Seeking legal opinion - Who gets the proceeds?

[Carpediem]

I'm hoping to get some feedback on this somewhat weird situation involving my mother's house. Here's the background:

- My mom and dad bought a house in Alabama in 1977 - joint ownership. The deed is in both their names.

- My dad passed in 2003 and my mom remarried in 2011 and her new husband moved into mom's house. No changes to the original deed.

- My mom drafts a Will in 2014 stating that upon her death her estate is to be divided up amongst the 5 living kids. Her husband is not mentioned in her Will at all.

- My mom enters a nursing home in January 2025 and files for Medicaid. She is approved and Medicaid places a lien on the house.

- Her husband joins her in the nursing home in January 2025 and files for Medicaid. According to Medicaid, he must list mom's house as an asset as well.

- Mom recently passed and her husband remains in the nursing home.

- We have a buyer for mom's house. How will the proceeds get divided up if/when it sells? Will all the proceeds go to the husband even though mom's Will instructs a division of proceeds? Will the husband get half of the proceeds? Something in between?

I realize I need to speak to a real estate lawyer most likely but thought I would get y'all's opinion first because I have the utmost respect for the intelligence and experience of the people in this forum.

 

[harllee]

You need to speak to an elder law attorney.

 

[MarieIG]

You need to speak to an elder law attorney.

I second this.

It seems obvious that the lien placed on the home for DM's care would need to be cleared either prior to, or contemporaneous with the sale.

While it is possible that a spouse (in this case your mother) may have some support obligations which would allow Medicaid to assert a lien against her assets vis-a-vis the stepfather's care. I could not say.

The right of a spouse to take against a will (absent a pre-nup) is typically determined by state law.

Edit: A quick search indicates that a surviving spouse in Alabama may have significant elective rights, and I wonder if Medicare will appoint an attorney to collect to pay for his nursing home care.

2024 Code of Alabama :: Title 43 - Wills and Decedents’ Estates. :: Chapter 8 - Probate Code. :: Article 4 - Elective Share of Surviving Spouse; Abatement. :: Section 43-8-70 - Right of Surviving Spouse to Elective Share.

Ala. Code § 43-8-70 - Right of Surviving Spouse to Elective Share. from 2024 Code of Alabama

law.justia.com

 

[pb4uski]

I'm hoping to get some feedback on this somewhat weird situation involving my mother's house. Here's the background:

- My mom and dad bought a house in Alabama in 1977 - joint ownership. The deed is in both their names.

- My dad passed in 2003 and my mom remarried in 2011 and her new husband moved into mom's house. No changes to the original deed.

- My mom drafts a Will in 2014 stating that upon her death her estate is to be divided up amongst the 5 living kids. Her husband is not mentioned in her Will at all.

- My mom enters a nursing home in January 2025 and files for Medicaid. She is approved and Medicaid places a lien on the house.

- Her husband joins her in the nursing home in January 2025 and files for Medicaid. According to Medicaid, he must list mom's house as an asset as well.

- Mom recently passed and her husband remains in the nursing home.
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- We have a buyer for mom's house. How will the proceeds get divided up if/when it sells? Will all the proceeds go to the husband even though mom's Will instructs a division of proceeds? Will the husband get half of the proceeds? Something in between?

I realize I need to speak to a real estate lawyer most likely but thought I would get y'all's opinion first because I have the utmost respect for the intelligence and experience of the people in this forum.

Well of course you need to talk with a lawyer but from what you wrote it sounds like some of the proceeds from the sale will go to Medicaid to reimburse them for what they spent on your Mom's LTC and the remainder should go to her 5 kids as set forth in her will.

From what you wrote your Mom owns the house solely and Medicaid has a lien on it so the Medicaid lien will need to be satisfied as part of the closing.

From what you wrote her second husband shouldn't have any claim on the sale proceeds, nor should Medicaid with respect to the second husband's Mediciad LTC. This part is a bit unclear and he might have some rights based on statute. I don't know how he could legitimately list the house on his Medicaid application in these circumstances. It might be that Medicaid assumes that any real estate is either jointly owned or that the husband is primary beneficiary of her will.

