They are joint owners and it is my understanding that spousal transfers are okay in Colorado. Dad still lives in the house. Mom's on Medicaid in nursing home.
Everybody likes to complain about how awful nursing homes are. Maybe they wouldn't be as bad if people quit trying to screw the system by hiding assets and refusing to pay what they can for their own care. My brothers and I would be inheriting a small fortune had my mother not paid out of pocket for her Assisted Living, her nursing home and her caregivers. My mother wasn't born with a silver spoon in her mouth - in fact she came from nothing but was able to save a tidy sum for her retirement and care. I have no problem at all with Medicaid paying for individuals who were not able to do the same - life can deal out some crappy hands and many are unable to do it - and that's what Medicaid is for and everybody deserves to receive care in their old age. But this purposeful hiding of assets so adult children can get a bigger inheritance at the expense of everyone who honestly pays into the system really chaps my hide.
Babs - it would be a flawed (at best) or fraudulent (at worst) Quit Claim in addition to the transfer penalty issues Pam mentioned.
Why? well when your mom applied for Medicaid there was something within the application in regards to MERP - Medicaid Estate Recovery Program. When they apply for Medicaid for NH, MERP is required to be part of the program. Mom or you or whomever did her application did NOT have to sign off on MERP either. For my mom in TX NH (she still has her home), MERP is an acknowledgement of fact statement within the initial Medicaid application. Also statement is in my moms annual recertification for Medicaid.In addition for the recertification, my mom is required to fill out a form as to any changes in her assets, information on those assets with documentation (like the annual tax assessor bill) and 4 months of banking - so I would have to put in if a QCD was done (and mom gets transfer penalty for Medicaid) - if I did not disclose I personally can be penalized for fraud by the state. In the MERP statement, it reads that any assets of the recipient is subject to recovery unless released by the state. (Release will be a document that needs to be filed to clear the title) All states have MERP as part of Medicaid.
Quit claim deeds by their nature do not provide a guarantee of ownership (that is what a warranty deed does & because of this most mortgage companies will not loan on a house or land sold via a QCD and if you need to put the house as collateral later on a QCD property may not qualify). What a QCD does is transfer what a person believes to be within their ownership to another. For married couples, doing a QCD isn't usually done as the spouse almost always has the right of survivorship or the house is viewed as community property so the spouse outright inherits the house. By applying & accepting Medicaid,she acknowledged that the house/asset is subject to a MERP claim or lien by the state on her asset. She does not have the ability to do the QCD as she knows by being on & accepting Medicaid that Medicaid can have their own claim or lien on the asset. Colorado has outsourced MERP to HMS and they are very, very, very good at what they do to enforce recovery & really doing a property search is just a few keystrokes from being found out and having a penalty. All real property value & records - homes, land, cars - are all recorded by the local assessor and then dovetailed into the state database. It will show up eventually. This site has postings from others whose parents did a QCD of the home in an attempt to hide it from Medicaid and then applied for Medicaid within 5 years. Eventually the state will find out and the state required was either they pay a transfer penalty OR they QCD'd the property back to the parents AND until this was done the parent was suspended from Medicaid and the kids had to private pay @ the NH till it worked through the system. So think carefully if you could private pay for mom if this happened.
Your dad, assuming he outlives mom, will qualify for the "community spouse" exemption or exclusion of the home for MERP. When mom dies, the state will send out a letter regarding MERP to whomever Medicaid has on file for contact. Dad fills out the form, provides whatever documentation is needed and he will get a release of MERP claim or lien and he owns the house outright. It will be his 100% (this is how it works for TX and I assume most states do the same). What he does then, like gift it to his kids or sell it is up to him. If Dad could himself need Medicaid, you want to speak with an elder law attorney regarding how best to structure the transfer of the house so it works best for a future Medicaid application.
Wouldn't it be great if everyone could keep their assets and the government would pick up the tab for long term care? Never mind - it's a rhetorical question.
