How Do I Buy My Mom's House So It Won't Be Considered Her Asset for Medicaid?

[nico08]

I live with, and take care of, my elderly (82 year old) mom. She has title to the property that we reside in together. We are in New Jersey and I believe there is a Medicaid asset exception for a property transfer that takes place between a Medicaid applicant and a caretaking child who has lived with the parent for at least two years and who has provided care to the elderly person. In New Jersey, under these circumstances, the value of the real estate would not be considered when an asset elgibility determination is made to assess whether my mom is eligible for Medicaid to pay for a nursing home.

I want to purchase the property from her now, so that if she needs to enter a nursing home, the value of the real estate will not be included for Medicaid eligibility purposes. I have a couple of questions-

1. How does my mom transfer the property from her to me?

2. I have three siblings. My mom would like everything to be fair, so she wants them to each receive a quarter of the sale price of the house. If she had a will, the house would have passed to all four of us equally. What type of document(s) would the three other siblings need to sign, after they receive their 1/4 share of the property from me, so as to avoid any legal disputes after my mom passes away? Is there a release/acknowledgement of an anticipated inheritance document? Is there any other process or procedure that I need to be aware of in this regard? Do I need to have a real estate, estate or elder care lawyer in order to engage in this type of transaction? Could with handle this type of transaction without a lawyer being involved?


Also, New Jersey Administrative Code Section 10:71-4.10(d)(4) addresses this type of exempt transfer.
Thank you for your help.

 

[MichaelB]

I live with, and take care of, my elderly (82 year old) mom. She has title to the property that we reside in together. We are in New Jersey and I believe there is a Medicaid asset exception for a property transfer that takes place between a Medicaid applicant and a caretaking child who has lived with the parent for at least two years and who has provided care to the elderly person. In New Jersey, under these circumstances, the value of the real estate would not be considered when an asset elgibility determination is made to assess whether my mom is eligible for Medicaid to pay for a nursing home.

I want to purchase the property from her now, so that if she needs to enter a nursing home, the value of the real estate will not be included for Medicaid eligibility purposes. I have a couple of questions-

1. How does my mom transfer the property from her to me?

2. I have three siblings. My mom would like everything to be fair, so she wants them to each receive a quarter of the sale price of the house. If she had a will, the house would have passed to all four of us equally. What type of document(s) would the three other siblings need to sign, after they receive their 1/4 share of the property from me, so as to avoid any legal disputes after my mom passes away? Is there a release/acknowledgement of an anticipated inheritance document? Is there any other process or procedure that I need to be aware of in this regard? Do I need to have a real estate, estate or elder care lawyer in order to engage in this type of transaction? Could with handle this type of transaction without a lawyer being involved?

Thank you for your help.

Midnighter777, you need an elder care attorney to help with this. There are a number of websites that list attorneys by location and specialization, NOLO (click here) is one example. In addition to Medicaid eligibility there are also tax issues for your mother and you, and to make sure you get the right advice and understand the implications of the choices you make you need an expert.

 

[Gumby]

Another way to find an attorney in your area is to use

Lawyers Find A Lawyer, Law Firm, Attorney & Legal Services: martindale

 

[GregLee]

I want to purchase the property from her now, so that if she needs to enter a nursing home, the value of the real estate will not be included for Medicaid eligibility purposes.

I think you should check whether a purchase is necessary. The value of the real estate might not be included for Medicaid eligibility even if you don't purchase the property.

 

[fritz]

As advised, you need to talk to an elder attorney. I had looked at this a quite sometime ago, but recall financial Medicaid qualifiers are different for married couple vs. singles. It has been some time, but then a spouse could keep home, car, and share of assets to apprx. $100K. Singles total assets was aro. $2500.00 if IIRC.

There was also a significant change to the medicaid look-back period (sheltering assets to avoid the medicaid spend down) under Bush passed in 2005 - went from three years to five.

This first (link) goes over 5 year look-back fairly well (Ohio).
5 Year Medicaid Look Back - Law Firm Budish, Solomon, Steiner & Peck, LTD Attorneys Beachwood, Ohio

Second link is a little info on limits (New Jersey)
Price and Price

 

[ChrisC]

As others have stated, get a good Elder Care lawyer. A few observations: (1) a simple transfer of the home residence to a caregiving child, who also resides with the medicaid applicant for two years, is generally exempt from calculating medicaid resources and there's no "look-back"; (2) the transfer under the caregiving child exception can be easily documented by a deed transfer -- care should be given to this because of tax consequences so a good elder care lawyer may suggest your mother transfer the residence with her reserving a life estate in the property -- this generally does not have medicaid eligibility consequences; (3) if you purchase the property from your mother, the proceeds from that purchase will be included in her assets and resources for medicaid eligibility -- does not seem like a good move for you, your mother or your siblings; (4) your elder care lawyer may suggest that mother avoid naming your other siblings on the transfer deed to you because the transfer of interests to each other sibling will not come under the caregiving exception and the value of the interests transferred to the other siblings will be included in medicaid resource assets (and the look-back period would apply to those transferred interests); (5) you and siblings can agree to an appropriate division of the residence once the caregiving exception has been used; (6) if you do nothing, and mother goes into the nursing home, the residence will be included in medicaid resources -- her house (or any proceeds from the sale of it) will not be left to her children.

