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Selling house with seller financing in nursing home
Old 04-17-2017, 09:47 AM   #1
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Selling house with seller financing in nursing home

An older neighbor in my neighborhood was just admitted to a long term care facility following a stroke. The way I understand it, he needs to sell his house to qualify for medicare coverage for a better facility than the one he's in. I'm interested in his house for a rental. Could he sell me the house with seller financing, where I pay him over 30 years, with the payments continuing toward his heirs?
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Old 04-17-2017, 10:48 AM   #2
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We aren't in nursing homes, but did just sell a place on a 30 year contract, OCC, and I expect payments will continue to our heirs. The obligation doesn't disappear with death. No idea what medicare's view of that is. His capital gains taxes could be rude, or not, depending on whether he pays all the taxes at once or spaces them out and pays them as principal is paid.
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Old 04-17-2017, 10:58 AM   #3
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Once you run out of funds to self pay for nursing home you can qualify for Medicaid. Medicare will not pay unless you are expected to recover in 3 months or less and go home. I would think you are expected to sell the home and use the funds because you must be down to 2k in total assets for them to pay. I am a guardian for a friend in a home and just went through this although they did not have a home to sell. I would ask a lawyer in elder care because the rules are very specific.
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Old 04-17-2017, 12:43 PM   #4
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This is not the place to ask. Spend-down [for Medicaid] is complicated and varies by state. You (or his POA) need to talk to an attorney in your state specializing in elder law. BTW if your neighbor does not have a will but is still competent, this would be a good time ...

Plan ahead, too: Particularly if there are multiple heirs, the heir(s) may well not want to carry a CD into the distant future, giving you the opportunity to cash them out at a discount. I'd be primed and ready with bank financing.
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Old 04-17-2017, 12:54 PM   #5
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The deal with too many assets is Medicaid--not Medicare. And people that "give" away their assets just prior to going into a nursing home are in violation of the law. Medicaid does do asset searches and catch people signing homes and savings accounts into their childrens' names--and they require payback.

Medicare will only pay for nursing home care for a short while and then it's either Long Term Care Insurance and/or cash out of pocket for nursing home care. Unfortunately (or sometimes fortunately) the life expectancy in most nursing homes is only a couple of years on average.

Let's face it, the reason we lived below our means and saved until it hurt was to provide for ourselves in our old age. The government won't pick up the tab until we're deemed truly indigent. And even then, they might put you into an old hell hole of a nursing home that's just out for the profits and not providing nice, compassionate old age care.
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Old 04-17-2017, 04:33 PM   #6
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The neighbor (or his POA) needs to talk with an elder law attorney. Once assets are spent down Medicaid will be looking at assets and his house is one of them. If he sells to you with seller financing it is possible that MAY be deemed an effort to avoid paying for his own care until he truly is indigent.
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Old 04-17-2017, 05:13 PM   #7
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Quote:
Originally Posted by Walt34 View Post
... If he sells to you with seller financing it is possible that MAY be deemed an effort to avoid paying for his own care until he truly is indigent.
Which is why the OP, too, needs legal advice. You do not want the deal to blow up retroactively. It could be quite a mess.
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Old 04-17-2017, 05:19 PM   #8
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I'm not an expert, but I would expect if the sale of the house is not at market value, the sale would be either disallowed or medicaid would be. Is the price is market.. medicaid would be disallowed since the man who sold the house now has the note for the house he just sold. He would have to spend down the note to medicaid levels to become medicaid eligible.

It may get ugly if your trying to help this guy. Selling the house does not deplete the old man's assets for medicaid. If he has funding for self pay his LTC... then not an issue.
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