Follow
Share

My Dad has been lending money for years to a local builders as a private lender, all paperwork is done properly, as with any lender and recorded as a lien on the property. Some properties are built and sold, while some are held onto as investment properties. My Dad has also done the same type of lending for myself. Can a nursing home "call" any of these notes and make the person pay them off right away?

This question has been closed for answers. Ask a New Question.
Loans are considered to an asset for the loaner & a debt for the borrower. If your father loaned monies on the up and up, which it sounds like he did, then all of this will be recorded on his tax returns. However, there may be another situation, in which your father did the lending through a corporation rather than in his own name. That changes the whole thing. Depending on how the corporation is registered, such as an LLC, PC or Inc., that's how the finances & tax ramifications are handled. If your father loaned the money through a corporation, it becomes much more complicated for a nursing home to get any money. They'd have to sue the corporation on the basis of "piercing the corporate veil", prove that there was an intermingling of personal & corporate funds, and a lawsuit like that could take several years to resolve.

Why don't you ask the accountant that does your father's taxes---or the accountant that does your own taxes---if he/she knows the answer to your question? I would start there, because as soon as an elder law attorney finds out that your father has plenty of assets to his name, he's going to find all kinds of reasons to start charging that hourly fee-----he'll want you to bring him financial documents for him to "review", he'll want to arrange a "meeting", have lots of telephone conversations, etc.

What I would tend to think---and this is in no way is coming from knowledge about the subject on a broad scale----is that in order for a nursing home to make a borrower pay back a loan to your father so they can get the money would be for them to file a rather complicated lawsuit that would take a very long time to wind through the court system. A nursing home can't "make" any borrower pay back a loan to your father. Could the nursing home put a lien on your home? Maybe in a lawsuit they could. I'm not sure how that would work if your father already has a lien on your property for the loan & what legal avenues you'd all have to go down to get the lien transferred to the nursing home. It all depends on what state you're in, but in my state, a creditor cannot force sale of a person's primary residence to pay off a debt. The creditor can put a lien on the home, but cannot force a sale. The lien would stay until the house was sold or the homeowner(s) died, and then the creditor would get the proceeds from the sale. However, "investment properties" can be a forced sale by a creditor in a legal action to satisfy a debt as long as they are not the person's primary residence. That's what I know about the state I live in. However, your situation differs because it would actually be your father that owes the debt to the nursing home, not you, and your house is not his primary residence but he holds a lien on your property..........very complicated.

Since you're worried about this, it may be in your best interest to check out alternate avenues to pay off the loan to your father, like a bank mortgage or another private lender. I'm sure you're getting a good interest rate from your father & might have to pay a higher interest rate to a bank, but for peace of mind it would probably be worth it. You definitely don't want to face the situation of having your home taken away by a nursing home.
Helpful Answer (0)
Report

Medicaid will not call the loans, but they will expect the payments to go to Dad's care. Investment properties that are producing good net income will not be seized or sold, again, as long as the income goes to his care. BUT when Dad dies and all these assets go to his Estate, the MERP (Medicaid Estate Recovery Program) will file a claim to be processed during probate.
I would definitely spend an hour with an Elder Law/Estate attorney and Dad's accountant to sort this all out. It will be money well spent.
Helpful Answer (0)
Report

Isn'tE - totally agree that attorney is needed. But maybe not elder law one.

But whatever legal speciality, Sonny really really needs to go into that law office meeting with is the hard & real details on just what Dad's financials are; all info on properties; and how the loans are structured. I think what so often happens is that the elder is less than transparent on what their finances are; the kids accept what they are told or find out what they think is "fact" without actually getting the true details. All the planning and legal in the world is for naught if it's not based on what the actual details are. If the parent is a big personality this is often the case or seems to be based on what posts are like on this site. Or if the elder is not cognizant enough of what the costs are in 2015 - they are still basing their world view on the 1980's / 1990's and making decisions based on what costs were back then.

The reason why I asked about if they were SCIN's is to address what you brought up about owing 20K even after death. SCINs if done right get around that. Plus if someone is doing SCINs to begin with, they probably have a real estate attorney or estate law who is structuring all this to begin with.
Helpful Answer (1)
Report

Given that he has private loans out, I'd say your dad's financial situation is sufficiently complex that you would do well to invest in a consultation with an elder law attorney. A few hundred dollars spent now could save thousands.

It sounds like you're saying that your dad is currently private pay in a nursing home and that his money will likely run out before he dies. If that is the case, the nursing home will expect you to move your dad to a community he can afford or (if they accept it) apply for Medicaid and spend down.

Nursing homes don't typically get into the nitty gritty of where their resident's money is coming from, so they wouldn't dig into who might owe money to your dad and go about trying to get those individuals to pay up. They present their invoice each month and, if it goes unpaid, they proceed with trying to collect in the usual way (as igloo572 has described). Coming up with the payment is your dad's (and your) problem.

Now, if your dad has limited resources and you will be spending him down to qualify for Medicaid, then all of his assets will be considered, including documented loans to you. So, if you still owe $20,000 on a loan from dad, that is considered his asset. I would guess that the documented terms of the loan would remain in effect, so you could keep paying on it as was agreed upon, but after his death, Medicaid will move forward with the recovery process and any remaining balance will have to be paid even after dad passes.

DO GO TO SEE AN ELDER LAW ATTORNEY.
Helpful Answer (2)
Report

The NH (or any other vendor) will require payment for services - whether he private pays for his care; you pay for it; or an alien from planet Felucia or Coruscant pays for it. For private pay situations, Dad or whomever is his point person in the family signed off on an admissions contract regarding payment, and it is expected to be done as per contract & rightly so.

If he becomes delinquent with facility, they will turn it over to collections and then the snowball from that…..judgements, liens, seizures, claims, etc.

Realize that Dad since he has all sorts of assets, will NOT qualify for Medicaid. All his care will need to be private pay. NH run about 80K - 150K annual for private pay depending on level of care and type of facility.

I'm going to go out on a tangent on this….is Dad the all controlling type and somewhat on the cheap side? If so, I'd suggest you really really now try to get a reality based factual idea of what his assets are & in detail. IF he needs to liquidate assets or "call" loans, what goes first and what type of taxable situation is posed?. Were his "loans" to you SCINs?
Helpful Answer (3)
Report

This question has been closed for answers. Ask a New Question.