My parents, my spouse and I own a duplex together. We are needing to relocate and sell. Can Medicaid take my proceeds from the sale and my parents’ as well?
We are selling the whole duplex. Both sides. Mom and Dad are looking for a handicap accessible apartment and we are looking to purchase a new, larger home. We are anticipating proceeds from the duplex to be around $40,000 after paying off current mortgages and all fees and commissions. We are listing it with a realtor and it is being listed at a good price. When it comes to taxes, insurance and mortgage, my husband and I have been responsible for 50% of everything for the 13 years we have owned the property. Mom will not need a nursing home in the foreseeable future. Hope that clears up some confusion. This is a sticky situation and most people we have talked to can’t give a clear answer.
Soto, I’m guessing that either: - one or maybe both parents are on Medicaid & you’re now finding out that it might be an issue for selling property? Is that it? OR - one or both are applying for LTC Medicaid and the transfer of ownership is posing issues for Medicaid eligibility? Is that it? Very different problems.... so just what’s the backstory?
So for the duplex exactly how is the property recorded? And when? Entire property (so both sides) owned by all or each side owned uniquely? To me that’s the key to determining if liens or claims can be done. Where I live (New Orleans) there are ooodles of “doubles” of which each side uniquely owned by 2 separate families although they are on the same parcel/plat #; & it can cause title issues at closing so act of sale document has to be written just right. And causes issues for Medicaid’s Estate Recovery unit as state cannot place a claim on the parcel as ownership has flawed title.
So is it all 4 each as owners & equal % each, so everybody’s 25%? How does it read on the annual tax assessor bill? And when was ownership % share recorded at the courthouse? The answers will determine if Medicaid transfer penalty or Medicaid estate Recovery can be involved. So what’s the backstory?
Ok dads % of ownership is 25%. AND his share of mortgage is 25%.
Once mortgage paid off at closing, how much do you think / hope will be left? Remember to factor in Realtor 6% and whatever closing costs tacked on.....
It’s being sold at FMV or close to FMV, right? Not being sold to your primo, right?
? have you & wife have been paying any of your mom & dads % share of costs on the house.... like you all pay all the property taxes, mortgage, insurance, etc? If so, have you been doing this like forever?
Does your state do a homestead exemption & if so who has the homestead exemption on the property? Everybody?
And once house sold, what happens with mom? Where does she go to live? And what’s mom’s health like?, her likely near future need for a NH herself? I’m not so much worried about $ proceeds to you (likely to be) but more about how this affects dads Medicaid eligibility and mom’s allowed exempt assets under Medicaid. Please post & I’ll give you my thoughts on what’s likely to happen.
We purchased the property jointly 13 years ago. All 4 of our names are on the deed. My parents are primary on the mortgages, but all 4 of us signed papers at closing when purchasing. My dad has since been put on Medicaid. I am afraid that they will take all the proceeds and we won’t have anything to use as a down payment.
Hsoto, does your mother live at this duplex? My understanding is that Medicaid will not take any primary residence from a spouse. Is your mother also wanting to sell the duplex, too? Or is it like Igloo mentions where the two sides are considered separate sales? "Parents are primary." Is your mother wanting to sell or refinance so that you can find a new residence?
Well it’s good that your parents have paid their 50% of property costs as you & hubs could not easily be reimbursed for those costs as it looks like “gifting” as far as Medicaid is concerned. It would be a beast to get through....
So to me there 2 paths that can happen.... & It’s super good that there’s a Realtor imo as that means that the buyer is getting a mortgage and therefore a title co & title insurance is involved in the sale. Title co will do a deep dive to determine if any liens on property as mortgage co needs clear title to do lending and for title co to issue thier title insurance policy. Almost always mortgage co requires clear clean title to lend. Path #1: If Medicaid has a lien placed, it should surface from the title co search / verification process and that will mean mom or you will need to deal with Medicaid to get a Release of Lien from the state document. Everybody’s gonna be very very not happy as this will delay closing. Could kill the sale. Your going to have to deal with Medicaid and negotiate. If dad has been in a facility for more than a month, the Medicaid lien will be beyond his 10k from the house sale. And you are going to have to provide detailed documentation as to why his exposure is limited to just his 25% share of ownership minus mortgage debt. Medicaid could move glacially to do anything, so you may need an atty.
