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In that state of MO.

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If dad signs over the home, and the market value of the home is $120,000, Medicaid will impose the full amount as a penalty.
The transfer would also require him to pay gift taxes.
Renting in back to him would not matter, there is still the full penalty.
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I need to add more info. The father is not using medicaid nursing home right now. He signed the home over six years ago and used IRS form 709 so no gift tax. Does she have to rent it? In some states the gift in not complete until she rents it back to the parent she can not let the parents live their free. Has anybody heard of this?
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Read the transfer documents. Usually the parent retains Life Tenant status, pays no rent, but pays property taxes and upkeep of the home. That means you really don't take possession until they die, when the transfer becomes effective, at full market value, and subject to estate exclusion.
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Dad would have needed to have gifted and legally transferred his ownership of the property 5 full years prior to the date of his Medicaid application to avoid a penalty by Medicaid for the gifting. Renting has no effect.

Property would need to have been gifted February, 2011 for medicaid application done today. It is the date of the Medicaid application that starts the lookback time & not the date of the transfer /gifting.

The penalty roughly is based on an equation of your states daily reinbursement rate for Medicaid and property value (this is usually the current tax assessor value). If assessment is whack, it is to your advantage to get the property inspected and appraised (each done by accompany licensed & registered with the state) BEFORE the legal transfer is done. And to file & complete an appeal of value with tax assessor BEFORE it is transferred. Your opinion or a Realtors comps on house value does not matter.

If you've already done this, well dear god, it will show up in the review of your application. You can expect a more detailed review on all your financials and assets too. You will be ineligible for Medicaid for however many many days long the penalty period is OR daughter signs the property back to you (there will likely be days of ineligibility till this is done) OR daughter pays you FMV on house which you use for spend-down you OR don't apply for Medicaid till sometime in 2021.

Medicaid usually does not require that you sell the home. You can keep it for your lifetime in your name but someone in the family will need to pay all costs on the home from now till after you die and go through probate and deal with MERP. MERP has all sorts of exemptions & exclusions but it is totally on family to document and do whatever to get them to qualify for a release of MERP claim or lien.
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Hmm, well 7 years could change things.

If the property in the daughters name? And it shows in her name on assessors bill, insurance, utilities, etc. if so, then it's hers & outside Medicaid lookback.

But if this is a life estate, take all the paperwork on the property and see an elder law atty. In MO. LE usually transfer outside of probate so in theory LE means no estate recovery by MERP. But many states are allowing a wider view of recoverable estate and LE are subject to MERP. MERP -the recovery arm of Medicaid - is very much interdependent on state laws on property & probate as to what can be one. Medicaid administration is unique to each state. You need a mo atty. to review this.
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The daughter name is on assessors bill and insurance. The father lives there free but pays utilities. Not a life estate the daughter just does not charge rent.
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The utilities are still in the name of the father.
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The property was not appraised they used the county value as the amount. It has been over six years ago now.
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OK so you are beyond the five year look back. Why on earth would she charge him rent? To cover the taxes, or does he pay those? Seems grossly unfair.
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I wanted to add a quick note. The topic of gift taxes just came up yesterday while I was with my mothers accountant starting her yearly taxes. Now this is just what our guy says but his is very good - a third generation accountant working in a family firm where the aunts, uncles, father all work. He said a gift over the allowed yearly amount - per receiver, which is around $12,000. requires a gift form to be submitted to the IRS however no tax is paid at the time. Gift tax comes into play at the end of life - the final filing and is based on a total amount given away over a lifetime. Generally the amount has to be well over a million dollars. This said, the Medicaid rules are very different and even giving away somewhat more modest amounts can disqualify someone for Medicaid.
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I heard on a radio show that in some states the gift in not complete until rent is charged. I am assuming to make it like the open market. She pays the tax bill and insurance should she pay the utilities also to get those out of his name?
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You heard wrong information. She should NOT have him pay the tax bill and insurance--- those are gifts to her when there is no contract in place and he no longer owns the property. PLEASE talk to the attorney.
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Write down your questions. List your goals and intentions. Get your documents. Find an Elder Attorney who also deals in estates, assets, medicaid etc.
Make the appointment. Good Luck!
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