worth of assets whether in cash, investments, property, or cash value of a life insurance policy. In very general terms (and I am no expert), to qualify for Medicaid, the applicant has to "spend-down" (i.e. use up) all their assets down to having only $2000 left (the family home I don't believe is counted if the spouse is still living in it). When the 5 yr look back is done, if there is a policy with cash value, Medcaid generally expects that the policy be cashed in as an available source of assets to help pay for the NH costs. After all the assets except $2000 are used up, Medicaid kicks in. If your parents policies were term life, there is no cash value and Medicaid has no interest in them. In my opinion, if your parents did not disclose something they should have, I don't think it's your responsibility, as I presume you were not the owner of their policies (i.e. they eached owned their own policies). It's not the beneficiary of the policies that matters, it's the owners. Only the owner can cash in the policy, and only the owner can transfer ownership of the policy to someone else. That is something else Medicaid looks at - to see if ownership was transferred within the 5 yrs prior to applying (i.e. to hide assets). In general, the Insured and the owner are the same person, and the beneficiary is someone else. Sometimes, initially or early on, husbands and wives make eachother the owners of their policies as well as the beneficiaries for reasons like protecting the cash value way into in the future. In any case, you were the beneficiary, and I do not think you have any obligation to use your money to pay back the nursing home. If I am wrong, I am certain someone else on this forum who knows more than I will set the record straight. You may want to read up on some of the information on this site, under the Money & Legal tab.

When you write that she went in the home during the 5-year lookback period, does this mean that she did not yet qualify for Medicaid? Had she applied and been turned down? Will Medicaid pay any of the debt that is owed? I ask this because Medicaid has certain rules about the size of life insurance policies that are owned by Medicaid recipients. If Medicaid has paid or will pay any of the expenses to care for your mother and they weren't aware of the insurance policy, you may need to disclose it to them. If Medicaid is not involved, then there is no problem unless you are in a filial responsibility state. These states do have the ability to bill the children, but I don't know how often they do.