What can we do if we can't afford to pay the Medicaid look back penalty?

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Mom had a CD for $5,000 with my name on it but p.o.d. (payable on her death.) She considered it to be my CD. Over the years I used it for collateral on loans. 3-1/2 years ago I wanted to use it for a loan again, but she said it wasn't earning hardly any interest on it, so why not just cash it in. So we did. She also had a $5,000 CD with my brother's name on it, also payable on her death. She also decided to cash his in for him. She figured it was her choice to forget about the payable on death, and cash them in for us. When she got the cds, it was probably 10 to 15 years ago. Had she not put p.o.d. on them, and just had our names on them, there wouldn't be a problem. But now she needs nursing home care. Is this going to be a problem, even though our names were on them? And if there is a penalty and she has no way to pay the penalty, then what? Is she out on the street, so to speak? I'm disabled, and my brother has no money. So we have no way to pay it back. Mom put the house in our names 10 years ago with her having a life estate. That was her only asset, other than a car valued at about $1,000. So she has no way to pay a penalty. So if no one can pay it, what happens next? Because she put the house in our names while retaining a life estate, we can't sell it till she dies. And we're broke, so have no money to pay for upkeep. Her mom lived to be 96, so we might have to hold onto it for another 9 years if she lives as long as her mom. We can't afford our own places plus hers. I live in a trailer with my disabled husband and don't want to sell my place and move into hers. When she dies, we'd sell her house (not a trailer) and then I wouldn't have my trailer to move back into. My brother has a nice double wide on its own lot and doesn't want to sell his place either. Neither of us can get a loan so we have no way to pay the cds back. Mom is 87 and can't get a loan either, for the penalty. So what happens when no one can pay the penalty??? Does that mean mom can't go into the nursing home? Is there any way around the life estate? Could she put it in my name (since I'm disabled would that exempt the transfer to just my name with no life estate) so that we could then sell it instead of waiting till she dies? This is all so confusing, she's in the hospital and they want her in the nursing home within days.

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When, the original poster said the CDs were cashed and given 3.5 years ago, well within 5 year lookback. And parent needs nursing home now, so they do need to worry and find out legal options before filing for Medicaid.
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Check what that look back period in your state is. I think in most places it is only 5 years so you might not have to deal with that. Maybe you could ask Gray Law attorney or legal adviser at a senior center in your community what your best plan of action is.
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An elder law attorney just recently informed me that putting the Life Estate up for sale will enable the applicant to qualify for Medicaid. This does not change the ownership of the real estate. In reality, a Life Estate is only worth the rental value for the rest of holder's life. What will anyone pay for that? Effectively, there is no market for a LE; but as long as it is up for sale, Medicaid requirement is satisfied.
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Cody - it can be rented.
But before you pop open that bottle of bubbly........ needs to be rented at fair market value. & rent is income to each “owner”. Income is reportable and taxable. Someone will need to deal with property management and also make sure the % of rent due to mom is included in required by Medicaid copay to the NH. This could pose eligibility issue if fmv rent added to moms existing monthly income (like SS, other retirement) could take her over the Medicaid limit for income set by your state.

It flat won’t be simple.

Really gather up all property legal, all of moms old dpoa and schedule a appt with an elder law atty. If this were me personally I’d get NAELA level atty.
Please realize it is NOT that the NH that wants the $ from the house sale. NH needs to be paid for their stay...... whether it’s paid from $ from moms savings; from the sale of a home ; or if eligible from Medicaid’s daily paid R&B $ to the NH; or or that someone in the family private pays for her stay.

Based on what you’ve posted, it reads there is no way around Moms having her LE on the property without it having a value which is an asset. Have NAELA atty work with mom & you all to look at what options exist and what the costs would be.
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The house was put into our names 10 years ago, with her having a life estate giving her the right to live in it until she dies. Her name is not on the title, and it was done 10 years ago so look back period is not an issue. The deed is in mine and my brothers name, then there is a letter stapled to the deed giving her the life estate. Had she not done the life estate at all, and just put our names on it (without the life estate letter attached) then we could just sell it now. Someone said all 3 of us could sell it. Legally yes, but then it would no longer be protected and it would start the look back period all over again. The nursing home would want the money from the sale. What if we rent it out? Does the nursing home get the rent money, even though her name isn't on the title, and is way past the look back period?? Could some of the rent go towards maintaining the house?  Also, I am her power of attorney.  Both financial and medical.
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igloo, life estate doesn't say whether revocable or ir, but nothing ever said about taxes, how would that work? all deeds have been recorded; are they checked? they definitely weren't done by elder law attorney and actually attorney who did the most of them said only did because fil had had done on the one deed he made sure was done before he passed because he wanted to make sure it was turned over to them; the rest weren't actually done until after he passed by mil and gc she made poa and they didn't care; actually mil didn't even really want but didn't tell lawyer, actually not even sure - well, know she didn't know anything about them, because upset at "finding" out, otherwise, why looking for that one, then upset at not being able to find out; lawyer, of course, only knew it was done, not what fil had done with it
I learned about the percentages from the IRS tax tables; nobody thinks any of the property, even the house, is worth very much anyway, so they don't really think be issue with Medicaid re nh, but any property has some value but would Medicaid have appraisal done themselves to determine how much lien or at least how much value toward the lien?

