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mrsmagoo Asked November 2013
Husband is in care center on Medicaid. Deed to our house in my name only. After we're deceased will our sons get the house or Medicaid?
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After we are both deceased, will our sons get the money from sale of house or will Medicaid.
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The trust because it doesn't go through probate, does avoid MERP. MERP is designed to be done through probate. But if they don't qualify for Medicaid to being with while they are alive, then that doesn't matter now, does it? Also there seems to be a newer issue with homes of those who go on Medicaid for NH, (even if the home is in a trust) in that the title companies are now requiring some sort of indemnity done for property sold by the elderly due to the whole issue of a MERP claim or lien clouding the title.
Nancy7 - a Miller Trust doesn't have to do with property ownership, Miller has to do with with excess income & Medicaid eligibility. A Miller Trust is a way for the Medicaid applicant's qualified income to divert to the trust so that the applicant has a monthly income under your state's income limit for Medicaid. You - as the surviving spouse who is not on Medicaid & living in the home - are exempt from any Medicaid recovery / claim / lien on the house. If there is a surviving spouse still @ the house, no recovery.
Make a list of "yes or no" type questions [then prepare for the lawyer to take each of those into more complicated discussion] questions.
There are numerous factors that could change outcomes for your property.
==What State you are in.
==Whether you owned your home "free and clear as a single person before you got married to this spouse.
==Certain legalities regarding surviving spouse keeping the house.
==Certain legalities of the immediate family being allowed to keep the house, particularly if it is also their home, and taking it would cause them to become dependent on the Welfare system…
==If there is a disabled child/adult child in the home being cared for by the surviving spouse, such that forcing them to lose the home would cause greater dependence on welfare, or, that the cared-for person would be caused to become more ill if forced to move, causing greater care-costs.
==Many States allow the surviving spouse to remain in the home, but once that surviving spouse dies, the kids don't get the house---it gets sold to pay off the State.
==Are the kids are paying monthly to the owner of the house, as in making the mortgage payment? --Then they they could file a lien on the property for the amount they have paid, which would take precedence over the State, since it was filed first, before State filed a lien. All liens must be satisfied once the property gets sold--those who filed firsts, generally get paid first; though unsure if that applies to State debts.
==IF the house is under a Reverse Mortgage, that entity owns it [main lien-holder], --there'd not likely be anything the kids could afford to buy back--evidently, even the State takes back-seat to Banks/Lenders in getting anything off a lien.
==Have you placed the house/property into a Living Trust that you own?
In which case all your assets are owned by your Revocable Living Trust…A lawyer would need to answer how well that would protect your assets from your spouses debts, or from his State-level debts from getting Medicaid.
BUT, a Living Trust does not necessarily protect your assets from your needs for Medicaid--you might have to spend it all down to get Medicaid for you.
Lots to consider.
Some States, like CA, IF "...person owns their home free and clear as a single person, BEFORE they marry", that property is NOT part of "joint property" for purposes of debts the non-owner spouse causes, nor in divorce or inheritance issues. ==Whether that applies to State debt accrued by a non-owner spouse, is a question.
There can be loopholes either way--consult a lawyer!
Welfare laws are fairly similar from State to State---like a 5-yr. look-back, etc. for assets.
States may differ when it comes to allowing a surviving spouse to keep their home.
CA & WA, Welfare allows about $40,000 total assets for a couple, but only $2000 of assets for the sole survivor of a couple, in order to qualify for DSHS help.
And, States administer the Federal program that assists Medicare recipients to get the Federal subsidy to pay for their Medicare monthly premium--States use same criteria to screen who gets that assistance, as for other Welfare recipients.
Some States "take" assets to repay the State for help given via Medicaid--that can be done in various ways.
In some areas, that includes billing relatives.
BUT…
Welfare will likelyback-off, IF [spousal or immediate family impoverishment]--- the family can show just cause why DSHS should cease & desist billing family--or taking family assets [both personal and business]
--it must be substantiated that if DSHS takes assets, the family would end up as DSHS recipients---most any State would do what they can to prevent more people being reduced to being welfare recipients.
Some families, the owner puts their assets into an LLC [limited liability corporation]. That removes those assets from "personal ownership"; they remain in control of the primary person; family must run it like a corporation--there has to be at least one annual meeting, and family members become "board of directors" and other various rules apply [record keeping, etc., as laid out in whatever rules are placed in how the LLC is structured].