Your mother and her children should all sit down with the elder care lawyer. Your family should be able to provide your mother with sufficient medical care, decent living conditions, and financial resources during this phase of life, while appropriately navigating medicaid eligibility and preserving her wishes to equitably distribute the value of her residence to her children.

Your situation was almost identical to the one my family faced in New York.

 

[chinaco]

I would recommend that some attorney familiar with the issues. You might give your mother's estate attorney a call to see if he or she is familiar with the issues.


If I were going to buy the house. I would get the value assessed and probably pay the assessed value for it or the average of a couple of assessed values. I would also only use credible assessor(s) that do a lot of work to assess the value of real estate for court related issues (e.g., estate settlements) that is well known in the community and have a track record that is credible and respected. I would do that just in case I had to defend it.


I have read that some states have a provision regarding real estate and children that care for their parents. You might consider contacting the state's ombudsman for Medicaid.... they can probably provide some information about that specific state's rules.

 

[teejayevans]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

 

[travelover]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

Shhhhhhhh! We are not supposed to notice.

 

[Bestwifeever]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

Although in most cases (when there is a strategic move to divest the aging parent of all of his/her assets so that state will have to pay for nursing home care--not successful in most cases anymore) I would agree with this, I don't think an adult child who has spent several years living with the aging parent and tending to them (and saving the state $ in many cases by proving the care) should find themselves on the street because the house is being sold to pay for the care. Much like the spouse who is allowed to keep the house when the other spouse enters a nursing home.

 

[nico08]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

Not at all. The legislature enacted this exception to encourage family members to care of their elderly parents and avoid having the parent enter a nursing home sooner than necessary.

 

[ziggy29]

Although in most cases (when there is a strategic move to divest the aging parent of all of his/her assets so that state will have to pay for nursing home care--not successful in most cases anymore) I would agree with this, I don't think an adult child who has spent several years living with the aging parent and tending to them (and saving the state $ in many cases by proving the care) should find themselves on the street because the house is being sold to pay for the care. Much like the spouse who is allowed to keep the house when the other spouse enters a nursing home.

There are cases where a blatant "fraudulent conveyance" to shield assets from means testing are evident and being sought. But considering the entire set of circumstances in *this* case as given to us, I don't think this particular situation arises to that level. After all, a live-in child is providing a lot of "free" services that have prevented the government (and health care system) from providing a lot of fee-based services that would tax the system more. They've already saved the system a lot of money.

 

[donheff]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

I did a quick Google search and it does look like a transfer can take place to a care-giver child to take the house out of the Medicaid calculation (at least in some states). I think it is entirely appropriate for OP to take advantage of such clauses and does not constitute dumping the liability on the tax payer any more than people sending their children to public schools takes unfair advantage of childless taxpayers.

I agree with other posters that you should get legal advice. This stuff can be tricky. For example, if the mother sold the house to her children she would have to spend down the proceeds before she could qualify for Medicaid. If she keeps the house and enters a nursing home the state will take the missing proceeds out of the house when she dies. If she uses the transfer exception (makes sense to me) the house will belong to the care giving child and the value will not be split among the siblings at death (it isn't part of her estate). The siblings need to come to grips with the fact that, if Mom is to go on Medicare, she must be destitute. There are no more assets to split up. The house will be lost to non-care givers in any event. The transfer exception is an exception to compensate a child who stayed with Mom at least 2 years helping to keep her out of a nursing home and thus presumably saving the state earlier Medicaid..

 

[sheehs1]

Ditto the advice of others here. I'd also like to ask a question or two or perhaps make a couple of points.
First...how do your other siblings feel about your ending up with the house? Are they o.k with it or do you expect some resistance? Are there other siblings who might also like the house?....etc.
Second...not sure how buying the property from your Mom will get the value of the house out of her estate...since I assume you will be paying her money for it. Or are you? Point is...that instead of the house value she ends up with a cash value...right? Unless of course you are not "buying it".
The only way I know to totally eliminate the "value" is for your Mom to use her Unified Tax Credit amount and gift the property to all of her children or to one child who then either buys it from or compensates the other siblings...etc...etc. A gift tax return may apply.
If your Mom is not ready to do that, she might also be able to use a trust...and transfer the title of the property to the trust. An elder attorney seems to be the best source of info for the proper steps.
Just be aware....that you buying it....and giving your Mom cash for it...does not seem to accomplish your goal of "no assets" for medicaid benefits. Unless as others have said....there are exclusions...

 

[chinaco]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

Did it ever occur to you that a child living in the home delays and sometimes prevents the parent from needing NH care?? Thereby reducing costs to the state and taxpayers?