Btw IF this happens and earnest $ paid, it needs to be returned ASAP. A buyer can come back with a “missed opportunity” suit against you all as the prospect of a Medicaid lien should have been disclosed on the Listing Agreement. Missed opportunity- if someone is a witch of a buyer - can result in another lien of the property. ******* Path #2: But if nothing comes up from title co, then you are good to go on closing as the buyer is getting title insurance and that title insurance protects them from any Medicaid issues clouding buyers title. Buyer needs to get title insurance as that protects everybody... them, you, mom&dad, Realtors. House get sold BUT then Medicaid must be notified of the change on dads finances. At closing get proceeds written as 4 separate checks; Realtor can get this done. You may need to be hard ball insistent on this.... 4 checks or no signing. Comprende?
So there’s 10k to dad, Medicaid must be notified of his change in finances and mom’s change as well. I’d suggest you as dads dpoa be proactive with Medicaid, so you set the playing field for this. So rather than have the transfer be reported at your dads annual Medicaid renewal, you as his dpoa report it EOM month of the sale BUT you want to get the timing in your families favor. To me how you best do this is.....set the date of the act of sale to be the first or 2nd of the month AFTER you have a ready to go plan to set in motion for the $ dad gets from his share of the house sale. Why? Cause the date of the act of sale is the date which dad technically has an increase in his “income” of 10k which is his 25% ownership share on the property.
So the month of the act of sale dad becomes ineligible for Medicaid as his income for that month is over the allowed Medicaid maximum unless he can find something allowed by Medicaid to do a spend down on & spent down within that month. 10k sadly isn’t that much, he could buy a fully paid irrevocable funeral & burial policy within Medicaid limits, new hearing aid, new eyeglasses, dental work. 10k spent on him or his care done within the month. So that he starts the month within Medicaid income limits and ends the month within Medicaid limits for income. Money must clear his bank account totally that month. Keep all receipts as they will need to be submitted. Dad cannot gift $ to anyone. Ideally goes into his sole bank account which all expenses paid (like funeral policy, dentist) is drawn from - this just makes it clearer to establish money stream. $$ must be clearly spent of his care or his needs and ideally something Medicaid would never ever pay for. Dental isn’t really covered by Medicaid so it’s especially good to spend on plus likely needed!
You do not want any of the 10k to roll over into month 2 as then it become an “asset” for Medicaid. For what I’ve heard “asset” change tend to mean whole new Medicaid application to be done...... Thats why you as dpoa need a plan in place for which to spend down his 10k.
For your mom, the 10k is income for her as well for the month received. But for Medicaid, her income is not a factor for dads Medicaid eligibility. The month after recieved it then goes from income paid to mom to an asset of hers but it’s subject to Medicaid asset rules for couples. BUT As long as mom’s assets are currently well under say 15k of the maximum asset limit for a community spouse (most states have this at 119k for a CS but you need to find out exactly what it is for your state), her adding in her 10k share to her current CS asset $ should not affect dad & his Medicaid. So say mom has $61,234.56 at the end of March, sale is April 3; for April it’s 10k income for mom, but may 1st it then becomes mom’s asset. Yeah it’s a lot to differentiate... Do you understand how income / asset works??
Medicaid tends to view all funds are subject to Medicaid restrictions. So you have to be imo proactive to provide documentation that define and limit dads $ from the house sale. Having 4 checks accomplishes this. Spend down on dads care accomplishes this. To me, you want things so that the medicaid caseworker can quickly look at the paperwork and determine all is good and within the first single month of an income change so dad ends the month once again with less than 2k in his bank account & therefore no change in his LTC NH eligibility status. That’s my suggestions. Good luck and let us know what shakes down.
