Comments on: Protect Your Home From Medicaid Liens (March 2010)

By: Sanford Okura

Sanford Okura — Wed, 25 Jan 2012 03:54:58 +0000

@Oran – First of all, if father-in-law goes to a nursing home and qualifies for Medicaid, he must never have more than $2,000 in assets thereafter. Therefore, if they draw money from the home equity loan line of credit, and if the check is made out to both husband and wife, there will be a potential problem because father-in-law probably will then have more than $2,000. If the financal institution who approved the home equity loan would be willing to make out the check to mother’s name only, then there should not be a problem. If either or both of them draw on the line of credit before he qualifies for Medicaid, then they must be careful that their assets do not exceed the maximum amount allowed for a married couple for one of them to qualify for Medicaid. If the financial institution insists on making out the check to both names, then you must check with the policy of your state’s Medicaid office as to whether, after he is approved for Medicaid, he can safely transfer his half of the check to his wife without causing a Medicaid problem. He will be required to report to the Medicaid worker the receipt of the check immediately after receiving it, and will probably have to report giving it to his wife, if that is allowed. If that money were given to anyone other than his wife, it would definitely cause a problem. In answer to your original question, if a Medicaid lien is placed on the property, as a general rule, when the house is sold, the first lienholder (the financial institution with the mortgage) will get paid in full first; Medicaid then gets the rest of the sale proceeds up to the amount of their Medicaid lien.
This written advice was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)
________________________________________________________________________

This reply is for general information only. The facts of your case may change the advice given. Do not rely on the information in this email without consulting an estate planning specialist, or a Medicaid planning specialist, if your situation involves Medicaid.

By: Oran

Oran — Wed, 25 Jan 2012 00:28:40 +0000

IN-laws have a house in kansas, and just took out a home-equity loan with property as collateral in month 1. 85% LTV. If father-in-law goes to nursing home in month 1. If they withdraw $60,000 in 5 years, and the house is worth $85,000, On a medicaid lien, will the first HOA lienholders get paid first ($60k) and Medicaid takes the rest?

By: Sanford Okura

Sanford Okura — Wed, 18 Jan 2012 04:07:57 +0000

@Jeff – If your mother and her husband each own half of the house, then half of the sale proceeds will go to your mother and half will go to her husband. However, Medicaid will count the assets of both spouses to see if the combined assets are low enough to allow your mother to qualify for Medicaid for nursing home costs. In Hawaii, we have discovered some techniques which often allow us to save 100% of the couple’s assets, even though the amount of assets exceeds the maximum allowed by Medicaid (which is, for 2012, $115,640 in Hawaii). There are some legal techniques which can save either all of the couple’s assets or part of your mother’s assets, depending on whether she wants her assets to go to her husband or to the children. Generally, she doe not have to lose all of her half to nursing home costs.You need to find an attorney in your state who is an expert in Medicaid Planning to help you with this situation. You need an attorney who has lots of experience in Medicaid cases in your state. You need to find competent legal help right away. If you would like my help to find the right attorney in your state, let me know. I hope things work out for your family.

________________________________________________________________________

This written advice was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)

________________________________________________________________________

This email is for general information only. The facts of your case may change the advice given. Do not rely on the information in this email without consulting an estate planning specialist, or a Medicaid planning specialist, if your situation involves Medicaid.

By: Jeff P.

Jeff P. — Wed, 11 Jan 2012 23:06:47 +0000

In NJ, my mom is in a nursing home approved for medicaid. The house is about to be sold. Is her husband able to keep half the proceeds from the sale of the house even though he does not live there anymore? And the other half going to Medicaid?

By: Sanford Okura

Sanford Okura — Wed, 04 Jan 2012 23:12:08 +0000

@Paul – Yes, in the situation you describe, paying down the mortgage is a simple technique that can be used to reduce assets to qualify the spouse for Medicaid for long term care.

By: Paul de Silva

Paul de Silva — Tue, 03 Jan 2012 23:32:07 +0000

Suppose A has a house with a mortgage and and some cash of an amount that would disqualify his cohabiting wife from qualifying for medicaid for long term care on the basis that the cash exceeded the allowed joint asset amount. Can paying down the mortgage with the disqualifying cash be an appropriate tactic to allow qualification?

By: Sanford Okura

Sanford Okura — Thu, 24 Nov 2011 17:10:44 +0000

@Mike – If your grandparents signed over their house to your dad and uncle, then they do not own the property, and a Medicaid lien cannot be placed on the property. They should not have gotten a notice of lien. Here are some possibilities: 1) they did not record in the county recorder’s office a deed turning the property over to your dad and uncle; 2) they gave the property to your dad and uncle but kept a life estate in the property; 3) they added your dad’s and uncle’s names as co-owners with them; 4) the Medicaid office made a mistake in sending the notice of lien.

You must immediately find out for sure who owns the property and how. Then you will know what their rights are and what the risks are. Please understand that I am not representing you or them as your or their attorney, and you must get competent legal help in your state. You must do something before the lien is placed. Good luck to your family.

By: Sanford Okura

Sanford Okura — Fri, 18 Nov 2011 22:00:41 +0000

@Rose – Transfer of a home of zero equity value should cause no penalty. It does not matter what your mother spent the money on, so long as she did not give any of it away as a gift. Taking out the mortgage does cause a penalty. The problem I see is that since your mother kept her name on title to the home, when she gets on Medicaid, the government will be able to place a lien on her half of the property. I suggest you find a competent Medicaid Planning attorney in your state and discuss this problems in additon to the issue of qualifying for Medicaid for nursing home costs. Good luck to you.

By: Mike R.

Mike R. — Fri, 18 Nov 2011 02:27:14 +0000

my grandfather died in 1997 and before he died he and my grandmother signed there house over to my dad and uncle. my uncle moved in with my grandparents to help my grandfather before he died. when my grandfather died my uncle stayed in the house and took care of my grandmother. my grandmother’s alzheimers got really bad and she had to be put into a nursing home to get the right care. my father just got papers in the mail from medecaid saying they put a lein on my grandparents house for medical bills from when she was in the nursing home. is there anything that can be done to save the farm from being taken??

By: Rose

Rose — Sun, 02 Oct 2011 01:23:46 +0000

I’ve been searching for an answer in regard to medicaid eligibility and haven’t run across this yet. My mom had paid off her home several times. In July 2007, she took out a new mortgage for 110k, paid off a $12k mortgage, and spent the rest on debts, and who knows what…the money is gone. In Nov. 2007, we did a quit claim adding me to her deed (which is subservient to the mortgage company’s lien of course). No money was exchanged, BUT at the time of the transfer to me, she had no equity–in fact her equity may have been negative. Would there still be a penalty period for this transfer? Is taking out the mortgage a transfer? (We have both been paying on this mortgage since then.) Does it matter what she did with the loan proceeds? I realize you are in HI.; we are in Michigan, but the laws are likely similar under federal statute. I will be consulting an attorney before applying for medicaid, as she is very close to needing nursing home care. I know I will need to take the entire mortgage on myself when she does enter a home. She has no assets and only her social security as income.
Thanks in advance!