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My mom passed a couple of weeks ago and had been 3 different nursing homes over the last 2 years in New York, my father had a reverse mortgage on their home in New York which mom inherited after he passed 7 years ago, medicaid was needed to pay nursing home bills for mom, I am one of 4 children, my brother was living with mom the entire time before she went into nursing home [well over 15 years including when my father was still alive] and bother had DPOA for mom sinse fathers passing. Doing my best to supply most relevant info, there is much more details twists and turns, so what i have read on this site so far is that bank will go after repayment of RM within 30 days [RM for moms home is apprx. 340K. market value of home is apprx. 600K] and that medicaid will want repayment of 2 years when mom was in nursing homes apprx. 250K. My question is after bank recoups its 340K after it moves to foreclose on home there will still be 260K leftover if they get 600K for it, will bank have responsibility to repay medicaid or is it on executor of her estate to pay? remaining 3 siblings [myself included] have been kept in dark by brother as he had DPOA over the years, he also still is living in moms house and he may be disabled on SSI, so as I had been reading also on this site that because he had been living with mom for more than 2 years before she went to nursing home [I suppose he would have to prove he was "caregiver"] and he could be disabled [not sure] but if these 2 points are true, would either one of these points or both be under the "Exemptions" part of MERP in which the 2 years of nursing home payments would not be pursued which in turn after all other outstanding debts were paid would the 4 heirs [siblings] split the remaining amount? Or, is the point moot because those Exemptions would only be valid if 'reverse mortgage' did not exist and brother was living in home?

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igloo posts that "each heir has to do their own exemptions" so disabled heir who lives out of state do they submit the MERP questionnaire [is this referred to as NOI notice of intent letter? not sure] to Medicaid estate recovery in the county where mothers house is located? to executor? or to surrogate court where estate is probated? Need clarification for this part of process. thanks.
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Partimeatty, NY requires a 7 month waiting period to settle estates. NOTHING gets distributed to heir for 7 months. NY also now goes after Trusts as a part of MERP. The Executor will have to deal with a complicated process.
I seriously doubt if a person on disability can afford the upkeep of a $600K home. That presents a major obstacle for the brother. PLUS if he inherits a large sum, his SSI or Medicaid would stop cold. Putting any of the assets in his name could create more problems than it would solve. Personally, I would want a good lawyer to help me avoid the pitfalls.
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You can always ask for confidentiality, I would be surprised if court would grant it. After all, the home is probably a big chunk of the estate, it usually is. Why wouldn't you tell them?
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also in addition to last question above can the disabled heir/sibling who files exemption: request to the attorney or the surrogate court that the fact that they are disabled is kept confidential from all parties involved i.e. [executor, other heirs, creditors, public, etc.] I believe executor will be sent MERP questionnaire where form specifically asks: "Is the decedent survived by a certified disabled child of any age? " and to "provide certification of disability" I believe that attorney most likely will be handling paperwork. Disabled sibling wants their disabling medical condition kept private from all eyes but logically at least Medicaid and whomever fills in MERP questionnaire form will know their disabled status that being executor or attorney.
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igloo and anyone else who may know:
Disabled heir/sibling who lives in different state from executor/brother does that heir need to contact brother or brothers attorney in order to file disabled exemption? Disabled heir/sibling has trust issues with brother and attorney helping him, another words can disabled heir/sibling request the NOI letter/form (from Medicaid or some other entity other than brother/attorney) to file disabled exemption on their own without getting involved with brother or his attorney?
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My understanding is - that most states put a time as to when probate must be opened. If family doesn't open probate, then the state can view them to have died intestate; & for the RM, the agreement will indicate by when settlement / payment must be done by. Under new HUD rules, lenders allow heirs up to 30 days to let them know what they plan to do & up to 6 mo to arrange financing for 95% of FMV. If family want the house, they have to pay off RM. If not, property can be foreclosed &/or sold on the open market. No gray area. If it’s an HUD backed RM (HECM /Home Equity Conversion Mortgage) & house sells for less than owed, HUD pay the difference to mortgage holder.

For MERP, your state's Medicaid website should have what are exemptions, exclusions and the cost-effectiveness minimum required for the estate recovery program and how all has to be documented. It's going to be very much interdependent on your state.