Also I’d be cautious on having mom buy her own home. Dad as her spouse will make a new house subject to any Medicaid recovery. Recovery isn’t gone by the house being sold & income spent down within 30. Its more - to me - placed outside of recovery access for the time being. But it is still there and added to for every day he’s receiving Medicaid benefits. It may be better to have mom rent for a bit. Till you all can determine if dad can be on his own and caregiving for him can work for your mom and find out if Medicaid will recovery lien place on a CS home. Some states do & some don’t.
Medicaid planning for a couple is very different than for an individual. Usually you’d want to do this with a NAELA or CELA level atty before Medicaid is ever applied for. Now it’s all after the fact and driven by whatever hurdles Medicaid should need to place. If there are title issues or Medicaid refuses to provide a Lien Release, you will have to get an atty to deal with this for your parents. At least they will have $ from proceeds of sale to pay for their legal.
- one or maybe both parents are on Medicaid & you’re now finding out that it might be an issue for selling property? Is that it?
OR
- one or both are applying for LTC Medicaid and the transfer of ownership is posing issues for Medicaid eligibility? Is that it?
Very different problems.... so just what’s the backstory?
So for the duplex exactly how is the property recorded? And when?
Entire property (so both sides) owned by all or each side owned uniquely?
To me that’s the key to determining if liens or claims can be done. Where I live (New Orleans) there are ooodles of “doubles” of which each side uniquely owned by 2 separate families although they are on the same parcel/plat #; & it can cause title issues at closing so act of sale document has to be written just right. And causes issues for Medicaid’s Estate Recovery unit as state cannot place a claim on the parcel as ownership has flawed title.
So is it all 4 each as owners & equal % each, so everybody’s 25%?
How does it read on the annual tax assessor bill?
And when was ownership % share recorded at the courthouse?
The answers will determine if Medicaid transfer penalty or Medicaid estate Recovery can be involved. So what’s the backstory?
Once mortgage paid off at closing, how much do you think / hope will be left? Remember to factor in Realtor 6% and whatever closing costs tacked on.....
It’s being sold at FMV or close to FMV, right?
Not being sold to your primo, right?
? have you & wife have been paying any of your mom & dads % share of costs on the house.... like you all pay all the property taxes, mortgage, insurance, etc? If so, have you been doing this like forever?
Does your state do a homestead exemption & if so who has the homestead exemption on the property? Everybody?
And once house sold, what happens with mom?
Where does she go to live?
And what’s mom’s health like?, her likely near future need for a NH herself?
I’m not so much worried about $ proceeds to you (likely to be) but more about how this affects dads Medicaid eligibility and mom’s allowed exempt assets under Medicaid.
Please post & I’ll give you my thoughts on what’s likely to happen.
E.g., did you contribute to the original purchase and can you show them the paperwork?
So to me there 2 paths that can happen....
& It’s super good that there’s a Realtor imo as that means that the buyer is getting a mortgage and therefore a title co & title insurance is involved in the sale. Title co will do a deep dive to determine if any liens on property as mortgage co needs clear title to do lending and for title co to issue thier title insurance policy. Almost always mortgage co requires clear clean title to lend.
Path #1: If Medicaid has a lien placed, it should surface from the title co search / verification process and that will mean mom or you will need to deal with Medicaid to get a Release of Lien from the state document. Everybody’s gonna be very very not happy as this will delay closing. Could kill the sale. Your going to have to deal with Medicaid and negotiate. If dad has been in a facility for more than a month, the Medicaid lien will be beyond his 10k from the house sale. And you are going to have to provide detailed documentation as to why his exposure is limited to just his 25% share of ownership minus mortgage debt. Medicaid could move glacially to do anything, so you may need an atty.