 

[Chuckanut]

I assume Medicaid/Medicare does not want an unhealthy spouse hiding assets that could be used to pay for care, by putting an asset only in the name of the healthier spouse. However, since the house was owned solely by your mom before they were married and stayed that way to her passing, that does not seem to be the case.

Yes, you need to talk to a lawyer about how Medicaid and state laws treat the house, and any other assets your mom left to heirs. The last thing you need is a misunderstanding that results in a legal mistake, and then needs to be worked out between five surviving siblings who may or may not have spent all or part of the money. That could be a family mess.

 

[mystang52]

I am not a lawyer. Your mother's husband listing the house as an asset seems untenable. I recognize he was spouse, but otherwise they were asking him to claim an asset he doesn't own.

 

[athena53]

I am not a lawyer. Your mother's husband listing the house as an asset seems untenable. I recognize he was spouse, but otherwise they were asking him to claim an asset he doesn't own.

That's what struck me- Medicaid protecting themselves (and the taxpayers)- but in Alabama a spouse can also "take against the will" and elect 1/3 of the estate instead. Most states have laws such as this giving the surviving spouse a minimum share of the estate if there is no will or the spouse was written out of the will. Mom's estate will be diminished by whatever Medicaid takes for the care she was provided so what's left for her husband may not be much.

I'm not a lawyer, either, but discussion such as this help the OP organize his/her questions and minimize time spent with someone who charges by the hour!

 

[Trailwalker]

I don't have any answers, but I have a prediction: "There will be lawyers."

 

[Chuckanut]

I don't have any answers, but I have a prediction: "There will be lawyers."

Agree. And by getting ahead of the game, the OP can minimize the amount of time he has to deal with the black robes of the legal system.

 

[harllee]

Not sure what state the OP is in but in many states a surviving spouse has a claim against the residence no matter what the will says. Again I say the OP needs to talk to a lawyer.

 

[pb4uski]

Not sure what state the OP is in but in many states a surviving spouse has a claim against the residence no matter what the will says. Again I say the OP needs to talk to a lawyer.

I'm wondering if what you refer to would apply in these circumstances where the property was owned before her marriage to the second husband and therefore was not a marital asset.

If the house was acquired during the second marriage then I can see it clearer because the house might be a marital asset no matter how it was titled if marital resources were used to acquire it.

 

[marko]

Hitting ctrl + alt +9 for auto reply:
"You need to talk to an estate lawyer"

 

[harllee]

I'm wondering if what you refer to would apply in these circumstances where the property was owned before her marriage to the second husband and therefore was not a marital asset.

If the house was acquired during the second marriage then I can see it clearer because the house might be a marital asset no matter how it was titled if marital resources were used to acquire it.

Here in NC the "Marital asset" rule only applies to divorces not death. Spouse has some rights to the house at death no matter when it was purchased but the OP needs to talk to a lawyer in their state.

 

[pb4uski]

I agree with the last part and said so in the first sentence of post #4 so I'm not sure what you point is harlee. And I realize that the concept of marital assets applies to divorce.

The thing is even if the spouse does have rights, since he is also on Medicaid LTC so he or his heirs are unlikely to benefit from it, but Medicaid might.

 

[badatmath]

You might check here. https://medicaid.alabama.gov/docume...1.8_Property_Liens/7.1.8_Lien_FAQs_4-5-21.pdf

I won't answer your questions exactly but food for thought when you consult the attorney.

 

[pb4uski]

You might check here. https://medicaid.alabama.gov/docume...1.8_Property_Liens/7.1.8_Lien_FAQs_4-5-21.pdf

I won't answer your questions exactly but food for thought when you consult the attorney.

This was interesting:

What if only the community spouse’s name is on the deed?
The only recovery would be if the community spouse received Medicaid services or if the
property’s ownership was transferred to the Medicaid recipient.