One important thing to keep in mind that each heir will need to do their own exemption or exclusion. It's just not simple.

I'd bet happens is that at the act of sale any proceeds left over (after RM is paid off) will either go into the estates account or an escrow-like account till it's determined if exemptions/exclusions are valid or proceeds left over all escheat to the state.

So your brother (who lives in the house, was caregiver and is executor) is planning on selling the house (600K value) to repay the RM (350K) and will have 250K left as proceeds from the sale, that's it, right? Medicaid paid 250K. 4 heirs of which 2 qualify for a Medicaid exemption and have done whatever documentation and filing within the time-frame in the NOI, right? What I'd bet happens is that those 2 heirs can get their 25% each of their proportional share of the final assets of the estate with the balance going to the state as it's a creditor of the estate which has 250K as assets.

Remember there will be all sorts of needed to be paid upfront costs of the estate…..probate atty fees, court costs, appraiser fees, funeral & burial costs, taxes, realtor commissions, property costs, etc. Executor brother could get executor fees paid as well. Whatever the case all that is established in probate as to who paid in what order. Atty will be busy & I hope they have experience in dealing with MERP.

Personally if I was a heir to an 250K valued estate with 250K Medicaid lien/claim & I had no exemptions or exclusions or no claims against the estate to submit to the court, I'd walk & not spend a penny on any aspect of the estate.
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1. Probate does not have a deadline, but read the reverse mortgage contract to see how long they give you.
2. Nothing stops MERP claims. A disabled person would only get a hardship exemption if they already live in the house. They would not be able to sell the house, just live there.
B. ALL the bills against the estate count against ALL the assets of the estate. Paying off one does not exempt you from the rest, especially MERP. The first creditors to foreclose will be unpaid property tax and reverse mortgage.
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igloo or anyone else please answer two questions in my last post. thanks.
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At this point as far as I know estate is in probate and lawyer contacted one of my siblings and stated that brother [who still lives in home and mother named as executor in will] is planning on selling house. My questions now are:

1. Is there a deadline established by probate as to when house will be sold? igloo says in first post that "family has 6 months to come up with repayment for reverse mortgage" does that mean if brother and or other heirs wanted to keep house pay them 350K or bank just wants their 350K and if you have to sell house to pay bank then you have 6 months to do so?

2. I need clarification on the role of exemptions for MERP:

A.Can brother or one of the other heirs file an exemption with MERP [one of my siblings who lives in a different state than where the house is located is disabled] after NOI letter is received and disabled proof is provided, will the disabled exemption stop the MERP claim? Anotherwords, the house is sold, the reverse mortgage is paid to bank and there is money left over does exemption put a stop to MERP claim on estate or collecting left over money after sale of home?

B. Do exemptions only apply if brother or other heirs decide to pay off reverse mortgage and keep home?
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Parti - ok so its 600K assessor value with 350k RM, right? 250K Medicaid?
Well unless bro has all the $ to pay off the RM, the house has to be sold.

Worrying about MERP exemptions, % heirship, probate, etc is a waste unless the RM is dealt with first & foremost. Not to sound harsh, but if he doesn't have the $, all totally on his own, then none of the other stuff matters; for you or other family to spend a dime on the property, or get themselves entangled w/RM or MERP, imo would never have any benefit unless you all have a ton of $$$ to spend with risk & like getting pissed on. RM gets their 350K first and any $ left over will be paid to the state at the act of sale. If one of you wants to deal with opening probate, you can but probably only the hard costs for probate (the legal fees to atty and the court costs) would be paid. The executor would have to front all costs first and do all their time for free as the estate will have no $ once RM and MERP is paid other than the tiny amount for legal & court.

Does bro have 350large right now in the bank for the RM? and another 10K or so for future house costs?

The caregiver exemption is terrific but the caregiver has to have the funds to afford the house. What happens based on posts on this site, is usually a daughter stops their career and moves home to take care of their folks. In the process, she spends her own nest egg and stops short the building of her own retirement. It all works out for awhile as the parents own their home and have SS & retirement so expenses are covered. But once the parents go into a NH, there is no more $. So the caregiver can get the home, but can't afford it. This is to me the real Shakespearian tragedy for caregiving.