As a taxpayer, I would like to say that your mom is on Medicaid - at taxpayer expense. Assets need to be used for her care. I'm not a fan of paying higher taxes so your mom can get Medicaid and then you guys get a windfall. Sorry - think about what you are trying to do. It is cheating & unfair.
Babs, court ordered transfers, like in a divorce, cannot be overruled by Medicaid. And rules for Medicaid vary from state to state. Exemptions are granted to a living spouse so they can remain in the home. BUT if they sell the home or quit claim the home, trouble ensues. See your state Medicaid rules.
Babs, don't do it because mom cannot quit claim her half... This how it would work: she quit claims half of a $300,000 house to Dad. That's a $150,000 transfer of an asset. Let's say Medicaid is paying her nursing home $5000 month. Medicaid is very good at find out about quit claims and they would send a letter stating that they are imposing a Transfer Penalty and they will NOT pay for her care for the next 30 months. (30X5000=150,000). Bad, Bad, Bad decision.
Donny, transferring would trigger both the Medicaid penalty and a huge income tax implication for the grandchild. Don't do it. Plus check the costs, I have to believe that a nursing home is a lot more than $2500 per month. Average NH cost in Pueblo CO is over $200 per day. Plus you would have to pay back the three years Medicaid has already paid for her. A POA can be sued for hiding assets . So I would foresee a $60K tax bill for the grandchild and a judgment against the POA for $162K for three years of NH care. NO GO.
donny - I would suggest you get an attorney &do a couple of things BEFORE your meeting with legal (my comments are based on gran being on Medicaid)-
- @ the NH: speak carefully with the NH to find out exactly what the Medicaid & private pay daily room & board cost is of the NH; what the total has been so far for what Medicaid has paid the NH; and how this facility approaches transfer penalty. Also check to see that gran is 100% current on her required "SOC" (her co-pay or share of cost) to the NH. As Pam has said, NH are a lot more than $ 2,500 mo. My mom is in a NH in TX which has a very low Medicaid reimbursement rate @ about $ 145.00 a day / $ 4,400 a mo for just room & board. Once you add in the costs of medications, any therapy, etc. the average NH is closer to 6K a mo (my mom is also on hospice and that alone is another $4,500 a mo paid on her care but thorough Medicare) and TX is a low reimbursement rate state! Once gran is off Medicaid, the NH does NOT necessarily have to bill you at the Medicaid rate, they can bill you at a private pay rate, which could mean double the daily rate too. All these are reasons why you need to carefully speak with the NH.
- IRS issues & minors: in addition to the tax bill Pam mentioned, I'd be especially careful on doing this as often putting real property in a minors name can be viewed as done to avoid taxes as they have minimal tax liability. You really should speak with an estate attorney who does elder law & a CPA too about how best to do this for your state. There may be a UTMA type of situation that can be done. Still the Medicaid transfer penalty to deal with but could be a better approach for IRS gifting taxes. Also realize once that minor reaches majority if they want to sell the house, they can without ever consulting you or other family. It's theirs.
- Medicaid application details. Please look over the application for Medicaid that someone signed off on for gran. Within it will be a statement regarding MERP- the Medicaid Estate Recovery Program. By accepting Medicaid, you accept the terms of the program including MERP. You do NOT have to sign off on this either, it is an acknowledgement of participation. If you as DPOA or whomever in the family does anything to change ownership of an asset (home,car, land) that gran had at the time of the application, you have to report it to Medicaid. I don't know how other states do this, but for TX Medicaid there is a sentence to the effect that if you don't let Medicaid know of any changes, you can personally have a penalty or fraud action against your personally. TX does an annual re-certification for Medicaid in which I have to send 4 months of banking along with details and documentation on assets, insurance, etc for my mom to be renewed for Medicaid (this years batch was 28 pages faxed to TXDADS). If CO does this too, then you have to disclose any changes.