 

[donheff]

The only way I know to totally eliminate the "value" is for your Mom to use her Unified Tax Credit amount and gift the property to all of her children or to one child who then either buys it from or compensates the other siblings...etc...etc. A gift tax return may apply.

As I understand it gifting (whether within the unified tax credit or taxed) will not work to gain eligibility for Medicaid. They look back 7 years to see if applicants dumped assets to qualify. Gifting would be dumping assets.

 

[gerntz]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

Absolutely. No reason for someone who manged to save thru their life to have to pay their last penny whereas those who chose to spend every penny are cared for by government at the savers' expense.

 

[sheehs1]

As I understand it gifting (whether within the unified tax credit or taxed) will not work to gain eligibility for Medicaid. They look back 7 years to see if applicants dumped assets to qualify. Gifting would be dumping assets.

I understand donheff ...and I suppose I was trying to understand just what the OP was wanting or doing as I saw his "buying" as potentially not helping the asset situation... if , indeed, it is an exchange of cash for the value of the house. Do you or does anyone know if "selling" rather than "gifting" to your children exempts someone from the look back? In other words...isn't selling also considered "dumping assets"...or does that fall in a different category?

As others have said ....knowing the medicaid exclusions is important.

 

[ziggy29]

Do you or does anyone know if "selling" rather than "gifting" to your children exempts someone from the look back? In other words...isn't selling also considered "dumping assets"...or does that fall in a different category?

Yeah, that's the main thing, IMO, and it's where competent legal aid is critical. A $1000 legal expense (plus or minus) may be a small price to pay in order to avoid a mistake that could cost hundreds of thousands. The main consideration is an airtight understanding of the law which could facilitate transfer of ownership without triggering a "fraudulent conveyance".

 

[ChrisC]

So you think the tax payer should pay for you mother's care so you can keep your inheritance?
TJ

Well, that's the considered judgment of our elected legislative body. Medicaid eligibility is difficult to attain -- you do have to be destitute to be eligibile, and virtually every asset or resource is taken into account!

The exceptions for assets included in resources subject to be taken in account (and required to be spent down) are no joke. A caregiving child encourages "home care" for parents and the child's sacrifice is enormous -- this isn't a giveaway.

Perhaps not in this case, but in many other cases, the parent and caregiving child may not have any other assets except the house; it would be cruel to me for the Government to force the caregiving child to become homeless after taking care of a parent.

 

[ChrisC]

I understand donheff ...and I suppose I was trying to understand just what the OP was wanting or doing as I saw his "buying" as potentially not helping the asset situation... if , indeed, it is an exchange of cash for the value of the house. Do you or does anyone know if "selling" rather than "gifting" to your children exempts someone from the look back? In other words...isn't selling also considered "dumping assets"...or does that fall in a different category?

As others have said ....knowing the medicaid exclusions is important.

A transfer under medicaid is a transfer whether as a gift or for cash. I think you're missing the point-- the caregiving child exception is used to shield a transfer from medicaid resources or look-back. But if one transfers the residence for cash to the mother, the case becomes a resource for medicaid. It's in her resources. The idea behind the caregiving child exception was to encourage simple transfers of the deed to a child, typically, gifts! There are tax consequences to the "gifting" so that's why you need competent elder care counsel!

 

[sheehs1]

A transfer under medicaid is a transfer whether as a gift or for cash. I think you're missing the point-- the caregiving child exception is used to shield a transfer from medicaid resources or look-back. But if one transfers the residence for cash to the mother, the case becomes a resource for medicaid. It's in her resources. The idea behind the caregiving child exception was to encourage simple transfers of the deed to a child, typically, gifts! There are tax consequences to the "gifting" so that's why you need competent elder care counsel!

I thought that was what I said in my first post...so. you might want to re-read my first post....

 

[chinaco]

Here is some information from the Dept of Health and Human Services. It is labeled with a 2005 date. I do not know if it is the latest publication... rules and regs change... there might be updates or changes.

This is a fed document and Medicaid is run by each state. So you still check with the state Medicaid office.


Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-Term Care

 

[GregLee]

As I understand it gifting (whether within the unified tax credit or taxed) will not work to gain eligibility for Medicaid.

At the risk of being tiresome, I'll reiterate my reservation about the assumption in this discussion that the spend-down requirement for Medicaid eligibility includes your house. I don't think it does. That doesn't mean that there is no reason to somehow contrive a transfer of ownership of the house before it becomes necessary to start Medicaid, because Medicaid can put a lien on the house, and after the Medicaid recipient dies, enforce that lien to reclaim what was spent on a nursing home, taking the house if necessary.

 

[ChrisC]

I thought that was what I said in my first post...so. you might want to re-read my first post....

Well, you did say that in your first post, but if you had read my post #6, you would have realized that you just simply regurgitated what I said in my first post.

In fact, both you and donheff just reiterated what I said in post 6-- though I must admit donheff might have said it better.

What got both you and donheff sidetracked was your post #18, where you responded to donheff's apparent confusion over "gifting rules" which morphed into confusion over medicaid eligiblity over transfers.