About the caregiver exemption, for the state I'm familiar with, they have to provide to the state a letter from the elders MD or SW (on their letterhead with state registration info) as to what caregiving was provided and why it was needed. Whether this would be easy or hard to get would just depend on the situation.

Your bro might could get the caregiver exemption, but if he cannot afford all the costs on the house from now till forever after he's paid off the RM, it's going to go to tax sale and still have the MERP cloud on it as that is how his state does the exemption as Pam said. Or catch on fire and not have any insurance coverage & still have the MERP cloud. Or some other dramarama. Is this perhaps accurate?
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Parti - yeah it's a typo……robare is probate.

One central thing in all this is that EACH state runs it's Medicaid program uniquely but within an overall federal guideline. Then add into this, that each state has it's own laws and administrative code for property rights, probate, etc. So how AL does MERP will be similar yet different than TX or NY. Like some states do not allow for any judgement to be placed on the persons homestead. Their home is sacred - this is true for TX & FL. So you can be sued but the judgement cannot be placed on your home. Some states allows for Medicaid to place a lien on the property while others it's a claim. They are different legal constraints on the property. Then add in that probate is different for different states….like if your state has MERP as a claim and your state (like TX) does probate as a Level of Claim by Class with MERP as a Class 7 claim so it will be paid after Class 1-6 is a very different dynamic than all claims equal.
Garden - for TX, state is not a supercreditor but a Class 7 creditor.

No 1 simple correct answer. We're all right & we're all wrong…..

Now there are somethings we can probably assume are standard:
- the RM or a mortgage holder as a secured creditor has to be satisfied first. The mortgage agreement has the terms for doing this.
- MERP is an unsecured creditor via a lien or a claim and what they can do will be interdependent on your state laws.
- family or heirs have to file whatever exemptions, exclusions, etc to release or offset estate recover once they get the NOI from the state or their outside contractor, &/or establish these as claims within probate.
- each heir has to do their own exemption.
- if you don't open probate, then I'd bet the state views the elder to have died intestate. My understanding is that most states intestacy has it so that all assets escheat to the state. For heirs, it is a very disadvantageous position.
- if you open probate, then everything should go through probate process.
- if the value of the "recoverable estate" is over around 10K, heirs will have to deal with MERP one way or another to get the claim or lein released.
- if the value of "recoverable estate" is under 10K (which family needs to be able to document in detail), then doing estate recovery probably will not meet the required cost-benefit analysis, but you have to request a release and then file this at the courthouse to the legal chain on the property or have to present at the act of sale so no issues with clear title.

