My mother lives with me and will continue to live with me until I can no longer care for her. She owns her own home. What can I do to protect it from the chance that she will need medicaid at some point?
On the rental of a home & Medicaid, my understanding on doing this & why it’s kinda problematic is that…. -as the elder owns the home, any rent is “income” to them ea month AND -rent should be at market rates for your area. Which could actually be quite high $$$ for a whole house rental. & -so rent as “income”, gets added to whatever other income paid each month. So SSA retirement income + rent $ = total mo income BUT - LCT Medicaid has a maximum $ amount set for “income”. For most States it’s abt $2,200 max mo income for individual LTC Medicaid. If total mo income exceeds State “income” maximum, they are ineligible for LTC Medicaid. Avg SS is $1,618 paid ea mo so if they get avg SS & rent over $582, its too much “income” for LTC Medicaid. Realistically market rate for renting a house going 2 b way more than $582!
This then gets real in the weeds on how to deal with excess income, like if your State allows Miller Trust to be done or allows for excess income “pool” to be done or flat doesn’t allow for any flexibility on excess income so they will be ineligible….. it’s gets way complicated. Like eyes glaze over complicated. Plus rental means tax filings and figuring out $ from rent to go for repairs, maintenance etc that can b shown to the caseworker for consideration as a deductible from rental income…. yada yada. I think all this is why caseworkers will say “the house cannot be rented as it makes them ineligible” cause the #s just can’t work. Neither the State or an agency of the state owns the property, so they cannot decide house has be sold, or repaired, or left vacant. Those are decisions done by the owner or their POA with that authority. But Medicaids rules - for most states - are rigid on exact $ limits. Rent usually takes $ over the limit.
Sell the home and use the funds for her care and to pay you for caregiving. My opinion only.. I hope my mom’s money last where Medicaid will never be involved. In my state you cannot even rent the home if you want to apply for Medicaid. My mom could not afford memory care if she had not sold her home. You have to ask yourself if you also want the burden of taking care of her home. You may soon want your mom to go into an ALF. Sound like you have enough on your plate to deal with.
Setting aside your moms desire to continue to own her home for whatever reasons she has…… just a few things to consider outside of the tight Medicaid rules and look back requirements: - can you completely and totally afford the time to be able to have a “second” home and all the responsibilities that a 2nd home means? You know the block her home is on…. Will you kinda need to go by weekly or does she have long term fabulous neighbors who will collect mail, look after it and let you know the minute something seems off which allows you maybe need to do a house check every 3 or 6 months? - Are the “majors” on her home still pretty sound? Has mom been good on having routine maintenance done on the majors? By the majors I mean the roof, plumbing, electrical, AC, doors & windows that securely lock / close. Not necessarily have all new roof or spanking new plumbing done but all are relatively sound &/or under maintenance/ service contracts? If the roof is seriously a problem, like leaks/water damage, is insecure or missing sections, does mom have the $ to do a new roof or if not do you? If it has roof issues & y’all cannot afford new or solid repairs, imo sell it & asap. - Once mom moves out, her homeowner policy will be void and she / you will need to get a vacant dwelling policy. They r not cheap plus they will either want details on the majors or will do a property inspection in order to ever do the underwriting. Also vacant dwelling policy’s ime seem to have to have the home be of a certain value to even be done nowadays.. like have assessor value of 200K minimum. If her home is way modest, or looks somewhat sad, she may not be able to get a vacant dwelling policy. It will be uninsured. Besides the risk of having it burned down and getting zero insurance $, should you need to try to sell it, it’s harder to get a FMV price and mortgage on an uninsured vacant older home. - If you decide to pull power & shut off water, be cautious as some utility co will require an inspection to reconnect…. If this is an old house, there’s likely to be something that inspector finds and have to be remediated before utilities will reconnect. - Are you pretty confident that you have the flexibility in your own personal finances to be able to afford what is basically a second home - that you do not own - for years? That the expenses on mothers home is beyond well within your budget and probably will have no or minimal effect on your own personal finances? If you do not have firm $ amounts on what is right now costs for mom to own her home, go through her checkbook & financials to find out to the penny what her costs have been for past 5 years. Do you have this plus an emergency fund just for her home?$?$? I mention this cause if mom should have her care go beyond what you can manage then she’s going to need to go into a facility. So her extra $ will go to pay for her care and then all her property costs will fall to you or will go unpaid. Should her homestead exemption(s) get invalidated, her property taxes could have a huge increase. - Are you comfortable with risk? Something could happen that upturns your own life & wallet…. do you have enough savings, investments, spouse support to be ok?