 

[Koolau]

Bite the bullet and hire a lawyer who specializes in such things.

 

[Carpediem]

Thank you all for the replies. Yes, we will definitely need to speak to an attorney but as others have said, having a bit of knowledge about the potential issues and outcomes will help when we meet with the attorney.

Someone mentioned listing the house as an asset on her husband's Medicaid app and yes, according to his family, they too had to list it on their Dad's application. I was surprised when I heard that since (1) his name isn't on the deed, and (2) the house was an asset that my Mom purchased long before the marriage to the 2nd husband.

Also, Mom was initially private pay when she entered the nursing home - approx $8k per month. The first month she received Medicaid was March and she passed on 5/12. So she received roughly $16k from Medicaid, which will be taken out of the house proceeds when the Medicaid lien is cleared at closing. The net proceeds will be anywhere from $80k to $100k.

 

[SecondCor521]

My condolences to OP.

There are two other factors that may impact the OP's situation:

1. Whether or not Mom and second husband had any sort of legal agreement, like a pre-nup, post-nup, or marriage settlement agreement.

2. State community property laws. There are community property states, and non-community property states. How property is handled varies greatly between the two types.

(A third thing is Alabama inheritance laws, but those have been alluded to several times already.)

 

[Carpediem]

Thank you, SecondCor521. Fyi - no marital agreements were made between my mom and the 2nd husband.

 

[engineernerd]

The Alabama law to which MarieIG helpfully provided a link says that when someone dies the surviving spouse can "elect" to take a certain share of the deceased spouse's estate regardless what the will says.

If the house was Mom's when she died, then it was part of her estate, except in the unlikely event it was titled with a right of survivorship for someone who is still alive, in which case ownership could have passed to that person when Mom died in the same way that a POD or TOD bank/investment account would.

 

[badatmath]

Should you even be thinking about this before probate? I'm not sure you can claim a small estate if there is real property. I suppose it depends on the state.

 

[SecondCor521]

Should you even be thinking about this before probate? I'm not sure you can claim a small estate if there is real property. I suppose it depends on the state.

Each state does indeed have their own "small estate" rules.

States also vary on their inheritance treatment of real property. Some states allow some form of TOD for real property; mine does not.

In my state, anything with a beneficiary on it (like an IRA) is not included in the small estate calculations, so that's an interesting wrinkle for us.

 

[badatmath]

Each state does indeed have their own "small estate" rules.

States also vary on their inheritance treatment of real property. Some states allow some form of TOD for real property; mine does not.

In my state, anything with a beneficiary on it (like an IRA) is not included in the small estate calculations, so that's an interesting wrinkle for us.

Right my state allows TOD for houses/cars but since OP did not mention it I'm guessing theirs does not/or they didn't have one. . . I'm not sure I personally have an estate at all cause I think right now there is a beneficiary on all my assets. . .

 

[Carpediem]

To kind of close out this thread, first I want to thank everyone who took the time to reply. This forum has always been (and will continue to be) an invaluable resource for me.

Below is what I have learned as it relates to Mom's estate and her second husband's 'inheritance' from it in Alabama. The numbers mentioned are related to her house possibly selling for $100k:

Final Answer:​

The second husband has no direct ownership in the house, as it’s your mother’s separate property (titled solely in her name, acquired pre-marriage). Despite exclusion from the will, he has potential rights to:

• Elective share: ~$26,667–$27,500 (one-third of ~$80,000–$82,500 net estate after lien, if filed within six months).
• Homestead allowance: Up to $15,000 (automatic unless waived).
• Exempt property: Up to $7,500 (likely from personal property).

His Medicaid status makes an elective share unlikely, but the homestead allowance ($15,000) is probable unless waived. The Medicaid lien (~$17,500–$20,000 for March–May 2025 care) takes priority, reducing the $100,000 house sale proceeds. After the lien, probate costs ($5,000–$10,000), real estate fees ($5,000–$6,000), and possible homestead allowance, each of the five children may receive $9,800–$14,500.