If a 90 y/o aunt cannot afford her mortgage/insurance/property taxes/HOA dues, can she QCD her house to her niece who is going to take care of these expenses? What are implications, i.e. IRS, Medicaid, etc? Thank you!
Aunt will still be responsible for the mortgage payments, even if someone pays them. The only way she wouldn't be held responsible is if the mortgage was assigned to the niece through concurrence of the lender. And if so, the lender would more than likely require conveyance be by warranty deed, not a quit claim deed.
Is the niece in a position to accept responsibility for these homeowner costs?
I'm not sure what IRS implications you might be thinking of. Could you elaborate? Or are you thinking of the funds the aunt would receive for the property?
I'll leave the Medicaid issues to others more knowledgeable, but the first question would be whether or not your aunt is currently receiving Medicaid, or anticipates doing so in the near or long term future.
Seek the counsel of a certified elder attorney well versed in Medicaid laws. You can protect your investment if you do the paperwork correctly in advance.
Gawd, a 90 yr old with a mortgage! I’m with Garden Artist on this needs to be dealt with first & foremost. Cause unless mortgage co is ok with what’s done & allows for others on the lending and title then whomever pays the mortgage could find themselves outside of any legal standing on the house as auntie could only transfer her equity share via the QCD and not full ownership. And mortgage Co won’t budge on changes to or transferring title unless auntie pays off mortgage in full while alive or property enters as an asset of Estate in probate and mortgage files a timed claim or they foreclose. There will be paragraphs in the mortgage agreement as to how any changes to the mortgage must be done.
There are are lots of old ? on this site regarding folks doing QCDs, you might want to read some of them for insight and varied opinions. To me, the tendency tends to be QCD are viewed as a easy, simple, needs no attorney way to transfer property. Yeah it can be but it transfers property without any guarantee of ownership. That only comes from doing a transfer via a Warranty Deed. WD are the gold standard for property sales and nowadays most lenders will not loan or move on a property that has QCD, TD, or Decree for ownership alone.
For your auntie, there’s the additional problem that she does NOT own her home outright. So she can only transfer in the QCD her current equity in the property which has to be determined.
I’m guessing that the niece is NOT planning paying Auntie her current equity share on the property. But instead the QCD is transferring what auntie thinks is her ownership to niece for zero and niece is then paying all future property costs. That’s it, isn’t it? If so, and Auntie applies for Medicaid, the QCD will place a transfer penalty on Auntie for a # of days based on the tax assessor value of the property on the date of Aunties Medicaid application. Say assessor has house at $100,000k value & your state Medicaid pays $165 a day room&board reimbursement rate. That’s basically 606 days that Auntie is ineligible for LTC NH Medicaid. The additional problem will be that Auntie is in a NH & impoverished in order to apply for Medicaid. So someone in the family will need to private pay for her stay. If not then she will be made a ward of the state with court appointed guardian. And they have wide powers to do whatever to get payment from anyone who may have taken advantage of Auntie as she can be viewed as a vulnerable adult. Getting home for zero falls into taking advantage. Stuff like this snowballs as APS, police get brought in..... you don’t want to go there.
If Auntie is at the cusp of needing to go into a facility, the days of doing anything creative for Medicaid planning has sailed imo. Although she can keep her home as an exempt asset under Medicaid rules, to me, having a mortgage & dealing with the requirements placed by mortgage makes it unfeasible. As she will not have any income to pay anything house due to Medicaid required copay to the NH. Niece can pay rent to her and in turn she uses $ to pay property costs. But rent counts as income for Medicaid and also there tax filings when your renting property, insurance issues, etc. It’s totally sticky.
Selling it, paying off mortgage and using balance to pay for her care & her needs might be best. If house is low value, after doing a preened funeral plan, new eyeglasses and hearing aids and dental work there may not be any $ left.
Is the niece in a position to accept responsibility for these homeowner costs?
I'm not sure what IRS implications you might be thinking of. Could you elaborate? Or are you thinking of the funds the aunt would receive for the property?
I'll leave the Medicaid issues to others more knowledgeable, but the first question would be whether or not your aunt is currently receiving Medicaid, or anticipates doing so in the near or long term future.
You can protect your investment if you do the paperwork correctly in advance.
I’m with Garden Artist on this needs to be dealt with first & foremost. Cause unless mortgage co is ok with what’s done & allows for others on the lending and title then whomever pays the mortgage could find themselves outside of any legal standing on the house as auntie could only transfer her equity share via the QCD and not full ownership. And mortgage Co won’t budge on changes to or transferring title unless auntie pays off mortgage in full while alive or property enters as an asset of Estate in probate and mortgage files a timed claim or they foreclose. There will be paragraphs in the mortgage agreement as to how any changes to the mortgage must be done.
There are are lots of old ? on this site regarding folks doing QCDs, you might want to read some of them for insight and varied opinions. To me, the tendency tends to be QCD are viewed as a easy, simple, needs no attorney way to transfer property. Yeah it can be but it transfers property without any guarantee of ownership. That only comes from doing a transfer via a Warranty Deed. WD are the gold standard for property sales and nowadays most lenders will not loan or move on a property that has QCD, TD, or Decree for ownership alone.
For your auntie, there’s the additional problem that she does NOT own her home outright. So she can only transfer in the QCD her current equity in the property which has to be determined.
I’m guessing that the niece is NOT planning paying Auntie her current equity share on the property. But instead the QCD is transferring what auntie thinks is her ownership to niece for zero and niece is then paying all future property costs. That’s it, isn’t it? If so, and Auntie applies for Medicaid, the QCD will place a transfer penalty on Auntie for a # of days based on the tax assessor value of the property on the date of Aunties Medicaid application. Say assessor has house at $100,000k value & your state Medicaid pays $165 a day room&board reimbursement rate. That’s basically 606 days that Auntie is ineligible for LTC NH Medicaid. The additional problem will be that Auntie is in a NH & impoverished in order to apply for Medicaid. So someone in the family will need to private pay for her stay. If not then she will be made a ward of the state with court appointed guardian. And they have wide powers to do whatever to get payment from anyone who may have taken advantage of Auntie as she can be viewed as a vulnerable adult. Getting home for zero falls into taking advantage. Stuff like this snowballs as APS, police get brought in..... you don’t want to go there.
If Auntie is at the cusp of needing to go into a facility, the days of doing anything creative for Medicaid planning has sailed imo. Although she can keep her home as an exempt asset under Medicaid rules, to me, having a mortgage & dealing with the requirements placed by mortgage makes it unfeasible. As she will not have any income to pay anything house due to Medicaid required copay to the NH. Niece can pay rent to her and in turn she uses $ to pay property costs. But rent counts as income for Medicaid and also there tax filings when your renting property, insurance issues, etc. It’s totally sticky.
Selling it, paying off mortgage and using balance to pay for her care & her needs might be best. If house is low value, after doing a preened funeral plan, new eyeglasses and hearing aids and dental work there may not be any $ left.