How does a life estate affect Medicaid?

Response to Personal... I would add that family can also buy pedicure and manicure cards... using chiropodist and a podiatrist. In my experience with varying homes - Medicaid or not - foot and nail treatments are often missed, but are on the family! Just saying!

Yes, there is another avenue in regards to if the property became an income source. I am not sure how that works though. I read it on another persons post.

I just went through this and it was hell to learn that the Quit Claim Deed my parents wrote in 1985, was not credible according to the expanded laws of Medicaid Recovery. I was paying for the property for 5 yrs, and when mom passed I thought it was mine. I took care of her, paid for so much for her, my sisters did nothing and I even paid 2 lawyers who should have know it was a loosing battle, but did not and took my money and tried to fight a loosing battle with the state. Then I learned that Medicaid Recovery has all rights to the value of it when it sells and I will recoop none of my expenses. Because my parents wrote a life estate, and it was "not" irrevocably written to me, which they did not do in order to keep "their Homestead discount", the property value belongs to Medicaid Recovery. They cannot lien the property until your dad passes, and who ever's name is on it will have to maintain it until sold. The only way the property is protected is if there is a Spouse living in it, or a disabled child for the previous 2 yrs. Then other restrictions come into play where they can't touch the property. What state are you in? What state is the property in? Although I doubt either matters after what I went through. And by the way I had many lawyers tell me that Medicaid Recovery could not touch the condo due to the Quit Claim Deed, and they were very wrong! The new expanded laws over ride previous laws. Even a law written in 1999 that says property with a Quit Claim Deed that passes at the time of death the beneficiary passes is not allowed to be recovered, is now no longer valid! and the property is recoverable! Sell the property, use the money for your dad's care and spend down, buy him everything and anything he will need for the next number of years. PJs, clothing, sweaters, wallet, over the counters, any and everything. It will also be used to pay for the Living Assisted facility. You must keep all receipts, cancelled checks, credit card statements, bank statements to prove what any monies were spent on from now until his money runs out. Yes, you and your sisters will not have the proceeds of his property. Spend it wisely on dad, and his care. You can even hire a PRIVATE aide in the living assisted facility to help him. The aides are very overloaded and if he is wheelchair bound, he will wait about 15 minutes to be taken to the bathroom. If he has a private aide she will be able to care for him at the time of need. I went through this with my mom, she would cry in her wheelchair waiting for someone to take her to the bathroom, they put her in pull -ups and told her to go to the bathroom in them. She was still fully able to hold it in, but not for 15 minutes. Then sometimes they would go to her shut her buzzer off, and tell her she had to wait longer. It was so painful for her, and no matter what I did, it was not going to stop. It was a nightmare. If my mom had the money, I would have let her stay home with a private aide as long as possible.

This came up for me recently. Moms condo is in a Life Estate (New York State, don't know if this applies to all states) and when she moved into Assisted Living, I checked with our accountant and our elder care attorneys, I was told that:
- if we sold it, 85% of the income would be mine, 15% would be attributed to her and we'd lose a lot to capital gains taxes from my 85%
- if we revoked the Living Estate, any money from the sale would be vulnerable to Medicaid look back
- if we *rented* the property (which is what we went with), the income would be considered Moms (and go toward paying her AL rent) and when she dies, the condo would be mine at market value (step up) and there would be no capital gains taxes at all. The additional income from the rental would be offset by the medical deductions she could take from the AL rent. If we have to go the Medicaid route, we'd look into a pooled income trust, but still be able to keep the condo as an income source, which would go to me when she dies.

I hope that helps somewhat.

If the home is not in his name there shouldn't be a problem. It's when you own a home that you better sell it if you need money that bad and use it up before applying for Medicaid

Susan, in SOME states, Medicaid will pay for AL.

Medicaid does not pay for AL. It only pays for some services provided. Medicaid does pay for skilled nursing SL for those who qualify.

parrothead01, Life Estate means for "life" even if your Dad no longer lives in the house. It's my understanding that you cannot sell the house until he passes. As Igloo suggested above, check with an Elder Law Attorney.

margaritavillehead01 - about the "afford costs"..... if it ends up that dad is the owner then when house sold all the $ from sale will be his a$$et. If your wife or her sister have been paying regular house expenses over the years, costs to get house "market ready", etc. it will be sticky to be repaid as it will more than likely be viewed as gifting by Medicaid. Gifting is not allowed and a transfer (of assets) penalty placed on dads Medicaid application. It's definitely something to discuss with the new atty as to how things could be handled BEFORE house ever put on market.

To me, if the elder doesn't have fixed desire to return home & family really are not interested in property &/or cannot afford parents property, house needs to be sold asap AND before ever submitting Medicaid application. It will give all more flexibility as to how $ is spent down. The atty will have options to suggest (like a special needs trust that's Medicaid compliant).

Buffethead01 - I bet your FIL did the LE 22 yrs ago with the plan being that it would pass outside of probate to your wife & her sister. It was done for estate planning and NOT for Medicaid planning. Usually with a LE, property stays in his name & getting whatever senior citizen & homestead breaks your state does. If this is it, then fIL still owns property.

The stickies with this will likely be:
- was LE an irrevocable LE? or an irrevocable LE?
My understanding is if irrevocable, then asset is a math problem for Medicaid like GuestShoppe mentioned. Please carefully review LE. This is not imo a DIY project to determine as it was eons ago. I'd get a NAELA elder law atty to do this. If revocable, medicaid probably will view house as nonexempt asset till sold (with that $ used in a spend-down) or ownership status changed (like dad has it revoke back to just his name which makes it exempt Medicaid asset but subject to Medicaid compliance & MERP).
- and does FILs state view property to be inherited via a LE to be exempt for MERP (estate recovery)? If so what paperwork needed? And if not, will heirs likely qualify for exemptions or exclusions to MERP?
- and whatever the above are, can the Sisters afford the costs on the property & for how long & without the likelihood of reimbursement?

If dad is looking at needing Medicaid in the very near future, you really need to get LE, will, assessor bills, etc and see atty asap. Also please pls make sure that the current AL will take Medicaid (AL is a waiver program for Medicaid) & if so, will the AL ensure that dad can transition from PP to Medicaid the day his $ runs out.

Another thing..... since dad did an LE, did he also do or update his will 22 years ago? Or was the plan that since an LE, no will was needed? If no will, he probably needs to get one done. I hope he is still competent & cognitive.....

Joann that is not true. A life estate is an asset for Medicaid calculations with a value. You need to consult an attorney to determine the value of the estate when applying for Medicaid. If it was registered with the deed when purchased, there is a record. If house bills stayed in dad's name for taxes etc, there is a paper trail.

If he turned it over 22 yrs ago it's the daughters and they can sell it. Medicaid look back is five years. They don't need to worry.