Brother can no longer live alone. Has some funds in retirement account. He also has home with big mortgage. I will need to take money out of his retirement account to pay for the LTC. This might last for 1 year. His mortgage needs to be paid to keep it from foreclosure. Can I use the retirement money to pay for the mortgage? He may run out of money prior to selling the house.

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To clarify, your intention is to sell the house and use the profits for his care, yes?

If yes, I stand by my answer. If he will end up with more money after everything is said and done when the house is sold then it is a good idea, but you have some work to do to establish the best route.
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Reply to Isthisrealyreal

No, I would not use his money to pay down his Mortgage. I would use it for his care. As Igloo has stated, you are allowed a house but your are not allowed to use your money for upkeep. Why save a house he will never live in again. Once in LTC with Medicaid within 5 yrs, I would spend nothing on the house. Foreclosure takes two years. Speak to someone at the Mortgage company. If its nearby, go in person. Make sure its not just a customer service rep. You need someone with authorization to work with you on how they get their money and you do to. I would put the house up for sale and hope it sells quickly. Medicaid will require it to be sold for Market Value. The Mortgage Co will get their money, taxes will be paid and any money left will be used for his care.

I would not pay taxes. I may pay electric, heat and water but not sure if u can use his money. Turn off phone and cable.

I would find a lawyer versed in Medicaid to make sure you do everything you need to do. I think Medicaid allows you to use brothers money for a lawyer.
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Reply to JoAnn29

To me IF there is the trifecta of Medicaid, Mortgage and MERP (Estate Recovery) likely looming, then for an individual LTC Medicaid applicant keeping their home doesn’t make sense.

Reason being is LTC Medicaid copay or SOC (share of cost) requirements...... which means that brother will have to have almost all of his monthly income (SS$, any other retirement / income distribution) be paid to the nursing home. All he will have in $ - once on LTC Medicaid- is the personal needs allowance. PNA ranges from $35-115 a mo depending on your state. Most PNA is $50 or $60 & realistically it’s may be enough for on-site barber shop at NH and some toiletries replacement. Really family will inevitably spend their own $ to buy him new clothing, shoes, room decor, etc to make his stay in the NH nicer.

Due to copay, There will be no- none - nada - zilch of his $ to pay property costs, like property taxes, insurance, utilities, maintenance. In your situation there’s also a Mortgage to be paid & which has specified insurance & maintenance requirements that a paid off property will not have - these could be costly. Like where I live it’s homeowners, flood & windstorm insurance... and can be a budget buster. All property costs again have to get paid in some way, which means family must pay all from day 1 of medicaid till beyond his death as whomever is Executor as per valid will ends have to deal with MERP. & in my experience Executor probably ends up needing an attorney to opening probate as best way to deal with MERP & any other claims against the estate. Property meanwhile continues to have costs...... property taxes have to get paid.

Now MERP does have all sorts exemptions, exclusions, cost benefit formula. But all that comes into play usually AFTER their death. If there is a community spouse or a caregiver exemption, to me, dealing with these are not a DIY and everyone is best served having an elder law atty shepherd his application and deal with CS items & caregiver exemption in tandem with his initial application. Imo If you or heirs not likely to have exemptions, etc. being a documented factor to offset Estate Recovery, I’d suggest house get sold at FMV and done before ever applying for Medicaid; hopefully the sale price pays off Mortgage and with funds left over to have him private pay for care till he clearly gets to the basically impoverishment level (2k in nonexempt assets for most states) needed to financially be eligible for LTC Medicaid.

If elder wants to keep their old home, they usually can as an exempt asset for Medicaid for most states. But family need to have the purse or wallet (& a sense of humor) to pay all costs for an undetermined period of time on a property that they do not own. So you’re running risk. Low value property or high (at the edge of figure allowed by Medicaid) with minimal debt service and pretty good likelihood of dealing with MERP can make sense if you have the $. But having a mortgage makes it just too costly to support doing imo.
Helpful Answer (3)
Reply to igloo572
Isthisrealyreal Jan 21, 2019
I believe the intention is to sell the house and use the profits for self pay.
I would find out if the value of the house justifies keeping it from foreclosure.

Get a real estate agent in and give you some comps to determine whether you should go that route.

If it costs more to keep it then he will realize from the sale, his IRA may be better spent on care.

You could make 1 payment to keep the bank from foreclosure to give you some time, unless they have already started the process. I would check because the loan could be written that the entire balance would be due and payable if foreclosure begins. Also ask about those fees, it could cost as much as 2,500.00 in fees for foreclosure process, possibly more. So how much money would the bank require to bring everything current. FYI their foreclosure fees will be paid 1st from any monies paid.

You are a lovely sister, best luck getting him the most money.
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Reply to Isthisrealyreal

Just thinking - that if his house goes into foreclosure then he will not have the use of the money from the sale of the house. He is single, no family except for me,his older sister, so I expect to use his money for self pay for his long term care in a facility. He cannot go home as he is unable to care for himself although he is young, 66 years old, diagnosed with self neglect and he is autistic. Thanks for your insight.
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Reply to Gailbry

If he can no longer live alone who will benefit from having the house paid down or off?
Will you be staying with him? Will he be moving? If he is moving what will happen to the house? If it is sold the proceeds from the sale will become an asset. The house paid off or not is an asset. I am not a financial adviser, I am not an eldercare lawyer, I am not a CPA any of these can better answer the question.
Starting payments from an IRA can be used to pay for anything the person wants this is what the idea is behind IRA, to provide money after a person has retired.
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Reply to Grandma1954

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