My brother and I are selling Mom's house and getting her into a facility of some sort soon. We were told there is a form that we can fill out that acts like a loan and we can recoup expenses from things we have spent while getting the house ready to list without being penalized when she goes on Medicaid.

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There is no "1sizeFitsAll" form, IMO as whatever document needs to be able to meet your areas legal standards for enforceability & medicaids standards for validity not to be considered gifting.

Probably the easiest way to deal with this is send a certified letter to Medicaid and ask for a written response within 30 days as to if a transfer penalty will be placed on mom medicaid application for property cost reinbursement to family members. If not, then follow whatever path Medicaid tells you to do in writing to be ok on transfers.

Good luck on this. My experience is that Medicaid tends to look at whatever the kids do for thier folks to be done for free and out of a sense of familial duty unless there is some sort of legally done contract.

So if its considered gifting, then you will need a Plan B..... something that forces at Act of Sale of your moms house for part of proceeds from sale to be paid to you & bro directly to reinburse your outlay in order for property to be sold. If that's it, then in my experience, you need something that either is a
- document that is secured debt against the property or
- a workmans lien on the property.
Either must entered recorded at courthouse & entered onto the chain of documents on the PPIN. So at act of sale / settlement, the debt is repaid to you by the escrow account for the act of sale and not by your mom from her proceeds of the sale. I'd suggest you clearly speak with the Realtor & the Title Co. on the feasibility on this and if it seems feasible then meet with a elder law atty (or Real Estate ) to draw up a note.

If you have costs paid before mom signs the note, consider that your gift to mom.

For the first, to me, You'd need to do some sort of Memo of Understanding or Promissory Note which places the property as collateral for the debt and indicate how repaid & signed by mom (not you as dpoa as you benefit) with witnesses & notarized. A sticky can be whether or not it's viewed as secured debt and also if the property has other secured debt (like a mortgage, heloc) where it stands in relation to getting paid.

Workmans leins are lots simpler but you have to have a registered business to do this or work with one on doing this. What 1 person has done was to hire a contractor to do all on their parents home to get it market ready. Mom out of house & in AL. The son paid a advance for work to start. The contractor placed a workmans lien on property for the full amount of all work. Work completed before Realtor listing. It was a highly motivated listing.... Like a 60 days sold. So when it went under contact & title search done the workmans lien showed. At closing, workmans paid off from proceeds to contractor as the lien caused a cloud on the title. Contractor then repaid the deposit to the son. $ floated about 4 mos. No issue when abt year later when his mom applied for NH Medicaid.

Nothing simple in any of this......
Or mom could sell the house "as is" with all the $ going to her Medicaid spend down. With nothing beyond what must be paid (like taxes, insurance) on house and those costs coming from your moms SS or other monthly income. If mom just does not have the $ to pay then you & bro make up the difference and it's a gift to her from you. If it looks like house will sell for way way less than assessor value OR it's bring sold to family member, pls pls please get the property appraised before sale to be able to counter any concerns from medicaid that property was sold for less than Fair Market Value. As that could mean that her Medicaid application gets stalled for months (like beyond 5 or 6 mos) as theres a transfer penalty inquiry ongoing and the facility will issue a 30 day notice that she either must revert to private pay or move out.

Yeah there's all sorts of hurdles. Unless the post contract $$$ is significant in relation to property value, you may be best just paying whatever's needed if the goal is to get house sold. Btw you do know that for most states they do NOT have to sell their homestead property, it can remain an exempt asset for their lifetime by Medicaid. But family will need the wallet and a sense of humor if mom chooses to do this both now and then after she dies & then through the probate and estate recovery process. 
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