This arrangement lasts until the "president" of the corporation dies, at which time the assets are divided among the Board of Directors….Not entirely sure how this needs set up, but know people who have done this successfully.
This USUALLY protects those assets from the vagaries of individual financial issues, and Usually is used by those who have large enough amount of assets to make it worth it…BUT…it still may not be safe against the State or Feds
--Gotta ask a lawyer!
No simple one answer, without knowing a raft of particulars.
You need to talk with a lawyer.
An elder lawyer with Medicaid experience in your state is your best get.
but if the children were caretakers of the surviving spouse
doesn't that change things?
The states are not in the "little old ladies house" real estate business. BUT what the states are required to do - in order to participate in Medicaid - is to try to use the assets from the Medicaid recipient to pay or recover ("recoup") some of the costs paid on their care and paid for by Medicaid. This is done via MERP after death and via the 5 year look back when they apply. Medicaid is for those "at-need" so they have to qualify for needing "skilled nursing services" and financially "at need" which is basically impoverished with 2K in income & 2 K in non-exempt assets. The home if it is their primary homestead is an exempt asset except in unusual situations. If a spouse living in the house, it is always exempt. Now under MERP, there are exemptions to recovery and expenses allowed to off-set recovery. What they are and how they have to be applied for is different for each state and very much dependent on state death laws. But the key to the exemptions and expenses is that they HAVE TO BE FILED FOR TO MERP and within the very short specific time-frame that MERP requires.
If you don't, then the state can place a lein or a claim on the property. So any sale or transfer of the house will have to have the MERP claim or lien "lifted" before a sale or proper transfer can be done. State doesn't want the house but state wants proceed$$'s from the sale or value of the home to recoup Medicaid payments.
The states have been able to do some sort of recovery since the 1990's. BUT rarely was there anything definitive done till recently. In the early 2000's, the fed's required the states that in order for them (fed) to do the Medicaid matching, they (state's) would have to come up with a recovery plan. As each states Medicaid program is administered by each state differently, how MERP is done depends on your state laws for probate, death & property rights. The states grandfathered all existing Medicaid recipients too so if you were on Medicaid before 2005 or 2006 (depends on state) then there would be NO MERP done as the rules had changed.
Kashi - this last sentence is important for your family to know and look into.
It's a lot to wade through and really it's my thought that most of us need an elder law attorney to make this happen correctly. Long term planning is the key but most family & their elderly just don't. It is my experience that if they live long enough, & unless are generationally wealthy, they will run out of $$ & need Medicaid.
kashi - the ability to "transfer" a house without Medicaid finding out doesn't happen very often. All real property ownership is recorded in the state's database and is just a few keystrokes for the Medicaid caseworker to find out to the penny what stuff sold for.( I don't know if all states are doing this but we had to do a separate TIN paperwork for property we bought a couple of years ago.) So all that data is there, state will find out, therefore Medicaid will find out and a transfer penalty done on the Medicaid recipient. Now how that get's enforced is a whole other issue….
Brittany G. Gloersen, Esq.
Ask yourself what your parents would want. All assets going for care of some of those going to children? Also keep in mind that we as well as our parents have paid into the system as well to pay for Medicaid. My grandma paid for her own care in a nursing home, she lived to be 101. All of her assets went for her care. But eventually she ran out of money and was on Medicaid for the last six years of her life. She would rather that the assets were reserved for her children. But, because a family member was not willing to care for her she was required to spend her money for her care. Care is care and should be paid for regardless of who provides it. Raising a child is much different than caring for a sick parent, who will never get better and often comes at great sacrifice by the child caregiver.
A significant difference in some of these cases is that children take the responsibility of caring for parents, sometimes in parents home. Give up own homes, life, career, family and everything else. This is why, in some states, Medicaid allows property to be transferred to a child if child has cared for parent, keeping them out of institutions for at least two years, but they have done it for much longer in some cases. If these child caregivers are not compensated for care by parents, which in many states is permitted by law, we are creating yet another generation of eligible Medicaid recipients in those child caregivers, who have given so much, when costs are higher.
A good estate planning attorney should be consulted, if possible, especially with so much at risk. I wish my parents had put the house in a trust 20 years ago, but the good news is that they didn't because the financial abuser would likely have connived their way into administering the trust.