Helping MediCal Recipient Rent Apartment

[LVJay]

Jurisdiction

California

My brother is getting a little over $900 in SSDI in California and qualifies for MediCal. I am the Trustee with POA for our mom's estate. She is alive but has Dementia. I would like to help my brother get an apartment but his income is less than half the likely rent. Can I sign a rental lease guaranteeing the rent as Trustee for my mom? If yes, will that have any impact on his MediCal benefits? And finally, I've read that I can pay for his food and shelter and not jeopardize his benefits as long as I don't pay 100% of those expenses. Is that true?

 

[Tax Counsel]

I am the Trustee with POA for our mom's estate.

Well, no you aren't. You are mixing terms here. So let's clarify the terms a bit.

A trustee is a person who manages a trust. A trust is not the same thing as an estate. The powers of the trustee are specified in the trust document.

Your mother's estate will arise after she dies and will comprise the assets she had at death that are NOT part of her trust and that do not automatically pass to others as a pay on death (POD) or transfer on death (TOD) arrangement.

A power of attorney (POA) is a power given by a principal (your mother in this case) to an agent (you) authorizing the agent to do certain things on the principal's behalf. The two most common powers of attorney in use today are the financial power of attorney and health care power of attorney. You might have one or both of those from your mother. The former would allow you to manage your mother's financial affairs while the other would allow you to make health care decisions for your mom. Importantly, the exact powers you have as the power of attorney will be specified in the POA document. The POAs will terminate on her death. They also terminate if she becomes mentally incompetent unless the POAs are durable POAs (meaning they specifically state the POA is good even if the principal becomes incompetent).

The POAs have nothing to with the trust or estate of your mother.

So, I suspect that you are trustee of your mother's trust, and may have a financial and/or healthcare POA from her. You might also be nominated in her will be the executor of her estate. But each of those are distinctly different roles.

With that background, let's turn to your question:

She is alive but has Dementia. I would like to help my brother get an apartment but his income is less than half the likely rent. Can I sign a rental lease guaranteeing the rent as Trustee for my mom?

The answer to that likely won't be satisfying for you because the answer depends on exactly what powers your mother gave you as trustee of the trust. I suggest you consult an elder law attorney about that and your questions about how to arrange for his care without putting his benefits at risk. There are ways to do that, but you have to go about it the right way. A full discussion of that is really more than a message board forum can do for you.

 

[army judge]

Can I sign a rental lease guaranteeing the rent as Trustee for my mom?

I am sure you have the ability to sign such a lease, if a landlord were willing to agree to doing so.

However, do you think you should use your mother's funds (entrusted to your care) for the benefit of your brother?

Common sense tells me that encumbering your mother with paying the rent for someone making less than $1,000 a month would go against the fiduciary duties you owe to mother as her POA.

I've read that I can pay for his food and shelter and not jeopardize his benefits as long as I don't pay 100% of those expenses. Is that true?

I suggest you speak to the authorities in California about what you can GIFT your brother.

 

[LVJay]

Thank you, both, Tax Counsel and Army Judge. Let me clarify a bit. My mom's trust has a springing durable POA which has become effective with her 2 doctors letters stating her condition. I also have POA for healthcare decisions. My brother's future inheritance will be put into a Special Needs Trust. Until then, I'll be managing her money to pay for her expenses and his. Her trust states I should take care of him as she would if she were able. He's been living with her rent free in her home and will need to move as she is in a memory care facility now and I will need to sell the home to finance both of their expenses. Where I read about being able to pay for less than 100% of his food and shelter is in the book Administering a California Special Needs Trust. I just don't know if it matters that he's not under an SNT yet.

 

[army judge]

I just don't know if it matters that he's not under an SNT yet.

Yes, there is no trust as far as I can discern.

I suggest you speak to a local trust attorney before you make a mess of things for everyone.

I am sure you are well intentioned, but you might need to have a bank or a law firm mange the trust once it is created.

My wife and I created a special needs trust for one of our sons maimed for life by an inebriated illegal alien and later by a unskilled, idiot anesthesiologist/MD during a later orthopedic surgery.

My wife managed his needs and the bank authorized expenditures from the trust.

In your case, you can't behave as if there is a SNT while there is no actual trust.

That is why you need legal advice before doing anything.

I can tell you from personal experience, as our trust exceeded $5,000,000 awarded from a one lawsuit, plus another $4,000,000 insurance payout.

Our son existed in a comatose (brain dead state) for 11 years before expiring.

Medical needs can seriously deplete the trust.

 

[Tax Counsel]

My mom's trust has a springing durable POA which has become effective with her 2 doctors letters stating her condition....Her trust states I should take care of him as she would if she were able.

All well and good that she has authorized the gifts to your brother, but you need to be sure you do it right both to meet (1) your fiduciary duty to your mother and (2) to ensure you don't jeopardize his government benefits.

The fiduciary problem is particularly acute here where you need to first ensure that you mother has sufficient assets to care for her needs, and as ArmyJudge rightfully points out, that can become expensive on its own. As for preserving your brother's benefits, there are ways to do that, and simply having the trust sign on for the rent might not cut it. It's possible, for example, to set up a SNT trust for him now and not wait until your mother dies. See an elder law attorney for help with this. That way you'll be able walk the fine line that you are trying to walk here without falling.