re other situation, maybe it's a state thing, too, but in state of my dad, courthouse told me even dpoa wouldn't cover real estate unless specifically stated to so couldn't sell dad's house, at least not legally, but if I had would have been to have allowed him to go into assisted living, probably not nursing home, at that point, anyway, but something ran into after he passed away, with them only having recertification every 4 years is his house was not worth what they assessing it at, so trying to get comps by house sales in his neighborhood, only one close at time, but was foreclosure, so didn't count, but burned - strange, huh - shortly after, so then bought from insurance company? since when were houses totaled out and turned over to insurance companies? what about the property house was on? have you ever heard of anything like that? bought by somebody who owned another house in neighborhood with mortgage but none on this one, bought by mortgaging yet another house owned that he lived in so no real record of final price paid, then another house finally went on market, with same situation, elderly male widow owner passed away and even though assessment situation might have been different, still didn't sell in its condition, not until same type repairs made, all this determined to be defined by insurance companies who won't insure, not necessarily because of condition, just age, and basically had to be done by family, otherwise getting underwater for sure, still had to lower price even after for to finally sell, but at least had family willing to do, something don't seem to have
in current situation, not sure why issue brought up about uncle laying outside for an hour before being missed
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GuestShoppe - Ryan Todd...beyond a charmer. His Mom “he was coddled too much”, now that’s an understatement...... bet she goes to visit him in prison as it really wasn’t his fault. Ryan Todd was led astray by bad convienience store clerks and unscrupulous pawn shop owners. I bet if you added up the check cashing fees, they made a hefty sum out of his fraud.  My goodness his folks were living at what look like from the photo a modest trailer park; “Ryan Todd” poster boy for POS. 

 Love, love, love the part where “Ryan Todd” asked the NH for a refund of the $ paid for his dads last month NH stay as dad died before the end of month cause there should be a refund paid. Cojones! 
GuestShoppe, honey, you gotta link good old boy “Ryan Todd” on a regular basis to posts on AC!
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If you want to see how the home was sold and money misused, there is a headline for Ryan Todd Powers, just convicted in Florida of elder abuse.
"Son steals parents' money, leaves dad at funeral home"
he left mother in medicaid nursing home, stole both parents pensions without paying nursing homes after he put parents in different ones, and he left his father in funeral home without paying for services so taxpayers would pay final expenses. A real charmer.
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Deb - since each state runs its Medicaid program uniquely, everybody’s answer is right and everybody’s is wrong depending on what state your in and what the latest changes the legislature does.....

On LE my understanding is most have LE if it was irrevocable done over 5 yrs ago is beyond MERP. But LE irrevocable under 5 yrs has transfer penalty. And states consider any LE if revocable to involve gifting & transfer penalty and the amt based on the % tenant owner age & property value with % shared by all remainder men. Revocable can be switched back. It’s not simple; really LE needs sharp elder law atty to shepherd the application imo.

LE breakout usually done by a taxation pro. Although irs has tables. If it were me, I’d get a property inspection then solid appraisal done & perhaps residential engineering report done before even turning it over to taxation atty (LL.M) to run %.

About the son who sold his moms house at my moms 1st NH, I imagine he had dpoa that allowed for all finances, sold her home, put the $ in her account and then paid himself. TX MLS allow dpoa to sign off the paper work at the act of sale, so his mom not needed to be there. TX has annual recertification, so I’d bet property sale showed up as all real property data is easily cross referenced btw county assessors & state database and the property was already in her file from the initial application. Just a few keystrokes for Medicaid to find sale to surface and to the penny. But whatever the path was, he didn’t report it to Medicaid, he ignored all correspondence and NH had enough and got APS involved which snowballed to his mom being made Ward of the state and moved to another NH by the new guardian. Major drama and totally avoidable.

I hope your families LE is irrevocable and beyond any MERP should they ever need Medicaid as it sounds so very very convoluted. Good luck.
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oh, regarding the other, almost had that situation, not with my family, but with some friends of one of my children - with some of their/our help - not mine - they got his father down here out of the facility he was in, apparently he had no guardian, etc. and could make that decision, even though he was there because of a tbi - go figure - anyway, affected his colon, so because of the 45 day waiting/transfer between states period you can just guess, leave that to you, but emergency surgery, then attempt at rehab but you can imagine how that went; they weren't told about his tbi when placed, so definitely were ready for him to go when time came but "they"/son and just gf hadn't realized what they'd bitten off so they didn't want him back and even left town the week he was to be discharged to them; well, leave it to me, I suppose but I didn't think fair to them? him? but also he had family, still had parents himself who'd been watching out for him - again, not sure of legalities, but knew they wouldn't want to happen to him what happened with situation you described so called and told them what was going on; wasn't entirely sure what you described would actually happen but guess it does, at least eventually, and they certainly were saying it would but they left anyway and refused to come back, except, and, yes, this is exactly what they planned to; they'd had his check transferred, since not lt yet, wasn't going to nh yet, they planned to come get it but not him, but finally, I suppose, either enough pressure or they finally got convinced of what would actually happen; think they thought would go the other way that if they didn't come get him he would just get to stay where he was and they could either come see him or at least they'd know where he was, think only when realized he really might be moved and they wouldn't know and might even be held responsible that somebody, not even sure it ended up being them, finally did come get him, take him back to at least the area he was, though don't think was allowed to go back to where he was, which probably wasn't a bad idea; had little too much freedom there, which is part of what allowed that whole situation, and got him placed in a somewhat more secure facility, though it was a hard adjustment on him; I normally am more a believer in letting even those type people have as much liberty as possible but guess have to say in this situation his really did need to be more curtailed; he just didn't have the judgement
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