MIL is leaving with us. She gave us the down payment on the new house and we also traded her car in to buy us a new one is this okay?

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MIL can do whatever with her money & her assets as long as she is competent and cognitive to do so. It's her money to do whatever with it…..

BUT - and this is critically important - IF your MIL should need to go into a NH facility and needs to apply for Medicaid to pay for it, there will be an issue with the money she "gifted" you all. Medicaid will pay for NH and in some states for AL for those who qualify as needing that level of care and are impoverished. In order to make sure that they are impoverished (usually having no more than 2K in assets and their monthly income is under whatever your state sets for this…like in TX it is no more than $ 2,094.00 monthly income), the state requires a 5 year look back on their finances. That means if MIL gave you money today (January, 2014), she cannot apply for Medicaid until February, 2019. That is 5 years and a lot can happen health wise for everybody…MIL, you, your hubby, your kids, etc. If you apply for NH for her say two years from now, the state can impose a transfer penalty for the amount of $ she gifted you. Understand?

Now since she is living with you all, here is my suggestion before this goes on too long. Go and make an appointment with an elder law attorney. This site has a drop down list of them by state. Call a couple of them or if they are not in your area, call them to get a name of someone in your area. You all (your hubby, MIL & you) all go to see the attorney and update all of her legal (DPOA, MPOA and whatever else they suggest like updating her will). Now MIL gets SS and maybe retirement, so MIL has monthly income. What the attorney will likely do is establish a caregiver contract for you & hubby, so that MIL can pay for her care to you all and so that this $ is totally Medicaid complaint. So you will be prepared in the future for this if & when MIL needs to go into a facility and you all need to apply to Medicaid for her. They likely can do something regarding the $ she gave you on the house too. but really that is a ? that good legal needs to answer for you.

Really none of this stuff is a DIY - do it yourself project. Good luck!
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