Home has sold & gram is still alive...now what?


Hi everyone, My grandma has bed in LTC since September. In October we received notice that we must place her house for sale and make reasonable effort to sell it. She is widowed and as I’m her grand child, not her child, I do not have a right to this property after her death. I have been told two different things about what happens with the sales income. 1, once all fees $ the mortgage are paid off, the balance goes to her checking account and she has to pay the full cost of the NH until she is re-eligible for Medicaid. If this is the case, since I’m on her bank account, do I have access to the $ or is it all paid lump sum to the NH and they spread it out? 2, she (or someone somewhere) holds onto the cash from the sale and upon her death, probate determines what goes where to “repay” the NH. I asked if I have access to the funds for because first of all I’d be writing the checks, second it may be considered income for me? And 3 I will essentially be homeless when the house closes. I’ve been on short-term disability for a few months as I am also on Medicaid. I am wondering if I am able to “borrow” against the cash if it’s in a joint account (less than $1000 of $100k) to get settled into a new apartment or if that’s even an option because she won’t have the $$ herself. I would pay it back very quickly bc I’ll be going back 2 jobs, it’s just that recent situations drained all my financial resources. Thanks!!

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I hate to be Cassandra, but do not touch that cash. Do not borrow from it, nor give any lender or landlord or anyone any reason to believe that it is in any way yours. It just isn't.

I am deeply sympathetic to your anxieties about where you are to live and how you are to manage - I have been there and it is no f***ing joke, I know. Get advice now, while you still have a roof over your head and comparatively few worries about your grandmother's wellbeing. I'd start with the office that deals with your short-term disability, they may well know of helpful resources for you.

This does not affect your ability to pay your *grandmother's* bills on her behalf, as you are an authorised signatory on her bank account. And one bill you can quite legitimately pay on her behalf is that of an elder care lawyer or planner who can advise you on how best to handle her house sale for her.
Helpful Answer (13)

The mortgage is a secured creditor, so it must be paid off first & foremost at closing. 
So how much “balance of proceeds” will be left after that happens???

Property values in CT are pretty high, there could be a good bit of cash post mortgage payoff. 

Medicaid lien is an unsecured creditor so what happens is going to depend on CT property laws and administrative code. Some states do a “clawback” of all costs paid by Medicaid to date..... others have the owner get the $ but they become ineligible for Medicaid as they have too many assets (and it’s know to the penny by Medicaid as the sale is recorded by tax assessor) so they do a spend down for their care at the NH. Find out which path is done as it sets the next steps. 

If it’s the latter and it’s a good bit of $$$ I’d see an elder atty to see if it makes sense to have a SNT special needs trust set up for the $. It’s got to be Medicaid compliant but allows for grans dpoa to have flexibility in getting things for her that otherwise are not covered by Medicaid and the means to pay for it. To me SNTs make good sense if it’s a good bit of $, like over 200-300k. You’d likely be a trustee on it if your the point person for doing stuff for gran. Usually state is beneficiary of the SnT when they die but Ask the atty if a disabled heir can be. Disabled heir can be an exclusion to regular after death estate recovery / MERP so maybe it could be done. It’s a CT legal question.

Good luck and make sure whomever represents gran at closing has the correct legal documents to sign..... you don’t want a glitch at closing. 
Helpful Answer (6)

Something to consider. When a home is sold, you go off Medicaid and you're paying the " private pay" rate, which is higher than the Medicaid rate. It's considered a smarter move by some to maintain the house and let the state do recovery after death at the Medicaid rate.

To get a clearer idea of the best course of action, you should consult an eldercare attorney.
Helpful Answer (5)

Thank you everyone! I have consulted with an elder care attorney in the past (a couple actually, plus a real estate one). I had no options to maintain the house until her passing due to limitations on who could stay in the house; hence why it had to be sold sooner than later so she could spend the income back down.

In the long term, I don’t care about any $ coming to me from her estate. She has no bills besides the mortgage which will be paid off during the sale, and a life insurance policy that is just enough to cover her cremation.

I mainly was curious where the sales from the house would go immediately, vs what they’d be used for. Believe me it makes me feel gross considering the “borrowing” against thing...thankfully I’ll at least be temporarily eligible for public housing.

Thanks again everyone!
Helpful Answer (5)

From my understanding, the net profit from the sale must go for grandma's care if she is going to be allowed back on medicaid. If you borrow money from it, that would be considered as a gift and expected to be paid back as a penalty.

Talk with an eldercare attorney.
Helpful Answer (4)

Either Elder Attorney or your Accountant - you can start with your Accountant.

And call Medicaid or the agency that contacted you and ask your questions.
Always start with the party that contacted you first as they are the ones pulling the strings at the moment.
Helpful Answer (3)

Where did this notice come from?
Helpful Answer (2)

I understand that there are Lawyers who specialize in the very questions you have and they work mostly for seniors and the laws concerning your State. I worked in a NH and it was understood that the nursing home used the money from the sales of the patient' s house for their services but you do get to keep a portion such as her car, etc.
Helpful Answer (1)

One reason my husband and I sold our home when we moved to be near our children was how complicated real estate is when you die. We bought an annuity from the sale of our home, which provides me with nearly $2000 a month, mostly tax free. My husband died of stroke 15 months after we moved, but I now have this money to pay my rent in a nice penthouse apartment. My children are thrilled that they won't have to see a house when I become incapacitated or die. I also have two LTC policies that may protect the amount my kids will inherit to some extent. One of the LTC policies requires a 3 months after entry into facility to kick in, the other kicks in right away but converts to an insurance policy if it isn't used.
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My nephew has a Special Needs Trust set up to protect his late Moms insurance pay out. He is disabled from birth. I looked up the definition. Only a disabled person 65 and under can apply for a special needs trust. My Mom has a house which didn't sell before her death. But if it had, Medicaid would have stopped and the money spent down. Doesn't seem right to be able to put itvin a trust once she is on Medicaid. Its her asset to be used for her care.
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