As others has posted, LTC Medicaid has its own regulations. Imo it can be dealt with by heirs / family with attorney advised planning. BUT to me, if you do not right now have the purse or wallet to easily pay for whatever expenses at moms place for years, without any impact on your own budget, please talk with mom on taking the steps needed for her to sell her home. And do this in the near future & sell it at FMV so that should she spend down all her house sale $ and needs to file for LTC Medicaid that she will have no issues for her Medicaid application. Good luck in the decision making!
I so agree that the homes abandoned become a nuisance. If you are POA you can rent this home out, but good renters are hard to come by, can damage a home, and etc. Mom is allowed to keep her own home, her "live in home" and still get medicaid if needed. There will be clawback then, after her death, when home is sold, of assets of the home, which will in some amount stipulated go to medicaid to reimburse for their cost. Or if you are POA you can sell home now, and that money goes in Mom's name in a CD, with you POA to manage it until needed for her care. If Mom is living with you you should consider making as POA, a contract for care with payment, and etc with an elder law attorney. Seeing the elder law attorney is a good thing if you are acting POA and your Mom's funds pay for this visit. You will get good answers that are professional, not the "opinion" of forum members.
Mom can put her house in a Trust if you don't feel that she will need Medicaid within the next 5 yrs. Me personally, my Moms house became an albatross around my neck. Once Mom went into an AL, most of her monthly income went for taxes and upkeep. Money I could have used for her care. It was a white elephant. I was not able to sell it until a 2 yrs after she died.
My suggestion would be to sell it. Make sure you receive Market Value in case Medicaid is needed in next 5 years. Take the proceeds and place it in an interest bearing account. It is to only be used for Mom's needs. The proceeds cannot be gifted or loaned out, again in case she needs Medicaid within the next 5 years.
Get the advice of an elder care attorney to see if there is a way to protect the house. When a friend of mine’s mom went into memory care she rented out her mom’s house to partially pay for it so she could keep it. Laws are different state by state.
Her assets are to be used for her care. Not protected for Medicaid. Taxpayers should not be asked to pay for her care while she has assets that could be sold and used for care.
I would invest in a consult with a Medicaid Planner for her state of residence, since it is a program run by each state with differing rules and this is a global forum so taking advice from here is risky.
If she needs medicaid at some point, there is a long look back period, I think 5 years. Anything like the sale of a house, large withdrawals, etc. are looked at carefully to determine if they were done with the intent of trying to hide her money instead of using it for her care. It's sad that someone's life savings often gets used up when they go into a nursing home, but OTOH that's really what their money is needed for. Make sure that you are not paying for anything of hers to at least minimally mitigate this potential loss of her assets.
-as the elder owns the home, any rent is “income” to them ea month
AND
-rent should be at market rates for your area. Which could actually be quite high $$$ for a whole house rental.
&
-so rent as “income”, gets added to whatever other income paid each month. So SSA retirement income + rent $ = total mo income
BUT
- LCT Medicaid has a maximum $ amount set for “income”. For most States it’s abt $2,200 max mo income for individual LTC Medicaid. If total mo income exceeds State “income” maximum, they are ineligible for LTC Medicaid. Avg SS is $1,618 paid ea mo so if they get avg SS & rent over $582, its too much “income” for LTC Medicaid. Realistically market rate for renting a house going 2 b way more than $582!
This then gets real in the weeds on how to deal with excess income, like if your State allows Miller Trust to be done or allows for excess income “pool” to be done or flat doesn’t allow for any flexibility on excess income so they will be ineligible….. it’s gets way complicated. Like eyes glaze over complicated.
