I've seen a number of abandoned houses in my lifetime, in fairly affluent neighborhoods where I lived. Why would someone do this? Does it have anything to do with Medicaid?
A reader writes:
Is it so wrong of me to laugh my patootie off about the people who are all fired up about keeping their money from "going to the nursing home"? Oh, sure - have the money go to your kids and grandkids instead of getting some semi-decent care at life-end. That sounds financially-stupid and personally-awful to me!
Yet this is a powerful pull on most Americans. Rip-off "burial insurance" or "Life Insurance for Seniors" use this angle to hook people into buying insurance that costs little, but pays out even less. For some reason, many people worry about leaving a "legacy" behind when they die, lest their children think you were a failure in life.
Or maybe it is more than that. When you get old, you lose control of your life, your finances, your daily living, your bowels, your bladder. What little control you have over people is financial - indeed, as I noted time and time again, that's all money really is, a way of incentivizing and controlling other people. Write a check and someone will manufacture you a car or deliver a pizza to your door or put on a new roof or even have sex with you. It is all about power, and when you are broke, you are largely powerless, other than your power to annoy - which is why powerless people are annoying.
I wrote before about people who deed their house to their kids, or jointly deed it, or put it in a trust or some other shenanigans, so as to qualify for Medicaid. Medicaid doesn't "take your house" - at least in your lifetime - but if you have assets above a certain level, you may not qualify for Medicaid, until you have spent those assets on your own care. After you die, it is possible Medicaid may try to put a lien on your house to recover some of the costs of your long-term care.
This link describes how Medicaid liens on a home work. Medicaid might be able to put a lien on a home to recover assets, if a person was over-55 and relied on Medicaid to pay for long-term care. It varies, State-by-State, and in some States, legal heirs have precedence over post-death Medicaid liens. Also, in some States if the person had an intent to return to the home, Medicaid might not be able to put a lien on it. How do you determine intent? That's where it gets tricky.
It is not my intention to give an exhaustive analysis of Medicaid rules for all 50 States, or to analyze the best strategies for spoofing the system. There are plenty of other sites out there that address that issue. And if you are thinking of deeding your house to your kids or setting up a "Medicaid Trust" then you need to talk to an eldercare lawyer to figure out what will work and what won't - for your State - and what your best options are. If you deed your house to your kids, there is a five year rule for example. So you can't deed your house to your daughter and check into the nursing home the next day, pleading poverty.
(A reader notes that the deeding the house deal can get tricky. Suppose you put your son's name on the deed and you live in a community property State? Your son gets divorced and his ex-wife now owns part of your house! Tricky business - consult an eldercare lawyer!)
And why should you be able to do this, anyway? Cheating the government is cheating the rest of us. But oddly enough, most people who would never think of stealing from Walmart or cheating on their taxes - people who considering themselves honest and having integrity - will gladly set up some kind of trust to scam Uncle Sugar. Funny how that works. (Well, maybe it is the kids getting the assets who are really behind it all).
However, I am wondering whether these Medicaid rules might explain the number of abandoned houses you see in many fairly middle-class and affluent neighborhoods. Now granted, some of these houses are just owned by crazy people. We lived across the street from one such house - one of three owned by a hoarder, who filled each house with junk, and then moved to a new one, filling it with junk. You know the deal - cars on the lawn and whatnot. He would buy a Lincoln, and then drive it until the engine seized, as he never changed the oil. Since Lincolns were "no good" he'd buy a Cadillac and do the same - reverting back to Lincolns the next time. So his driveway was an alternating parking lot of abandoned Lincoln/Cadillac/Lincoln....etc. That's just crazy.
But down the street from us - on another block - was a house that had not been occupied for years. Being a novice real estate investor, I stopped by one day to look at it, and a neighbor came out when he saw me. He was very protective of the house and he explained that "everyone stops by, wanting to buy it!" because they assume it is a distressed property and it would be a bargain. The story, he said, was the the lady who lived there had "temporarily" gone to a nursing home (years ago) but was intending to return. Interesting choice of words.
There is a house down the street from us today, that, as I noted in my previous posting, has been abandoned for about two decades. Again, the owner is in a nursing home, and doesn't want to sell the house. Is this another scenario where the owner is hoping to leave the house to their kids and avoid a Medicaid lien? I have no way of knowing. But a mile or so down the road was another house that belonged to... someone in a nursing home.... and we were cleaning out stuff from it after the owner died. He left the house to his kids, who took what they wanted, left the rest, and sold the place. The house needed to be gutted and redone, being abandoned for at least a decade.
