FIL lived in the house while MIL moved into a nursing home, but now FIL has moved out and we are selling the house. When we close on the house, do half of the funds get paid directly to Medicaid for my MIL?

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slmCoach -

I would definitely discuss this with an elder law or estate attorney to be sure you are doing the right thing. The last thing you need is to have MERP (Medicaid Estate Recovery Program) coming after your father-in-law or you, as the heirs, for not sending them what was required.

You didn't mention if your mother-in-law had passed away, but it sounds as if she may have. What happens is once the Medicaid recipient dies, if the spouse is still living in the house, MERP can't touch it for recovery until they either move out or die themselves. There are multiple situations that can complicate matters - that's why I recommend talking to an attorney to make sure you're doing the right thing - or you could call the MERP office in your state yourself. The person I've been speaking to about my parents' home has been very helpful and understanding.
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