Nursing home community spouse - How to change ownership when there is a mortgage on the house?

Follow
Share

One source says it's a 90 day window to retitle assets. A second source mentioned a year's time limit.

This question has been closed for answers. Ask a New Question.
Find Care & Housing
15

Answers

Show:
that's my point; don't think the kids who were deeded the properties realize that mom could still get it all back, or at least it could be taken for her care
Helpful Answer (0)
Report

From what I've discerned, just what estate recovery can do is very very much dependent on your individual state laws on probate, property & debt. Some states do no estate recovery at all on a house fully inherited by the surviving spouse ever. So spouse can go and sell house after NH spouse dies and the proceeds are all theirs. Probably happens in states that are more pro property rights do this - like the states that do not ever allow defaulted credit card or other unsecured debt to be placed as a lien or a judgement on your homestead.

Also it can be administrative heavy to do this lein of the house forever approach.....like imagine if well spouse lives another decade or two and even gets remarried; states can't get too difficult on this as it places a unfair burden on the spouse to force them to stay in a home or in a city that may not be best for them over time. I'd bet there's going to be litigation if states try doing this.....

SNF doesnt get estate recovery $. Snf is paid a daily room & board by medicaid. The recovery $ is due to either the state or to its outside contractor - if your state has contracted out this function of Medicaid.

Now if house is sold, while NH spouse is alive, the proceeds from their share of sale will take their assets over the 2k limit allowed by Medicaid. They have to do a spend-down to be eligible again. But I'd bet that if the house sale $ is large enough.... you could get NH spouse off Medicaid entirely, pay off whatever recovery, private pay NH for a couple of months, and in that time get the CS to get their assets up to the medicaid maximum allowed (about 117k) and maybe get a SPIA to get all but 2k...so Nh spouse is now impoverished again. Not simple but a clever elder atty could likely structure all this. A younger CS really needs to do whatever to maximize their financial future.

From what I've gathered, life estates are done to have asset pass outside of probate. In theory, probate is how estate recovery is to happen. But states are taking a wider view of recoverable assets & can go after LEs. NYS is doing this.
Helpful Answer (0)
Report

Anyone can check if they are on the title by looking at the tax records as well as the mortgage contract. Most lenders at least encourage joint ownership as it's easier to collect from a surviving spouse who has an ownership interest in a property. I've not encountered anyone with a life estate for a home and do not know how it works. Where we live it's joint ownership with right of survival. My parents property is in a community property state so things are a little different. How to account for a life estate to a former home is an interesting thought. I wouldn't be surprised if it defaults back to rules that snf couples can only have one house.
Helpful Answer (0)
Report

or what if community spouse is living in home, but not sure if they're on the title but have a life estate to their former home?
Helpful Answer (0)
Report

Igloo - the MERP/Estate Recovery is not supposed to take place while the surviving spouse is living in the home. I've seen conflicting information as to whether or not the spouse can sale without having to involve the state. I think, but am not certain, that at least 1/2 spouse's equity must be paid to the SNF. Then requalification would start all over again. I've also seen not seen definitive information as to whether the spouse is subjected to double impoverishment by way of re-means testing couple for total assets, dividing in half, and determining that spouse now has over the allowed spousal limits, thus having to give even more of the equity proceeds to the snf.
Helpful Answer (0)
Report

I'm interested in this because I have a similar situation with my hub's aunt and uncle been working with, except re VA, which have just been told by company who's been working with veterans for a number of years to help them get their benefits that, even though it's not official yet, they're beginning to look more closely and question gifting of assets, which in their case was somewhat done with their IRA, which they didn't even tell me about until a ways into the process since they didn't want anybody to know about it, like they can't find out these things and if you try to hide it just makes everything worse and which is totally, or at least as appears on their statement and is what she's said, that she has no access to, his as the veteran and the one we've been trying to get the care for, even though she has access to other accounts on the statement and they also have a term burial insurance policy as well - was there a reason for cancelling that? not exactly sure where this leaves them but if they decide to count those assets that are gone certainly will be worse than if they don't, which if we'd been able to get this done before they started questioning things more definitely wouldn't have been done; was concerned then this would happen with them being so much more liberal than Medicaid was at the time; didn't see how it could keep going on that way and guess now it is beginning to stop so now they may for sure be ineligible for the VA benefit, which, not sure how attitudes are with Medicaid, but a lot of these veterans or maybe more just their spouses seem to feel they should be able to get this benefit regardless, that it shouldn't be income based, but with this being fairly new for VA, the usual people that help the veterans with applying for this benefit are even less knowledgeable about this than the ones for Medicaid so since the typical process has been to lock in your claim as early as possible so you can get the most retroactive benefit otoh if you're denied for these reasons then if you did it that way you would be denied for an even longer period of time, just like with Medicaid, and just have to private pay; at least, apparently, thankfully, in that sense, the companies that will pay for your care while you're waiting for your benefit to kick in normally know about this and will check into it all and just won't do it if they feel you aren't going to qualify so you at least won't be on the hook for paying them back but then otoh if you don't/can't/whatever do the private pay then you just don't get the care and right now being obligated to pay back for getting care is just something they're terrified of but things are getting worse as far as being able to provide care so wondering if 3rd option is going to loom on the horizon, something that happened with dil's family but not sure I see that happening in this situation but not sure I see it not either, just don't think they see that as a real possibility that they won't qualify for the benefit because of what they've done but then otoh they didn't think they would get it to begin with but if they'd just been willing to accept it at the time when it was easier....

they, too, needed a lawyer but when it comes to the VA people don't think so, they think they should be able to get the info from the VA directly but for whatever reason they don't tell you; they just intend for you to apply and go through the apply and deny cycle, just like with Medicaid, but then does anybody apply that expects to be denied...and just like with this Medicaid issue, with the VA, it's the veteran's interests that are being taken care of, but not the spouse's, which is where the concern is.
Helpful Answer (0)
Report

House - I'd try to clearly find out IF by doing a quit claim deed in which hubs gives you all ownership on the house THAT GA Medicaid will consider it a gifting or transfer of assets of hubs 50% ownership AND place a transfer penalty of 50% of usually whatever the tax assessor has as the value of the property.