Plus rental means tax filings and figuring out $ from rent to go for repairs, maintenance etc that can b shown to the caseworker for consideration as a deductible from rental income…. yada yada. I think all this is why caseworkers will say “the house cannot be rented as it makes them ineligible” cause the #s just can’t work. Neither the State or an agency of the state owns the property, so they cannot decide house has be sold, or repaired, or left vacant. Those are decisions done by the owner or their POA with that authority. But Medicaids rules - for most states - are rigid on exact $ limits. Rent usually takes $ over the limit.
- can you completely and totally afford the time to be able to have a “second” home and all the responsibilities that a 2nd home means? You know the block her home is on…. Will you kinda need to go by weekly or does she have long term fabulous neighbors who will collect mail, look after it and let you know the minute something seems off which allows you maybe need to do a house check every 3 or 6 months?
- Are the “majors” on her home still pretty sound? Has mom been good on having routine maintenance done on the majors? By the majors I mean the roof, plumbing, electrical, AC, doors & windows that securely lock / close. Not necessarily have all new roof or spanking new plumbing done but all are relatively sound &/or under maintenance/ service contracts?
If the roof is seriously a problem, like leaks/water damage, is insecure or missing sections, does mom have the $ to do a new roof or if not do you? If it has roof issues & y’all cannot afford new or solid repairs, imo sell it & asap.
- Once mom moves out, her homeowner policy will be void and she / you will need to get a vacant dwelling policy. They r not cheap plus they will either want details on the majors or will do a property inspection in order to ever do the underwriting. Also vacant dwelling policy’s ime seem to have to have the home be of a certain value to even be done nowadays.. like have assessor value of 200K minimum. If her home is way modest, or looks somewhat sad, she may not be able to get a vacant dwelling policy. It will be uninsured. Besides the risk of having it burned down and getting zero insurance $, should you need to try to sell it, it’s harder to get a FMV price and mortgage on an uninsured vacant older home.
- If you decide to pull power & shut off water, be cautious as some utility co will require an inspection to reconnect…. If this is an old house, there’s likely to be something that inspector finds and have to be remediated before utilities will reconnect.
- Are you pretty confident that you have the flexibility in your own personal finances to be able to afford what is basically a second home - that you do not own - for years? That the expenses on mothers home is beyond well within your budget and probably will have no or minimal effect on your own personal finances? If you do not have firm $ amounts on what is right now costs for mom to own her home, go through her checkbook & financials to find out to the penny what her costs have been for past 5 years. Do you have this plus an emergency fund just for her home?$?$?
I mention this cause if mom should have her care go beyond what you can manage then she’s going to need to go into a facility. So her extra $ will go to pay for her care and then all her property costs will fall to you or will go unpaid. Should her homestead exemption(s) get invalidated, her property taxes could have a huge increase.
- Are you comfortable with risk? Something could happen that upturns your own life & wallet…. do you have enough savings, investments, spouse support to be ok?
As others has posted, LTC Medicaid has its own regulations. Imo it can be dealt with by heirs / family with attorney advised planning.
BUT
to me, if you do not right now have the purse or wallet to easily pay for whatever expenses at moms place for years, without any impact on your own budget, please talk with mom on taking the steps needed for her to sell her home. And do this in the near future & sell it at FMV so that should she spend down all her house sale $ and needs to file for LTC Medicaid that she will have no issues for her Medicaid application.
Good luck in the decision making!
Or if you are POA you can sell home now, and that money goes in Mom's name in a CD, with you POA to manage it until needed for her care.
If Mom is living with you you should consider making as POA, a contract for care with payment, and etc with an elder law attorney.
Seeing the elder law attorney is a good thing if you are acting POA and your Mom's funds pay for this visit. You will get good answers that are professional, not the "opinion" of forum members.
Mom can put her house in a Trust if you don't feel that she will need Medicaid within the next 5 yrs. Me personally, my Moms house became an albatross around my neck. Once Mom went into an AL, most of her monthly income went for taxes and upkeep. Money I could have used for her care. It was a white elephant. I was not able to sell it until a 2 yrs after she died.
My suggestion would be to sell it. Make sure you receive Market Value in case Medicaid is needed in next 5 years. Take the proceeds and place it in an interest bearing account. It is to only be used for Mom's needs. The proceeds cannot be gifted or loaned out, again in case she needs Medicaid within the next 5 years.
It never hurts to talk to an elder lawyer.