- Title issues. If you don't deal with Medicaid, and when the transfer surfaces (and it will eventually), the property can have issues with having a clear, clean title. The claim or lien from Medicaid will be on the property till the Medicaid bill is settled. There are several posts on this site from those who did a property transfer or ignored the MERP notice on the property after the parent on Medicaid died and now a couple of years later, they are trying to deal with selling the property and find when they go to closing that low&behold there is a claim or lien on the property which has to be paid from the proceeds of the sale in order for the sale to go through. Or they want to transfer it to their name because they are using the property as collateral, and can't as they don't own it. Having clean, clear ownership of property is really important. You don't want to gift the house to a minor grandkid and then find that they have in their name something with all sorts of debt which is tied to their name.
- if you are in Colorado, MERP is has been outsourced to HMS by the state. They are very, very, very good at what they do to enforce MERP.
Again find out the details and then speak with good legal on all this. Good Luck
RainMom, thanks for having the courage to be frank about people trying to shield assets yet feed at the public trough. I agree completely. I find it reprehensible.
There are people legitimately in need who have no assets to shield; these are the people who need Medicaid assistance, not those trying to sequester their assets yet still suck off public funds.
Nope. Medicaid looks at all transfers and imposes a penalty. In fact they look back at least 5 years. See an Elder Law attorney before you create a huge fiscal mess. You can go to cms.gov and read the rules for Colorado. Medicaid will not toss Dad out in the street unless he does something stupid like try to hide the asset with a quit claim deed.
Why? well when your mom applied for Medicaid there was something within the application in regards to MERP - Medicaid Estate Recovery Program. When they apply for Medicaid for NH, MERP is required to be part of the program. Mom or you or whomever did her application did NOT have to sign off on MERP either. For my mom in TX NH (she still has her home), MERP is an acknowledgement of fact statement within the initial Medicaid application. Also statement is in my moms annual recertification for Medicaid.In addition for the recertification, my mom is required to fill out a form as to any changes in her assets, information on those assets with documentation (like the annual tax assessor bill) and 4 months of banking - so I would have to put in if a QCD was done (and mom gets transfer penalty for Medicaid) - if I did not disclose I personally can be penalized for fraud by the state. In the MERP statement, it reads that any assets of the recipient is subject to recovery unless released by the state. (Release will be a document that needs to be filed to clear the title) All states have MERP as part of Medicaid.
Quit claim deeds by their nature do not provide a guarantee of ownership (that is what a warranty deed does & because of this most mortgage companies will not loan on a house or land sold via a QCD and if you need to put the house as collateral later on a QCD property may not qualify). What a QCD does is transfer what a person believes to be within their ownership to another. For married couples, doing a QCD isn't usually done as the spouse almost always has the right of survivorship or the house is viewed as community property so the spouse outright inherits the house. By applying & accepting Medicaid,she acknowledged that the house/asset is subject to a MERP claim or lien by the state on her asset. She does not have the ability to do the QCD as she knows by being on & accepting Medicaid that Medicaid can have their own claim or lien on the asset. Colorado has outsourced MERP to HMS and they are very, very, very good at what they do to enforce recovery & really doing a property search is just a few keystrokes from being found out and having a penalty. All real property value & records - homes, land, cars - are all recorded by the local assessor and then dovetailed into the state database. It will show up eventually. This site has postings from others whose parents did a QCD of the home in an attempt to hide it from Medicaid and then applied for Medicaid within 5 years. Eventually the state will find out and the state required was either they pay a transfer penalty OR they QCD'd the property back to the parents AND until this was done the parent was suspended from Medicaid and the kids had to private pay @ the NH till it worked through the system. So think carefully if you could private pay for mom if this happened.
