My mom who has Alzheimer's was recently placed in NH . She gets royalties from oil on land that my dad owned . His will gives here usufructs . Can I change the royalties to be given to me and will this affect her Medicaid application . She will run out of money in about 10 months
Perchance is mom a 2nd or 3rd wife? usufruct is often used for that situation as he can leave assets to children from first marriage but allows the 2nd/3rd wife and the kids from that marriage to continue to live in the lifestyle of their marriage when he was alive. Often for second homes, the kids from #1 can buy her out too if they can come to terms with #2 as real estate has a set value to use. For O&G, usually it's hard to do this as it's only a teeny tiny part of a bigger field that it's tied within and it would be hard to put a value on mom's interest as the field has all sorts of owners (which she is not one), perhaps in several counties/parishes. If for whatever reason, Medicaid wants a value, you will have to get a landman to run the #'s on it for you. Your attorney can contact one of the big )&G white shoe law firms (like C&M or MonBar) in NOLA to find a landman who does valuations. Will be expensive. You want to avoid this anyways.
So what type of royalty amount are we talking about? If this is a pass through like the 1/32nd of 1/10 of section # 1234 in field # 4567 situation, it won't be much. Dad probably didn't own the well, now did he? So what is the check for and for what period of time?
In other words, you need to see how the checks are being done. Often for production, they only pay when it meets a certain mark. Can be low like $ 10 in a quarter or could be like $ 100 annual before any royalty gets paid. If it's a dry well and produced next to nothing, they can go for ages before a check ever gets issued. Family may not even know of it's existence as it's been decades since production happened. When oil was low, it just wasn't worth dealing with older ones. Prices are high now plus all that fracking, so old wells are being reworked. But I digress, how it gets paid can be amortized over the period of time of the payment for Medicaid. So if mom got $ 360.00 last year, it's $ 30 a month in reportable income for Medicaid. Believe me there is going to be someone within LA Medicaid staff who will know how to deal with this; who understand the uniqueness of LA usufruct laws and how O&G & minerals work. LA like TX has lots of royalties being paid routinely to the elderly. For my mom's TX Medicaid annual renewal form, there is a specific line for reporting O&G royalties, so it's not anything rare. If the royalty payment is modest (I bet it is), it won't affect her Medicaid once it's amortized. But you need a good legal to work with you on this, like a NAELA elder law attorney to take the lead on all this or maybe the estate attorney for dad may have a name for you. Good luck too.
Production pays a royalty to the owner but this owner (Vick's dead dads estate) has that benefit given as a usufruct to the wife. She didn't inherit the lease, just has the benefit from the usufruct. What happens to the royalty once she dies will depend on (again) what is indicated in Dad's will.
If the royalty is small (which I bet it is as most are just a teeny tiny part of a field), she would just need to amortize the payment annually to determine what her monthly income is for Medicaid. Hopefully between the royalty, her SS and any other monthly income, she is under the maximum Medicaid amount allowed.
If it's a lot of $, then that is a whole other problem as mineral rights - as they change in value - probably cannot be done in a Miller trust for Medicaid.
My mom's annual renewal for TX Medicaid has a line for mineral rights payments specifically between the value of a funeral & burial policy ? and before reporting any dividend from insurance ?. So it's common enough at least for TX Medicaid to make it onto a routinely sent form. The royalty is kinda like how you would get a dividend on a paid up insurance policy and report it to Medicaid as income.
Vick - please check with the NH to see how they approach Medicaid. Most of the places in NOLA do not ever take Medicaid (St Anna's, Poydras, Lambeth - we looked for my late MIL). Now some of those on the wet bank do but you may find that mom needs to be private pay and placed on the Medicaid bed waiting list for 2 years. You want to clearly make sure that she will be able to stay in her current place and that they will take her as "Medicaid Pending" in 10 months. For my MIL, it took maybe 4 months to clear Medicaid and this was preKatrina. BTW the caseworker was pretty user-friendly for MIL's app.
LA law is very different in how it deals with family issues as it is based on French law. Usufructs pretty common especially for generationally owned property, vacation or 2nd homes or multi marriages. Until just recently, in LA you could NOT ever disinherit your kids in your will (all offspring too even those illegitimate). You have to have a LA license to do anything in the state too because of it's French law basis as all the other states & their law schools use English law. As another little nugget, usufruct's pretty common to way to do a little after death something for your mistress back in the day. In the lower Quarter and Marigny (old old neighborhoods) some of the been in the 'hood forever residents could point out houses that were usufructs to an octoroon or quadroon mistress.
You're talking about committing fraud, just so you know.