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BlueSky01 Asked November 2016

Can my parent sell their house to me if on Medicaid at a nursing home?

My parent was approved for Medicaid a few months ago. They started out in rehab then turned into longterm care at a nursing home due to memory. My sibling has POA but in the event my sibling is not available I am listed as a secondary POA. My parents house is less than $50,000 (including property) and they have no other estate or resources. Does Medicaid "allow" this?

pamstegma Nov 2016
Medicaid will certainly allow you to buy it at fair market value. No you cannot do this as a POA, it has to be a "hands off" transaction to be legal. So sit down with a good attorney and talk it over; he may advise you to resign your secondary POA so there is no conflict of interest.

freqflyer Nov 2016
igloo572 is right, I also wouldn't recommend using a Realtor to give you value on your parent's home. Licensed Appraiser can use many different formulas to come to a current market value.

A recent situation... I knew of a person who was going to purchase his parent's house, because at the parents advanced age the house was too large and the the swimming pool too much maintenance for them. It wasn't until the house was empty that the Son got to see the real snapshot of the house. So many things needed updating and repair that he didn't notice these things prior with all the furniture and stuff in the house. Such as how terribly outdated the house was, the chopped up floorplan, the hardwood floors under the wall to wall carpet had water stains, house needed all new windows.

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igloo572 Nov 2016
Often for elderly homewners the tax assessor value will be inaccurate. If they have owned the house like forever with no renovations or upgrades value will be off. Assessors place value on what other properties in your area, census tract, etc have recently sold for. So if the area where the house is has oodles of tear downs & new builds, or renovations, thier old unrenovated property value will be off.

Like FreqFlyer said you need an appraisal. You may also want to get it inspected first & if there are foundation problems perhaps a residential structural engineering report and both done first. These are given to appraiser so they have a complete precise view of the house to do an accurate appraisal. Appraisal is a legal document & will be handy to deal with any penalties issues with medicaid (when you buy the house) but also to have the property value changed to reflect the value at the time of sale. Could be worth thousands of $$ saved over time.

Everbody (appraiser, inspector, engineer) needs to be certified & registered in your state. All should have some sort of seal placed on their report. I got all 3 done for probate for my moms house ...costs based on state rates and square footage; $ 250-$750 for appraiser, inspector, but engineer will be more.

What you might hear is that you can get a Realtor to do a valuation on the house for free. Realtors do comps work up all the time and have some sort of MLS program to do this for them. In my experience, They are not considered "legal" and tend to be higher as they are what hopefully property could sell for. The higher the more $$ for the 6% Realtor commission.

freqflyer Nov 2016
Bluesky, if you do purchase your parent's house, it would need to be purchased at fair market value... I would advise having a licensed appraiser appraise the house so that you would have proof of what it is worth.... then you can buy pretty near to the appraised price.

Selling the house now would eliminate you having to pay property taxes, utilities, keeping the yard mowed, and having to pay higher homeowners insurance [many insurance carriers won't insure an empty house unless the house is on the market For Sale], and pay for any repairs as the house sits empty if you plan to wait until your parents pass. This could go on for many years, and your parent(s) cannot pay for any of the above expenses.

If you aren't sure, I would recommend making an appointment with an Elder Law Attorney to get his/her advice.

JessieBelle Nov 2016
If you purchase your parent's house it will disqualify them for Medicaid until the money paid for the house is spent down. This would not be a bad thing, since the house would probably have a lien put on it that would have to be paid if you wanted it after your parents are gone. You'll need to decide when it would be the best time to purchase -- now or later.

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