You see a pattern here. House abandoned for years, owner in nursing home. House falls apart, owner dies, developer buys it, guts it, and flips it. Yes, Virginia, there are "distressed properties" out there you can buy. Check the obituaries or put rat poison in the soup in the nursing home. Just kidding about the latter - that's illegal!
But yes, do check the obits, if you really want to buy a distressed property. Don't be surprised if you go to the funeral and see a lot of other work trucks there and other real estate investors there, contracts and fountain pens in hand. They're like lonely widows at a funeral in the retirement community - each bringing a casserole to hit on the aging and confused widower. Women outnumber men at least 2:1 and if you can find a husband who can drive at night, you've hit the jackpot. You learn early on that a "respectful waiting period" is for losers. Hit on that widower before his wife's body is cold!
Getting back to our reader's comment, yes it does seem dumb to jump through all these hoops, just to leave money to your kids. But then again, if you are leaving them nothing, they have no reason to visit you in the nursing home. And while that may sound crass, there is a quid pro quo between aging relatives and their offspring. If you don't visit, no money in the will! And if you have no money, the kids won't visit, either. Oh, sure, you love grandma and you just love to visit the "home" and see all those people on death's door and enjoy all those wonderful old-people smells. You do it because you love her. And I believe you, too. But the subconscious is a weird thing.
It is a funny thing, but my Grandfather Bell died destitute, and not surprisingly, my Dad - who had a strained relationship with him - rarely visited him when he got old. My Dad groused that all he got from his father was "a lousy second-hand Buick!" which sounded kind of crass. No love lost there. I stopped talking to my Dad, years ago, and not surprisingly, he wrote me out of his will (or my brother did - the new will was signed a month before he died!). Didn't even leave me a lousy Buick! But you see how the quid pro quo works, eh?
All was not lost, however, as my Mother put her money in a trust for us kids, and the money was evenly distributed to us kids (as trustee, I made sure of that). Was she being altruistic? She stated the reason for her "anti-bimbo trust" was to keep gold-diggers away from Dad. On the other hand, if she left her money directly to Dad, what reason would we have to visit her, in her declining years? We'd be better off patronizing father. And yes, that sounds crass, but again, we do things subconsciously, without realizing it. And old people use the prospect of an inheritance to string along the next generation, if nothing else, to get the occasional visit. Actually entirely so they get the occasional visit. Loneliness is a horrible thing, particularly when you get old.
My Grandmother Bell used to put up with petty theft and requests for "loans" from one of my drug-addled cousins, only because she would visit grandma, stay for days at a time, and go out and do activities with her. In a way, it was like having an elder-care provider or a paid companion. I think she knew where the missing jewelry went, but frankly didn't care, as it was a small price to pay for companionship.
Mark's stepmother had no offspring, but did have a niece who would come visit regularly. Since the house was deeded to Mark and his siblings, and her estate was divided up nine ways (to various nieces and nephews, as well as Mark and his siblings) the inheritance was, well, nice, but hardly enough to make anyone rich. The niece confided to me that she had hoped to inherit enough money "to retire on" - apparently believing that (a) she would be sole heir, (b) that the house was in her aunt's name, and/or (c) that her aunt had a helluva lot more money than she did. When she got the actual proceeds of the estate, she was kind of shocked, and made noises that perhaps someone was stealing from the estate. What really browned her off was that her siblings, who rarely visited the aunt, got the same amount of money as she did. And that's just not fair! Quid pro quo!
Again, welcome to the wonderful world of elder law. To those who practice it, I salute you. People are just plum crazy.
So, we play this sick dance, as we get older, trying to influence and control others like puppets on a string, hoping they come visit and help us clean behind the refrigerator ("you're so strong, could you help me with that?") But for those of us who have no offspring to annoy, harass, and emotionally scar for a lifetime, the issue is a little different. We can't try to control our kids with promises of the pathetic proceeds of a burial policy, or perhaps the lure of co-signing a loan on a new Camaro. Yes, the elderly often will do anything for company.
And some oldsters get exploited this way. Another neighbor (remember, I live in God's waiting room) lost her mind, well, actually she was bipolar all her life, which was tragic. Her husband died and her children wanted nothing to do with her craziness. Some local gypsies moved in with her, promising to "take care of her" which they did, in a way. They started selling off her possessions and raiding her bank account. It was sad to watch, and when she tried to protest to the Police, no one would believe her, as, well, she was mentally ill. The problem resolved itself when she died. When her children came to clean up the mess, they found the place stripped bare, with padlock hasps on some of the bedroom doors.