Your dad, assuming he outlives mom, will qualify for the "community spouse" exemption or exclusion of the home for MERP. When mom dies, the state will send out a letter regarding MERP to whomever Medicaid has on file for contact. Dad fills out the form, provides whatever documentation is needed and he will get a release of MERP claim or lien and he owns the house outright. It will be his 100% (this is how it works for TX and I assume most states do the same). What he does then, like gift it to his kids or sell it is up to him. If Dad could himself need Medicaid, you want to speak with an elder law attorney regarding how best to structure the transfer of the house so it works best for a future Medicaid application.
Bad, Bad, Bad decision.
- @ the NH: speak carefully with the NH to find out exactly what the Medicaid & private pay daily room & board cost is of the NH; what the total has been so far for what Medicaid has paid the NH; and how this facility approaches transfer penalty. Also check to see that gran is 100% current on her required "SOC" (her co-pay or share of cost) to the NH. As Pam has said, NH are a lot more than $ 2,500 mo. My mom is in a NH in TX which has a very low Medicaid reimbursement rate @ about $ 145.00 a day / $ 4,400 a mo for just room & board. Once you add in the costs of medications, any therapy, etc. the average NH is closer to 6K a mo (my mom is also on hospice and that alone is another $4,500 a mo paid on her care but thorough Medicare) and TX is a low reimbursement rate state! Once gran is off Medicaid, the NH does NOT necessarily have to bill you at the Medicaid rate, they can bill you at a private pay rate, which could mean double the daily rate too. All these are reasons why you need to carefully speak with the NH.
- IRS issues & minors: in addition to the tax bill Pam mentioned, I'd be especially careful on doing this as often putting real property in a minors name can be viewed as done to avoid taxes as they have minimal tax liability. You really should speak with an estate attorney who does elder law & a CPA too about how best to do this for your state. There may be a UTMA type of situation that can be done. Still the Medicaid transfer penalty to deal with but could be a better approach for IRS gifting taxes. Also realize once that minor reaches majority if they want to sell the house, they can without ever consulting you or other family. It's theirs.
- Medicaid application details. Please look over the application for Medicaid that someone signed off on for gran. Within it will be a statement regarding MERP- the Medicaid Estate Recovery Program. By accepting Medicaid, you accept the terms of the program including MERP. You do NOT have to sign off on this either, it is an acknowledgement of participation. If you as DPOA or whomever in the family does anything to change ownership of an asset (home,car, land) that gran had at the time of the application, you have to report it to Medicaid. I don't know how other states do this, but for TX Medicaid there is a sentence to the effect that if you don't
let Medicaid know of any changes, you can personally have a penalty or fraud action against your personally. TX does an annual re-certification for Medicaid in which I have to send 4 months of banking along with details and documentation on assets, insurance, etc for my mom to be renewed for Medicaid (this years batch was 28 pages faxed to TXDADS). If CO does this too, then you have to disclose any changes.
- Title issues. If you don't deal with Medicaid, and when the transfer surfaces (and it will eventually), the property can have issues with having a clear, clean title. The claim or lien from Medicaid will be on the property till the Medicaid bill is settled. There are several posts on this site from those who did a property transfer or ignored the MERP notice on the property after the parent on Medicaid died and now a couple of years later, they are trying to deal with selling the property and find when they go to closing that low&behold there is a claim or lien on the property which has to be paid from the proceeds of the sale in order for the sale to go through. Or they want to transfer it to their name because they are using the property as collateral, and can't as they don't own it. Having clean, clear ownership of property is really important. You don't want to gift the house to a minor grandkid and then find that they have in their name something with all sorts of debt which is tied to their name.
- if you are in Colorado, MERP is has been outsourced to HMS by the state. They are very, very, very good at what they do to enforce MERP.
Again find out the details and then speak with good legal on all this. Good Luck
There are people legitimately in need who have no assets to shield; these are the people who need Medicaid assistance, not those trying to sequester their assets yet still suck off public funds.
Medicaid will not toss Dad out in the street unless he does something stupid like try to hide the asset with a quit claim deed.
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