The "Pig" Theory in Elder Law

Numerous blogs have discussed excludable resources such as funeral expenses, expenses used to fix up the home, transfers to a disabled child, payments pursuant to a Caretaker Agreement, and related matters.

Underlying these expenditures is an unwritten rule known as the "pig" theory. That is, even for an expense that is exempt, there is a subjective limitation. For example, I doubt whether Medicaid would allow funeral expenses of $50,000. Similarly, fix-up expenses on an excludable resource, such as a home, are limited by the theory. It is doubtful whether Medicaid would allow $200,000 in improvements.

Caretaker Agreements have been limited by the word "reasonable." Although Medicaid has not defined the word "reasonable", there is a subjective limitation limited by the "pig" theory.

Although transfers to a disabled child are exempt, it is my inclination that there is some limitation that Medicaid would not accept.

While one motor vehicle is an excludable resource, it is doubtful whether the purchase of a Lamborghini would be allowable. Although such examples are limitless, such theory must be considered even when making an exempt transfer or purchasing an excludable resource.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2011, Post 160