I think it would be wise to contact an attorney who specializes in Elder Law (not just estate law) before disposing of any of Mom's assets if she will be needing to apply for Medicaid. Yes, that is yet another expense, but it will be part of her spend down process.
Jean, just curious why you wouldn't want to sell at assessed value or current market value?
Unless you are selling to a relative or friend. If within the next 5 years your Mother needs Medicaid, Medicaid would see selling the land below value to be a huge red flag. Now it also depends on if Medicaid in your State even bothers to look at land as an asset.
Ok here’s my suggestions, couple of ways to approach this... - get the land appraised & do new Realtor listing at new price. What you are seeking is a “conservative appraisal”. So all warts, issues, bad whatevers on the land is taken into consideration. You may need to write a list of issues, like it’s in a flood zone (download fema maps for this), or is in a watershed / recharge zone, or limited egress (for raw land this is mucho importante for realistic value), has mineral rights below or adjacent that you don’t own. Whatever that would possibly be of concern for a developer or site selection company. You give this to appraiser. It should come in lower than tax assessor “value” as those are based on comps of land that sold and probably quite nicer / bigger / level / multiple egress points, etc than what your trying to unload. Make sure your Realtor knows land & ask as to thier average DOM to close (days on market).
For property with a house, you’d get a residential inspector to do the above. But for crappy raw land, imho, it costs more than its worth to do this. So if you can get the information, copy and put into a binder the appraiser can use it. Appraiser costs vary, like for house it costs $ 300 - $500. But it is totally considered legal. So no issues from Medicaid on new price even if way way below tax assessor figure if need be.
This gets paid by dad. Just as taxes are. This is important as if you or others in family are paying for property costs, dad cannot easily reimburse costs. It looks like “gifting” and will stall Medicaid application.
If the taxes on land are really high, like family kinda needs to be reimbursed, you need to see an elder law atty & asap. They may be able to do some sort of memo of understanding or promissory note as to these costs. Dad had to be competent & cognitive to do this. It would be for future costs. Advantage is you’ll get over any Medicaid glitch later on and get dads legal all updated at the same time.
Also by getting appraised, you can take this to next tax assessor challenge (usually in late spring) to get value kicked down to what appraised was. Will lower taxes & may make it more attractive for a buyer.
- OR you try the “inaccessible asset” route. Sometimes there flat are just assets that although are not exempt for Medicaid are inaccessible. They exist & can have a value but cannot be sold. Like oil & gas royalty are often these. It not Spindletop but more that land got sold ages ago but family retained ownership of mineral rights. But the mineral field is like over hundreds of sections / thousands of acres and your share is 1/32nd of 1/64th of a field that flows into 2 other fields to well head which is leased to exploration company which sell to production co. For more fun, the royality payment is under $100 yr. So it’s not worth much but can’t easily be sold as ownership is undivided. An inaccessible asset.
Sometimes land can be inaccessible asset. So dad continues to own it but it doesnt count for his Medicaid eligibility. If it’s been a legit listing at FMV by a Realtor (no FSBO) for a verifiable MLS with offers that never get close to fmv, you can try to get this approved by Medicaid. If you go this route, I’d try to do a couple of nice packets together all xeroxed and speak with a LTC caseworker who is the caseworker for the facility that dad will probably go into in the future. They can’t give you a definitive answer but can tell you to who you send your questions to that are at a higher level. This is high cotton financial decisions so it’s going to be done at the regional level or requires Medicaid legal Dept sign off. The good part about this is you’ll have a bit of a relationship with the entry level caseworker for later on. Yeah not simple. Good luck!
Is it the situation that any offers you’ve gotten have been way way below the tax assessor value? If that’s it, can you let us know? As folks will have suggestions as to getting though this & ok for Medicaid.
It's a fair market transaction if the parties are unrelated and no relationships. Often property isn't worth what it's assessed for. Take the best offer you can get, especially after 2 years. Keep documentation that shows that it was for sale for 2 years before this offer.
We absolutely want to sell for the highest price we can, The higher we sell for the longer we can keep Mom in the facility. However land has been listed for a couple years and the few offers that have come through are not even close to the assessed value. No one in the family is interested in the land.
Unless you are selling to a relative or friend. If within the next 5 years your Mother needs Medicaid, Medicaid would see selling the land below value to be a huge red flag. Now it also depends on if Medicaid in your State even bothers to look at land as an asset.
- get the land appraised & do new Realtor listing at new price. What you are seeking is a “conservative appraisal”. So all warts, issues, bad whatevers on the land is taken into consideration. You may need to write a list of issues, like it’s in a flood zone (download fema maps for this), or is in a watershed / recharge zone, or limited egress (for raw land this is mucho importante for realistic value), has mineral rights below or adjacent that you don’t own. Whatever that would possibly be of concern for a developer or site selection company. You give this to appraiser. It should come in lower than tax assessor “value” as those are based on comps of land that sold and probably quite nicer / bigger / level / multiple egress points, etc than what your trying to unload. Make sure your Realtor knows land & ask as to thier average DOM to close (days on market).
For property with a house, you’d get a residential inspector to do the above. But for crappy raw land, imho, it costs more than its worth to do this. So if you can get the information, copy and put into a binder the appraiser can use it. Appraiser costs vary, like for house it costs $ 300 - $500. But it is totally considered legal. So no issues from Medicaid on new price even if way way below tax assessor figure if need be.
This gets paid by dad. Just as taxes are. This is important as if you or others in family are paying for property costs, dad cannot easily reimburse costs. It looks like “gifting” and will stall Medicaid application.
If the taxes on land are really high, like family kinda needs to be reimbursed, you need to see an elder law atty & asap. They may be able to do some sort of memo of understanding or promissory note as to these costs. Dad had to be competent & cognitive to do this. It would be for future costs. Advantage is you’ll get over any Medicaid glitch later on and get dads legal all updated at the same time.
Also by getting appraised, you can take this to next tax assessor challenge (usually in late spring) to get value kicked down to what appraised was. Will lower taxes & may make it more attractive for a buyer.
- OR you try the “inaccessible asset” route.
Sometimes there flat are just assets that although are not exempt for Medicaid are inaccessible. They exist & can have a value but cannot be sold. Like oil & gas royalty are often these. It not Spindletop but more that land got sold ages ago but family retained ownership of mineral rights. But the mineral field is like over hundreds of sections / thousands of acres and your share is 1/32nd of 1/64th of a field that flows into 2 other fields to well head which is leased to exploration company which sell to production co. For more fun, the royality payment is under $100 yr. So it’s not worth much but can’t easily be sold as ownership is undivided. An inaccessible asset.
Sometimes land can be inaccessible asset. So dad continues to own it but it doesnt count for his Medicaid eligibility. If it’s been a legit listing at FMV by a Realtor (no FSBO) for a verifiable MLS with offers that never get close to fmv, you can try to get this approved by Medicaid. If you go this route, I’d try to do a couple of nice packets together all xeroxed and speak with a LTC caseworker who is the caseworker for the facility that dad will probably go into in the future. They can’t give you a definitive answer but can tell you to who you send your questions to that are at a higher level. This is high cotton financial decisions so it’s going to be done at the regional level or requires Medicaid legal Dept sign off. The good part about this is you’ll have a bit of a relationship with the entry level caseworker for later on.
Yeah not simple. Good luck!
If that’s it, can you let us know? As folks will have suggestions as to getting though this & ok for Medicaid.