Dealing with transfer penalty is pretty cumbersome to deal with as once a penalty has been placed (not the penalty inquiry phase but once placed), they will be ineligible for Medicaid to pay (even though they are now impoverished) and its retroactive to the date of the application (which could be months). The facility will get a letter from the state as well and usually require you to sign off on a contract to private pay and for the outstanding amount past due.

For family getting a penalty the choices are stark....either sign off to private pay & have a huge debt of the NH bill; move them back into the home and deal with fallout on the past due; or you do a new quit claim to move the house back to 50/50 ownership; or the nh resident becomes a ward of the state.

Really it's a lot to deal with and there will be a elder law atty somewhere within the state of Ga that can work with you & hubs to get the option that works best. Everybody your dealing with is looking at things from their viewpoint which is to maximize& safeguard their position which could be not in your best long term interest. That why good NAELA legal will be so worthwhile as you've got a lot of intertwined & complex issues that need to be done to your advantage and not the banks, or mortgage co, or state Medicaid program.
Helpful Answer (1)
Report

Bank said retitling is "probably" what's needed, though I was also told that if I wanted to pursue a quitclaim to check with the county to see how difficult it would be from that perspective. The loan officer said to call back and notify accordingly if we wanted to pursue that avenue. It doesn't answer if Medicaid approves of quitclaims. Quitclaiming would keep both spouses responsible for payment of the mortgage, but may prohibit the NH spouse from exercising any options to dispose of the property.
In our state the CS is usually not subject to MERP as long as the CS keeps the same address. Though CS has no plans to move, a pre-Medicaid sale definitely disqualifes the NH spouse due to joint ownership. There is definitely some option as far as getting the house into just the community spouse's name/control within a defined time period. In order to fully protect the CS, the NH spouse has to have no right to or control over the property.
It makes no sense to pay off through a sale if the outcome for CS is applying for & receiving the "safety nets". Entitlements provide no "safety" - just a bunch of nets to get caught into.
Mortgage has a due on sale clause and an accelerated payment clause. The second clause applies to defaults in payments. Makes sense when used to achieve normal financial objectives.
By paying off at this stage the equity realized is considered income/assets available for the NH spouse. Should we sale now, Medicaid will get what is left over after the lender is paid in full. This should take care of NH spouse's eligibility and benefits, the lender and Medicaid pay offs, but not the CS protections. Iin spite of the spousal protections, just 3 of 4 objectives are met. According to what I've read, it's even questionable whether MERP is successful because there often is just nothing to recover. The fourth - CS protection - is hard to fit into this equation.
NH says to expect apply & deny cycle and eventually Medicaid approves.

I'm really happy that 2015 is ending. I can add to my resume new experience with medical/legal marijuana issues (due to tenants at parent's property), how to dispossess, vs. evict bad tenants, how to become a landlord, how to follow through on estate settlement requirements, and how to navigate the Medicaid minefield. This is in addition to being the point person for all the spouse/financial issues.
I did not sign up for any of this. 2015 was just that way. We're further along than 8 months ago for spouse and13 months ago for Mom - when I became the executor for Mom.
We now keep the Medicaid dart game in the living room. Several months ago, I was cleaning and discovered this old dart board. It felt so good to toss the darts onto the dart board. Instead of a hunting target the center target wass a round sheet marked "Medicaid". We drew the circular lines just like a real target. Our friends bought a few orange targets - real targets and from there it is history. So we have the neighborhood Medicaid darts game. It really fees good to throw the darts - and it's cheap therapy. I highly recommend Medicaid darts to anyone needing cheap therapy.
Helpful Answer (0)
Report

Speaking only to the issue of retitling: mortgages typically have standard default clauses, of which one event of default is a sale or transfer of title w/o the mortgagee's (lender's) permission. Events of default can allow the lender to accelerate the indebtedness, i.e., issue a demand letter advising that the entire balance of the mortgage is then due, as opposed to whatever longer term was established for the 30 year mortgage, if that's what it is.

As Igloo states, a mortgage lender may agree to work with you and approve of a quit claim deed transferring title to the one spouse, but it would depend on (a) the particular lender (b) the legal sophistication of the community banker with whom you discuss the issue, (c) the credit rating and assets of each of the parties individually and collectively.

If the remaining spouse had few assets and a poor credit record, for example, the lender might not be amenable to allowing the other spouse to be relieved of the debt obligation.

The title issue is kind of like the other pincing claw on a pair of crabs - you're between the claws of the lender and the claws of governmental regulations.
Helpful Answer (2)
Report

I can't possibly compete (or follow) igloo...lol - too smart for me. In simple terms - if you want to get the house outta your parent's name....you have to BUY it from the mortgage co. That's right, get your own mortgage and buy it (for what is owed on it, basically). If you cannot, that's too bad.
Helpful Answer (0)
Report

This question has been closed for answers. Ask a New Question.
Related
Questions