My mother deeded her second home to me but kept the mortgage in her name. Will her mortgage payments be considered a gift under Medicaid or payment of her debt?
🙄 🙄 it’s gifting! Home AND mortgage payments would each have transfer penalties. Mom needs to get with a really good elder law aatty & asap cause this has major issues for Medicaid & for whatever lender hold the mortgage.
Medicaid allows them to have their 1 homestead property as an exempt asset for their lifetime by & large. But once they go into a facility on Medicaid, due to Medicaids required copay or SOC (share of cost) requirement, all thier monthly income must be paid to the NH less a small $50-60 or so a mo allowance. So if mom and her family want to keep her old homestead, family will have to pay all the property costs on it from day 1 of medicaid till beyond death and then go through whatever MERP estate recovery process if heirs are wanting to keep the house.
A 2nd home would totally be a nonexempt asset which Medicaid expects them to sell and fully use the proceeds from the sale to pay for their care or thier needs. Proceeds from 2nd home sale = spend down $. Mom would have needed to gift you her share of equity in the 2nd home back in 2013 to have some of this be beyond Medicaid. That didn’t happen now did it, Rosco?
Then every month since transfer mom’s gives you another gift; she pays the mortgage on the property she gave you. That too will have transfer penalty. It will surface. Real property ownership & transfers are all recorded at the courthouse and to the penny; all info dovetails to the state.
It’s gonna surface. It’s gonna be a transfer penalty.
But in addition to this, there probably also will be a problem with the mortgage holder. Mom did not actually own the 2nd home property outright. There’s a mortgage on it, right? That mortgage was done based on her credit history, her ability to pay. It just cannot casually be turned over to you & you “own” it. How was this done & did you get any real legal advice in doing this? If mom did this via a QCD, it only conveys what she thinks she owns. The issue is she doesn’t own it outright. The mortgage holder has to allow any change in owner/ mortgagee & usually it means the mortgage gets “struck” or cancelled with the new owner placed on an entirely new mortgage. & new owner must meet mortgage company lending criteria. I’m guessing as mommas paying the mortgage for you, you cannot pay it on your own. If so, you aren’t easily going to get mortgage co to underwrite. They will probably call in the loan.
Roscommon - until the second house is PAID off and the lender RELEASES the lien, your mother's GIFT of a house to you is only a GIFT of her portion of ownership. Mom (and therefore YOU) does not own the house in full. The mortgage is a SECURED debt (using the second home as collateral) of your mother's that is being satisfied monthly in order to pay for a house that she GIFTED that has a lien that must be satisfied before any changes in ownership can be fully recorded and given free and clear to you. I promise you that if the mortgage was not paid, you would find out pretty quickly that the lender does not consider you to be the owner of the property free and clear. If your name and social security number are not on the 1098 for interest payments made over the course of the year, the lender does not consider you the owner of the house. If your name is not on the deed filed with the county/parish, or your name is not on the tax rolls of your jurisdiction and you are not the one making tax payments on the house, you are not considered the owner of the house. If your name is not on the homeowner's insurance policy and you are not paying the payments (most likely your mother is paying for insurance and property taxes through an escrow account with the mortgage payment), then you are still being GIFTED monthly for the value of the mortgage and escrow payment. If the property taxes that are being assessed include your mother's age as a factor for assessment or any special treatment that you are not entitled to by age or disability, that can also cause you problems with the taxing authority. Talk with an elder care lawyer about your situation. Medicaid takes a dim view of gifting a house to a child and continuing to pay for it via mortgage, insurance, and taxes and keeping another house for your own exclusion. The mortgage payments will surface when bank statements are reviewed and property filings are reviewed. You give Medicaid an "all-access pass" when you file - nursing home or community Medicaid. And if the utilities are in mom's name or she is paying them, that's a gift too. Please have a professional review your situation for all the legal ramifications, not just what you or your best friend or your Mom think is the situation.
Be aware, that if Mom goes on Medicaid that she no longer will be able to pay the mortgage on the second house or any upkeep on the first. All money goes for her care.
Roscoe - whether it’s Medicaid for a facility (NH, MC, AL) or a community based program (like PACE, IHHS or other still living at home programs), medicaid requires them to be “AT NEED” both financially and medically & contribute to the copay or SOC (share of cost) for the program.
You mom has/had a second home, she is NOT at need financially. Her “transferring” it to you, is gifting of an asset & not allowed by Medicaid. By applying to Medicaid, state can look into anything that has her name, her SS#, as well as her late husbands name & SS#.
Read & re-read GuestShoppe’s post. Whatever you all did will surface and not in either of your favor. Mom seriously needs a NAELA or CELA level of elder law atty.
Yes. And so will the house itself, if the transfer occurred within 5 years of her application. Do you do caregiving for your mother? It might be better for her to pay you the mortgage amount for the services you provide (with a caregiving contract).
I think seeing an attorney who specializes in Elder Law is important at this point. The specialty is important! Many lawyers could tell you the tax implications but you need someone who knows Medicaid inside and out. Contact your Area Agency on Aging and ask if they sometimes sponsor seminars or Q & A sessions with such a lawyer, or ask for referrals.