Btw IF this happens and earnest $ paid, it needs to be returned ASAP. A buyer can come back with a “missed opportunity” suit against you all as the prospect of a Medicaid lien should have been disclosed on the Listing Agreement. Missed opportunity- if someone is a witch of a buyer - can result in another lien of the property.
*******
Path #2: But if nothing comes up from title co, then you are good to go on closing as the buyer is getting title insurance and that title insurance protects them from any Medicaid issues clouding buyers title. Buyer needs to get title insurance as that protects everybody... them, you, mom&dad, Realtors. House get sold BUT then Medicaid must be notified of the change on dads finances. At closing get proceeds written as 4 separate checks; Realtor can get this done. You may need to be hard ball insistent on this.... 4 checks or no signing. Comprende?
So there’s 10k to dad, Medicaid must be notified of his change in finances and mom’s change as well. I’d suggest you as dads dpoa be proactive with Medicaid, so you set the playing field for this. So rather than have the transfer be reported at your dads annual Medicaid renewal, you as his dpoa report it EOM month of the sale BUT you want to get the timing in your families favor. To me how you best do this is.....set the date of the act of sale to be the first or 2nd of the month AFTER you have a ready to go plan to set in motion for the $ dad gets from his share of the house sale. Why? Cause the date of the act of sale is the date which dad technically has an increase in his “income” of 10k which is his 25% ownership share on the property.
So the month of the act of sale dad becomes ineligible for Medicaid as his income for that month is over the allowed Medicaid maximum unless he can find something allowed by Medicaid to do a spend down on & spent down within that month. 10k sadly isn’t that much, he could buy a fully paid irrevocable funeral & burial policy within Medicaid limits, new hearing aid, new eyeglasses, dental work. 10k spent on him or his care done within the month. So that he starts the month within Medicaid income limits and ends the month within Medicaid limits for income. Money must clear his bank account totally that month. Keep all receipts as they will need to be submitted. Dad cannot gift $ to anyone. Ideally goes into his sole bank account which all expenses paid (like funeral policy, dentist) is drawn from - this just makes it clearer to establish money stream. $$ must be clearly spent of his care or his needs and ideally something Medicaid would never ever pay for. Dental isn’t really covered by Medicaid so it’s especially good to spend on plus likely needed!
You do not want any of the 10k to roll over into month 2 as then it become an “asset” for Medicaid. For what I’ve heard “asset” change tend to mean whole new Medicaid application to be done...... Thats why you as dpoa need a plan in place for which to spend down his 10k.
For your mom, the 10k is income for her as well for the month received. But for Medicaid, her income is not a factor for dads Medicaid eligibility. The month after recieved it then goes from income paid to mom to an asset of hers but it’s subject to Medicaid asset rules for couples. BUT As long as mom’s assets are currently well under say 15k of the maximum asset limit for a community spouse (most states have this at 119k for a CS but you need to find out exactly what it is for your state), her adding in her 10k share to her current CS asset $ should not affect dad & his Medicaid. So say mom has $61,234.56 at the end of March, sale is April 3; for April it’s 10k income for mom, but may 1st it then becomes mom’s asset.
Yeah it’s a lot to differentiate... Do you understand how income / asset works??
Medicaid tends to view all funds are subject to Medicaid restrictions. So you have to be imo proactive to provide documentation that define and limit dads $ from the house sale. Having 4 checks accomplishes this. Spend down on dads care accomplishes this.
To me, you want things so that the medicaid caseworker can quickly look at the paperwork and determine all is good and within the first single month of an income change so dad ends the month once again with less than 2k in his bank account & therefore no change in his LTC NH eligibility status. That’s my suggestions. Good luck and let us know what shakes down.
Medicaid planning for a couple is very different than for an individual. Usually you’d want to do this with a NAELA or CELA level atty before Medicaid is ever applied for. Now it’s all after the fact and driven by whatever hurdles Medicaid should need to place. If there are title issues or Medicaid refuses to provide a Lien Release, you will have to get an atty to deal with this for your parents. At least they will have $ from proceeds of sale to pay for their legal.