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My parent has advanced dementia in a nursing home. At this point are my only options to get have POA redone with my name or guardianship? Can I sue a sibling if the proceeds from the sell of the house did not go to the care of my parent?

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Medicaid does not put a lean on the house until the person dies. Not sure if a trust can be done once parent is on Medicaid. Everyone I know who sold a house, Medicaid stops until the proceeds from the house are spent down for parents care. Then u file again. You can have a lawyer ask for an accounting. A POA can't use the money for personal use.
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Abby, the house might not have been sold at all if it was transferred to a trust. For whose benefit was the trust made? Your parent? I think there are some transactions mentioned that aren't quite clear.

You write that your sibling's "spouse's name could be on the deed to the house". Which deed? The one for sale of your parent's home or the house your sibling just bought?

Do you have enough knowledge of your sibling's financial assets to confidently assert that he or she really did use the proceeds from sale of your parent's house? That's the inference.

On the other hand, if the house was transferred to a trust, it wasn't sold.

I think some clarifications would help respond to your concerns.
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Never fear, medicaid will have a lien against the house to recoup the money they are spending on your parent's care, they will be the ones looking for any proceeds from a sale.
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The spouse's name was put on what deed? The house that was sold or the new one purchased? What makes you think it "could be" on the deed? What do you think the reason might be to put spouse's name on the deed? Who would benefit from that?

Is the fact that sibling bought a house the same month Parents' home was sold the only thing that makes you think something is suspicious?

Parent is on Medicaid. That must be renewed annually. Medicaid will definitely need to know what happened to the sale proceeds. POA will have to show where it went. Probably Medicaid will be suspended and the money will go to pay for the nursing home for as long as that lasts, and then Medicaid can be reactivated. Neither you nor sibling will get any of that money. (Sibling may be reimbursed for expenses they paid out of their own pocket.)

It is really unfortunate when siblings can't communicate with each other. It would make things go so much smoother! Not that the POA as any legal obligations to communicate about decisions, but it would help, wouldn't it?

pamstegma is right. The POA gets to make these decisions. Was the POA guided in the sale by an attorney?

Here are some other things to find out:
1. How long has parent been on Medicaid? While on Medicaid parent would have no money for the upkeep of the house.
2. For the months parent has been on Medicaid, who has been paying property taxes, insurance, and utilities? Who has been keeping the lawn (if any) up to city standards? Mowing? Shoveling? It costs something to keep an empty house from deteriorating.
3. Did the house need some updating in order to be sold? Who handled that?

If you want to pursue this in some way, I think you need more than suspicions and maybes.
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My sibling recently bought a house at the same time selling our parents house (within the same month) My sibling's spouse's name could be on the deed to the house...I have to get more information. The hard part...besides my parents house being sold...is my sibling does not communicate so I have no idea what's going on. It seems to me it would be illegal to have a POA's spouse's name added to deed. My parent is on Medicaid in the nursing home and I was understand the house was placed in a trust to protect my parent's assets.
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Do you have any reason to think the money is not being spent on your parent? That would be against the law. Do you have any evidence for this suspicion?

Getting guardianship is a legal process. As I understand it, if two family members each want to be guardian the court can appoint an outsider to be guardian. This person will be paid out of your mother's funds.

Only your parent could re-do the POA papers, and then only if they are competent.

The big issue here, it seems, is what is the POA doing with the proceeds of the sale? Have you asked? What is the claim?
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Abby, are you saying that the funds were NOT used for your parent's care?
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You have no rights or responsibilities. The POA has the responsibility to see to the parent's care and if that means selling the house to pay for a nursing home, that's what they are expected to do.
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