None of this is simple.
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so the caregiver or disabled exemption allows brother to stay in house as far as Medicaid (MERP) claim against estate goes, what about reverse mortgage? what keeps bank from forcing sale of home? or are you saying that MERP claim puts cloud on title of home [as igloo says] and that prevents bank from foreclosing on home?
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partimeatty, the brother/caregiver/executor will probably seek a caregiver's exemption that allows him to stay in the house. BUT he cannot sell it, nor will the lien disappear. Basically he becomes a life tenant, not an owner.
You won't be selling and splitting anything, sorry.
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igloo thanks for taking the time to share your thoughts. I'm going to investigate this more and have more info soon [hopefully] I understood 99% of what you have written except in last paragraph you have "look for a robare guy" and I have never heard of this term before [maybe it is a typo] couldn't find much on google so please clarify? At this moment mom had named brother who lives in home as executor, I live out of state as well as another sibling, the 4th sibling lives in NY near brother. you are correct brother has many issues [poor judgment is the least of it] and should not be executor, he had a shady atty helping him for last 7 years and with his DPOA paid for his fees with moms money [I suppose that at the very least is grounds for a complaint with the bar] I suspect shady atty is helping him now with his executor duties and had been helping him last 7 yrs to secure his DPOA so he could use moms money for himself and keep the 3 of us away from him robbing mom blind, we tried to get mom to change POA back to one of us but she was afraid of him. One of large banks has the reverse mortgage as it went back to when father was alive at least 8 or more years ago. one of my siblings who lives out of state has been feuding furiously with brother for last 7 yrs as a result of his "mismanaging" of moms health and finances and is out for "justice" against the brother, as you can see any of the last 2 words with quotes I am using words which are very kind I should be using stronger language as this entire saga has been an absolute nightmare from when my father passed up until this very minute and is extremely volatile and I do not know what phone call or text is coming next. yes, please stay tuned..
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Igloo, wouldn't a MERP lien take priority over any other liens, including an RM lien, because of its governmental status as a super creditor?
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Here's my suggestions as one who has dealt w/parent home & MERP:
- there needs to be 1 person to be the point person in this. Whomever is named executor as per moms will ideally is that person. If they have issues (not competent, not interested), judge can appoint an administrator. Judges seem to prefer family but it can be an outside administrator & their fees & MIE paid from estate if no family step up.
- & they get probate opened ASAP. Why? Well probate provides for a legal codified system that EVERYBODY...family, estate recovery (MERP), banks, RM etc to have to file into and go through. I'd try to get a probate atty who does litigation if at all feasible, it may not come to that but keeps you from having to switch out attys. Later on if this gets super sticky.
- if this was a federally backed RM (like HUD or FHA), the rules for repayment have changed. The 30 day is moot. Family has 6ms to come up with repayment and it's NOT at full RM balance. google NYT reverse mortgage changes and articles on this will come up.
- RMs have dramatically changed. The bigger banks - BoA, Wells - have gotten out of RM biz as they were taking a beating on RM being overvalued.Feds have required changes in how federal RMs are done (Feds underwrite them ultimately). Leaving IMO more predatory RM underwriters who don't play fair. If you want the house, you are going to deal with RM very assertively and your atty will be invaluable. As a thought, there could be an issue with mom moving into a NH and the RM, as they are usually required to reside in their home - keep homestead-, moving into a NH could means RM agreement was out of compliance and RM should have been called. This could be an issue.
- find out the amount to payoff. There could be all sorts of fees, fines above the $ mom got. The line of credit RM costs are not quite as huge in settlement. Hopefully this was a line of credit RM.
- imo house is going to need to be appraised. You may find RM has house at one value & MERP at another. You get it appraised and this is the figure entered into probate & everbody had to live with this figure. If house has issues, you may need to get it inspected and a residential structural engineers report done first and provided to the appraiser.
- probate & appraisal is also important for dealing with MERP......If say appraisal comes in at 475k and RM payoff is 400k, that means only 75k available for MERP. So say there are 3 heirs to the estate, of which 1 will qualify for either caregiver or disabled exemption for his 1/3 but the other 2 have no MERP exemptions. So family need 50k to pay MERP to get claim or lien released. However, probate allows for executor expenses, probate costs, funeral costs to be paid before unsecured claims (merp is unsecured). If all that adds up to 20/30k, it could well be that the MERP claim is reduced to the point where it is easily affordable or does not meet the required cost-effectiveness to be done.

- RM is probably going to want brother out & want house sold asap as they are a secure creditor, they are ahead of MERP which is unsecured creditor. The atty can push back on this. Your brother will need to clearly establish his exemption or exclusion to MERP. MERP has caregiver & disabled exemptions but they have to be documented. MERP send out a " notice of intent" to file a claim or lien within 2-6 mos of death to whomever is on file as the contact person for Medicaid. If the NOI is not responded to, MERP assumes claim or lien can be placed by default. It will surface and be a problem when House is sold or to transfer to brother ( assuming bro /family pay off RM and house is to be kept) as neither can go through as there s a secondary claim or lien. It is a " cloud" on the title which is found when title co is doing its work for the mortgage underwriter.

Probate is going to be useful as the "we want this done in 30" comes to a screeching halt once probate opens. It enables time to work things out. At 600k+ the estate has value, atty can be assured of payment, brother -who sounds like has judgement issues - will have an advocate.
Think if bro will just ignore all this and it snowballs to be a sticky mess, what then? Really I'd get look for robare guy ASAP. Good lick and key us know what happens. We all lean from each other.
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Yes, it sounds as if bro may have you all in a situation of no recovery under MERP. However, there is the issue of the repayment of the reverse mortgage. You will need to see an attorney that specializes in elder law and Medicaid.
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