Full question:
we have a life estate deed on my mothers house for about a year. if we have to put her in a nursing home can we sell the house to pay the nursing home
- Category: Real Property
- Subcategory: Deeds
- Date:
- State: South Carolina
Answer:
A life tenant can sell or mortgage their life interest, but this interest only lasts for the seller's lifetime. If you sell the life estate, the buyer will only have rights as long as the original life tenant lives.
However, if you plan to apply for government nursing home assistance, be aware of a 60-month look-back period. This period checks for any asset transfers made for less than fair market value, which could affect eligibility for assistance. Under the Deficit Reduction Act of 2005, this look-back period is five years. If you transfer assets, you may face penalties that delay your eligibility for Medical Assistance for nursing home care.
Some transfers do not affect Medicaid eligibility, including transfers to a spouse, a child under twenty-one, a sibling with an equity interest who lived in the home for at least a year before institutionalization, or a caretaker child who provided care for at least two years.
If the equity interest in the home is $500,000 or less (or $750,000 in certain cases) and the person intends to return home, it may not count as a resource for Medicaid eligibility. The equity value is calculated by subtracting any liens or mortgages from the home's fair market value.
Creating a life estate without the power to sell may be considered a disposal of resources, potentially disqualifying you from Medical Assistance. If the life estate was created long enough ago, it might not incur penalties, but its market value would be $0, thus not disqualifying you. A life estate with the power to sell is not a disposal, as you retain the ability to sell without permission. However, the house's market value would count as an available resource unless exempt for other reasons.
Fraudulent conveyance transfers, defined by the Uniform Fraudulent Transfer Act, occur when a debtor transfers assets with the intent to defraud creditors or without receiving reasonable value in return.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.