What can happen if my elderly uncle wants to give me money to settle debts but may need Medicaid funds in the future?

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What can happen if my elderly uncle wants to give me money to settle debts but may need Medicaid funds in the future?

My uncle wants to give me $25,000 to help settle debts and avoid bankcruptcy. He is healthy and of sound mind. My brother is POA and worried that down the road if he goes into nursing home and would eventually need Medicaid, once his funds are gone they would go to POA for the money. I want to have an attorney draw up papers for this money to be a legal loan that I will pay back monthly. My brother (POA) does not want to be held liable. Would Medicaid be able to go after POA for this money or would they just assume the payment from me? My brother want to be sure he is not liable for this matter.

Asked on April 28, 2011 under Estate Planning, Ohio

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

That is really lovely of your Uncle but I can understand why your Brother would be skeptical. I think that it is a good idea that you go and seek help from an attorney and that you have a formal loan agreement drawn up.  The interest paid on the loan is tax deductible to you (or it should be) and the payments are an asset that is collectible.  The issue I have with giving any guidance here is not being able to read the power of attorney and ask why it is in place to begin with and if your brother makes decisions on your uncle's behalf at this point in time, since you say he is healthy and of sound mind.  The attorney will make sure that your brother is protected.  Good luck.


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