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My brother loaned $40,000 to my mother over the course of 5 years to help cover living and medical expenses. He wants to sell her home and repay himself the money. The loans came out of his personal account and transferred to my mothers. What kind of documentation does he need? How will this affect her ability to be eligible for Medaid?

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Also like to add, you might want to give some thoughts as to possibly just having mom continue to own her home - most states Medicaid allow for their home to be an exempt asset for their lifetime. Now there will be costs on the property that has to be paid (taxes, insurance, utilities). But if your state has in its laws or Medicaid administrative code that reasonable property expenses on a vacant house are allowed to be excluded to any Estate Recovery (MERP), then all those costs can be deducted from your mom’s Medicaid tally. And tyen bro can legitimately enter the 40k as a claim against her estate for probate. If house is somewhat lower property value, 40k plus all the other costs associated with probate could put the value of the Estate under the cost benefit requirement for MERP. It’s risky as you’ve got to pay all for an undetermined time and House has to be empty to get exclusion. But it is a possible tactic.
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Reply to igloo572
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Ok so just who is the DPOA? I ask cause they are going to be saddled with this hot mess. If it’s you, resign and make the 40k loan brother be DPOA. Otherwise you’re going to have to deal with it & on $ not yours.

My experience is that it needs to be a legit promissory note or memo of understanding that was done between mom & him and that it was done with signatures, witnesses and notarized in advance of any funds spent to firmly establish its intent & position years ago. And it all get reviewed & done by an atty. Then he’s going to need to put in a lien on the property filed at the courthouse ahead of any act of sale using this promissory note to place the lien. (If mom should die before this gets done, then it gets entered as a claim against her Estate.)

So that at Act of Sale his existing & filed 40k lien on the property will cause a cloud on title and the cloud has to be paid in order for a clear title to be there in order for title insurance to be issued. Title insurance will be needed for any traditional mortgage lending.

Mom cannot easily just repay sonny from the $ she gets paid at Act of Sale herself, as that will be considered “gifting”. Sonny’s lien gets paid ahead of her, similar as to how Realtor commission or other liens (like a Mortgage) are paid. Otherwise it’s $ paid to mom then gifted by mom to bro. All real property transfers are recorded to the penny so Medicaid will know what mom got paid and fully expects every cent used for her care or her needs.

If he's thinking mom will just pay him from her $, imho, Medicaid will be totally push back on allowing it and I’ll bet a case of Prosecco that her application will be ineligible as they will place a transfer penalty on the full amount IF she pays him this way. Whomever is doing her Medicaid application will have to file an appeal for her as she’s gonna be denied. The issue with that (denied / ineligible) is the NH will get the denial info as well and more than likely shift mom from being ok for “Medicaid Pending” to instead be totally private pay for her old bill (while she was on Pending) and any future bills till she is determined to be eligible for Medicaid. Appeals to me are never ever a DIY except in rare situations. So whomever is her dpoa is gonna have to pay for an atty.

It cannot be imo paperwork drawn up now, it has to be done before any funds started to exchanged between them. If bro doesn’t have this, it’s toast.

Realistically if your mom gets penalized 40k, will bro make up the $ to private pay for her during the set by # of days transfer penalty??? If your her dpoa and have any qualms about your brother, resign dpoa and let him deal with all this.
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Reply to igloo572
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I agree. A lawyer is needed here. I hope brother kept all statements showing the transfer to Moms account. And something in writing maybe nice. The house will have to be sold at Market Value and that money put aside for Moms care only.
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Reply to JoAnn29
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Was the loan documented or just an agreement?
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Reply to cmagnum
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I would consult with an elder law attorney before you do anything else. Do you or someone have POA or would this be mom's decision? The attorney can help you, mom and brother to navigate the tricky Medicaid process and can look over the information you have to determine if repayment would be appropriate and if so, how it should be structured.
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Reply to FrazzledMama
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