It's called elder abuse and people will move in with you, once you have lost your mind, and start cashing your Social Security checks, even after you died (they get used to the smell). It happens, more often than you think, and yes, drugs are involved.
People get into this sort of trouble because they fear going into a "rest home" and would rather "stay in their house" which can end up in disaster. A better approach is to find a place to live as you get older, where there is elder care. A good place to start is an over-55 community, many of which can be fairly inexpensive, such as the park model communities in Florida and Arizona.
Other places offer "life care" or used to, anyway. Mark's Grandmother went to such a place - Shell Point Village. Far from being an "old folks home" the place has million-dollar homes, golf courses, and even a marina. She had a modest (delux) one-bedroom apartment with a balcony and water view, and a place to park her Buick. When she could no longer drive, she could take the facility bus to the store or hire a local driver. There was a hairdresser on site, as well as dining hall, if she didn't feel like cooking. And when she fell and couldn't get up, there was a button to press to summon help.
She lead an active life for many years, and when she could no longer care for herself, she was moved to "Kings Crown" which as like a nice hotel room. She finally ended up in the "Pavilion" which was more hospital-like - although before she died, they finished a new wing which looks more like rooms in the Ritz-Carlton. Too bad she was too far gone to appreciate it!
And far gone is the word. One day we went to visit her and the television was on, playing nothing but static and snow. I went to turn it off and she said, "Don't turn that off! That's my favorite show!" Ouch.
But they took good care of her there and she lived an active life, and later on, lived with dignity and in as much comfort as possible. And this was because she bought in to the place when she was in her early 70's. Her daughter (Mark's Mom) had died young, and she had no other children and her husband was long-dead. Relying on her ex-son-in-law to care for her wasn't a smart move and a burden to him - not that he would have slacked off on the job. She wanted to do things on her own terms, rather than wait for the inevitable and have someone else make these decisions for you.
She was also very smart - remember what I said about the elderly controlling the youth? She sold her house on Ft. Myers Beach to Mark's Dad for the amount needed for the "buy-in" at Shell Point, plus $5000 for the Buick. Smart lady. Since the See family would be staying in their new vacation home six months of the year - and the grandchildren and great-grandchildren would regularly fly down to visit, she would be assured of visits at Shell Point for years to come. Yes, maybe that was all at a subconscious level, but it worked out that way for her.
What is my plan? I have no relatives to "move back" to as so many of my neighbors do. Well, I have some relatives, but I suspect they would tie me to the bed, cash my Social Security check and use the money to buy drugs. So that's out.
Mark and I still have (God willing) a few years of ambulatory life left, and we hope to spend it doing interesting things. But we are keeping our eyes out for the next step - perhaps an over-55 community somewhere, where there is no lawn to mow or house to keep up. And beyond that, hopefully we can land in a place as nice as Shell Point - if we (or one of us remaining) can afford it. And actually, it isn't all that expensive, either. Starting at under $200,000 for the "entrance fee" and under $2000 a month in costs. I use that only as an example - there are many other such communities across the country.
Sadly, many folks don't bother to think about this (they live in denial - if I don't think about it, it won't happen!) and they wait until it is too late and either some nephew has to deal with where to park Grandma, or some government agency has to intervene. I went to the local "public rest home" once, as a friend was referred there for "rehab" after an operation. It was a nightmare of a place, and he left after an hour and "re-habbed" at home, instead. But it drove home to me why many elderly fear "the rest home" as there are many bad ones out there.
But fear is not an emotion to be trusted, and one sure way to end up in a scary nursing home is to not make plans but rather stubbornly try to "stay in your home" and squander the money you could have used to stay in a nicer place, with no maintenance, no worries, and no gypsies.
It's never too early to think about this. Having a plan and investigating various options, is a good idea. Better to go under your own power than to be shuffled off to "the home."
Death is inevitable - and it is messy, painful, and awkward, and may occur at a time and place not of your choosing. As Woody Allen once famously said, "I'm not afraid of death, I just don't want to be there when it happens!" Death is bad enough, but being uncomfortable, in pain, or living in fear or your own filth for years on end before you die, is even worse. Is it worth it, so you can leave your kids an abandoned house?
