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She is going into a nursing home next week. My sister and I cannot pay her mortgage or tax bill. moms income from my deceased dad will cover her nursing home expenses. Can we remove the contents of the house and let the house go into default? What are the legal ramifications for my sister who has POA?

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You can probably take personal items and some things out that are of sentimental value only, but anything major could be a problem.

Neither of you should end up fiscally liable, unless you were not doing what you could have done to keep Mom more current in billpaying, were recipient of major recent "gifting" of assets from Mom, or your state has unusually stringent filial responsibility (indigent parent) laws. Filial responsibility might mean that her widow's pension might go to the IRS till that is paid off and then either you or Medicaid would have to cover her skilled nursing care. It's complicated and varies from state to state. You almost certainly need eldercare legal advice and help. I would Google for local eldercare attorneys and pick one whose website reflects good knowledge of Medicaid as well as IRS issues like this, and whose initial consultation fees are reasonable (not "free" necessarily as that can be a come on and prety well guarantees very limited initial time spent, but not through the roof either...I got the best advice ever for my Mom, a solid hour's worth, for $300.00) Possibly, you will need to plan on and estate sale and selling the house and yes, the funds would have to go towards the debts; possibly a bankruptcy proceeding for Mom will be needed if it turns out to be a short sale. IRS typically still gets their money despite bankruptcy though, and the attorney might be able to help in that regard...but even then, the money would be expected to come from Mom's assets and not children's; a POA is for management of a person's finances rather than an agreement to take on their debts.
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So just how does someone elderly get 150K in mortgage debt out of curiosity?

20K in taxes? How long? I'd go on-line to the county courthouse to see if the property has gone to tax sale. If she is delinquent for a few tax years and it has gone to full-redemption from tax sale and she owes 150K, I personally would put the keys into an envelope and fed ex it to the mortgage holder and walk away. I bet there is other debt with her that will surface too. I would get a mail box @ a UPS or other parcel/shipping store and have that become mom's new address for everything (so neither you or Sissy have your address associated with all the fall-out that will happen) too. But I'm pretty ruthless about this sort of stuff. She's going into a NH and not exactly needing credit anymore and her SS cannot be seized or garnished (only IRS can take SS)

I would remove from the house all her clothing, shoes, and other personal items she will need @ the nursing home. Plan on cleaning them and storing like 80% of this for her to replace clothing, etc as needed @ the NH. I'd take all the family photos and other mementos too. I'd leave everything else and document what the house looks like when you leave too.

Keep in mind for future reference, that mom may get a 1099-C from the mortgage company. The 150K she owes will be written off but is fully taxable income from the foreclosure. May not be for 2014 either could be in 2015 or later. A 1099-C is income from cancellation of debt. The IRS views it as income and taxes have to be paid on income. It is important that you file taxes and do an impoverishment for mom so that it zero's out. 1099-C because it is "income" can pose a problem for Medicaid as it increases her assets. The fact that it is totally zombie income doesn't matter, it will show up as income if your state does a matching with IRS. Good luck with all this, it is not going to be simple or easy.
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You can't do a reverse reverse mortgage if the homeowner won't be living there any more. Also, the house mostly has to be paid off and the $150k mortgage probably is another reason a reverse mortgage would not work.
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Talk to an eldercare attorney and a realtor. My thought was a reverse mortgage, but I don't know if they take underwater houses. And don't sign any papers at the nursing home for your mother. If you or your sister must sign, use the phrase "as POA."
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Talk to an attorney. You can probably take the contents because it is likely that there are no liens that are secured by the normal household possessions. The county property tax is applying to the real estate, as is the mortgage. Those are not secured by the personal property assets like furniture, clothes, etc.. If you are talking about taxes like IRS taxes come back and clarify that. What creditor di you think would come after clothes etc? If things like appliances or furniture are still being purchased on contract then the creditors have likely to have secured their collateral on those particular assets by filing a UCC, Uniform Commercial Code form. That's how a furniture store can come out and repo your furniture if you don't make the payments. Their claim doesn't extend to the house or anything else. If you know nothing in the house is still being paid for I think you are safe in removing all those things. As far as the house itself, why not try to sell it instead of just walking away? You can be months behind on the payments, or even have had foreclosure started and still dump the house on the sale market. Call a realtor and see what they can suggest.
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Avoid lawsuits and garnishee, see a lawyer. Remove NO contents, those are assets. If you take them the lienholders come after you, and win. The POA at this point needs good legal advice to avoid an expensive error for which she will be personally liable.
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You need to talk to an eldercare attorney, pronto!
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