The reasoning is that if Mother had sold her second home (it could be to you) at fair market value, and if she wasn't paying the mortgage on it she would have more money for her own care, and wouldn't need Medicaid, at least not so soon. In this country we treat caring for our elders as Welfare. That's not how I'd run things, but I'm not in charge. See an Elder Law attorney.
Igloo raised the issue that I thought of before thinking of the Medicaid implications. Mortgages typically have a clause that the property cannot be transferred w/o the lender's consent. Sometimes allowances are made for inter-family transfers, such as upon death. Did anyone notify the lender of the transfer?
There's another issues as well. With your name on the title, you would be responsible for property tax payments, And since you're not paying on the mortgage, you wouldn't be able to take deductions for interest.
However, I haven't read the recent omnibus tax act from beginning to end, but I do recall a synopsis that indicated the interest deductions and property tax were eliminated as deductions. I'm not sure about this though.
Stepping aside again for a related issue - the question might be raised as to why she needs Medicaid if she can afford to make payments on a house she no longer owns.
We aren't talking about nursing home Medicaid, just community so her money wouldn't all be going for her care. And I'm not sure if lender was notified. We could not make an argument that it is not a continuing gift since her name is on the mortgage and it is her debt, not mine?
Home AND mortgage payments would each have transfer penalties.
Mom needs to get with a really good elder law aatty & asap cause this has major issues for Medicaid & for whatever lender hold the mortgage.
Medicaid allows them to have their 1 homestead property as an exempt asset for their lifetime by & large. But once they go into a facility on Medicaid, due to Medicaids required copay or SOC (share of cost) requirement, all thier monthly income must be paid to the NH less a small $50-60 or so a mo allowance. So if mom and her family want to keep her old homestead, family will have to pay all the property costs on it from day 1 of medicaid till beyond death and then go through whatever MERP estate recovery process if heirs are wanting to keep the house.
A 2nd home would totally be a nonexempt asset which Medicaid expects them to sell and fully use the proceeds from the sale to pay for their care or thier needs. Proceeds from 2nd home sale = spend down $.
Mom would have needed to gift you her share of equity in the 2nd home back in 2013 to have some of this be beyond Medicaid. That didn’t happen now did it, Rosco?
Then every month since transfer mom’s gives you another gift; she pays the mortgage on the property she gave you. That too will have transfer penalty. It will surface.
Real property ownership & transfers are all recorded at the courthouse and to the penny; all info dovetails to the state.
It’s gonna surface. It’s gonna be a transfer penalty.
But in addition to this, there probably also will be a problem with the mortgage holder. Mom did not actually own the 2nd home property outright. There’s a mortgage on it, right? That mortgage was done based on her credit history, her ability to pay. It just cannot casually be turned over to you & you “own” it. How was this done & did you get any real legal advice in doing this?
If mom did this via a QCD, it only conveys what she thinks she owns. The issue is she doesn’t own it outright. The mortgage holder has to allow any change in owner/ mortgagee & usually it means the mortgage gets “struck” or cancelled with the new owner placed on an entirely new mortgage. & new owner must meet mortgage company lending criteria. I’m guessing as mommas paying the mortgage for you, you cannot pay it on your own. If so, you aren’t easily going to get mortgage co to underwrite. They will probably call in the loan.
Your Mom needs an atty ASAP.
Roscoe - whether it’s Medicaid for a facility (NH, MC, AL) or a community based program (like PACE, IHHS or other still living at home programs), medicaid requires them to be “AT NEED” both financially and medically & contribute to the copay or SOC (share of cost) for the program.
You mom has/had a second home, she is NOT at need financially.
Her “transferring” it to you, is gifting of an asset & not allowed by Medicaid. By applying to Medicaid, state can look into anything that has her name, her SS#, as well as her late husbands name & SS#.
Read & re-read GuestShoppe’s post.
Whatever you all did will surface and not in either of your favor.
Mom seriously needs a NAELA or CELA level of elder law atty.
I think seeing an attorney who specializes in Elder Law is important at this point. The specialty is important! Many lawyers could tell you the tax implications but you need someone who knows Medicaid inside and out. Contact your Area Agency on Aging and ask if they sometimes sponsor seminars or Q & A sessions with such a lawyer, or ask for referrals.
The reasoning is that if Mother had sold her second home (it could be to you) at fair market value, and if she wasn't paying the mortgage on it she would have more money for her own care, and wouldn't need Medicaid, at least not so soon. In this country we treat caring for our elders as Welfare. That's not how I'd run things, but I'm not in charge. See an Elder Law attorney.
There's another issues as well. With your name on the title, you would be responsible for property tax payments, And since you're not paying on the mortgage, you wouldn't be able to take deductions for interest.
However, I haven't read the recent omnibus tax act from beginning to end, but I do recall a synopsis that indicated the interest deductions and property tax were eliminated as deductions. I'm not sure about this though.