Need money advice...

[MoodyBlu]

Would the posting police, in advance, give me a break for this vanity. I've been around here long enough to know how things work, but I simply could not get the response posting under general that I may get here.

[MoodyBlu]

We need some advice from any money experts. My mother-in-law, an 86 year old widow who has lived alone for 25+ years, just received a check for $41,000 from the estate of her departed sister. My MIL receives a small social security check, a small pension from her husband's employer, and some aid from the state (PA) in the way of food stamps and heating assistance. Through the years, she has flat refused to let us help her with any expenses. We have tried to pay her electric bill, property taxes, phone, you name it. I have to admire her independence.

Here's the problem. We believe she is going to have to some how report this money to the "government" and we are unsure how this is going to effect what the "government" now provides. Can anyone provide some advice on how to help the MIL handle her recent fortune? My wife wants to journey home to help with the situation next week and I just know that the great folks of FreeRepublic will have some worthwhile advice/help. I thank you in advance.

MoodyBlu

[snippy_about_it]

Disclaimer: Hi, I'm from the government and here to help. LOL. Seriously, I am not a money expert but this is what I know.

If the check is deposited into your MIL's bank account, the State agency that is approving her ability to receive Federal food stamps and heating assistance will know about it and that will stop. But your MIL may want it to because of her independence and I am quite sure the Food Stamps and Heating assistance isn't much.

IMHO, if she wanted to put the money in some kind of trust for future use if she ever needed private nursing or perhaps, God forbid, a nursing home, I would seek out a lawyer for advice on how to best deposit the money. Perhaps a new joint account with someone she trusts.

With that much money I would seek professional help. You know, if you cannot afford it, perhaps a bank manager might be able to help with types of accounts.

Good luck and I am sure some great freepers will have some excellent advice.

[NYS_Eric]

I wouldn't think the social security or the pension money are in any way jeopardized as they aren't need-based to begin with. Pennsylvania food stamps? That I don't know.

[LIBERTARIAN JOE]

We need some advice from any money experts...

Not a money expert, but...

Eligibility for food stamps and heating assistance is probably based on taxable income... don't know how inheritances are treated (my guess is that the gov't will treat it as income and it will effect her eligibility for assistance) but a tax preparer or on-line tax return preparation site (turbo tax) should give the answers you need. You are wise to start looking into this now as the feds don't like you getting large lump-sum amounts of cash from any source without immediately paying them 'their' share. If no fed & state taxes were taken out of the money she received and the money is treated as income, she will need to increase her tax withholdings to cover the amount of taxes on the money (I always figure about 40%) by the end of the year or she will be penalized.

Sorry I can't help with specific answers. I just wanted to warn you that receiving lump-sum cash payments for side jobs I've done has really screwed up my taxes and has resulted in penalties for 'underpayment' of taxes in the past. Maybe the gov't goes easier on retirees receiving extra income, but with all the parasites we have to support these days, I doubt it. Good rule of thumb is that the more responsible and self-sufficient a person has been, the worse the gov't treats her.

Good luck!

[KevinB]

I am an attorney who has experience in these matters. Here's the skinny.

(1) the receipt of the inheritance is not a taxable event.

(2) the social security payments will not be impacted by the inheritance.

(3) the pension payments will not be impacted by the inheritance.

(4) the state aid may be impacted by the inheritance. States impose limits on the amount of net worth and income a person may have in order to be eligible for aid. Although the inheritance will not cause an income problem, it may well put her over the net worth limits. Call the agency administering the aid, without identifying yourself or your aunt, and find out what the limits are.

(5) You may have a hard time finding an attorney who will help you skirt the rules on this. Because she has already received the money, it is legally hers regardless of how or where she deposits it. Playing games to try to hide it constitutes fraud.

[Soren]

As usual, the FR knowledge pool is impressive!

[ken5050]

Kevin gives you excellent advice...and he's correct that an attorney is ethically bound not to circumvent the rules...however, there's nothing to prevent you from doing so.....also, since it sounds like your MIL doesn't have very many assets, and given her age, it a little risky to let her have a sum of money like that all at once..Older people can lose mental faculties very rapidly, and you always run the risk that she's watching the Home Shopping Network, and goes wild....if, IF, she trusts your wife, the best suggestion would be to transfer the account to a joint account with your wife and her mother, but with your wife's name as first on the account, and HER SSN#..this way, the money virtually disappears, as the interest will be reportable and taxable, to you..but the state will never know...it's a small amount........and your MIL can have check writing on the account, or have a small amount each month transferred to her for her use... if she really trusts your wife, than just put the funds in your wife's name, with any joint account stuff....BTW, the transfer to your wife is a gift, and poses no tax problems to you.....I have absoslutely no compunction in advising you to take this course...assuming of course that your MIL in comfortable with it, and that she doesn't think that you're trying to get her money...but if you're gonna do it, do it asap..

[KevinB]

I mean no offense to either you or Ken, but it does not seem that committing welfare fraud is in line with the conservative ideals we like to champion here at FR. Are we no better than the liberals we so despise?