Full question:
My Mom is 80 yrs. old. He has two children , a son (me) and a daughter . Mom lives alone in her home that is paid for . She has some physical and emotional issues and my sister promised our Dad before he died she'd make sure she was taken care of . My sister and her husband owns their home with a mortgage and so do I. Mom can't afford an assisted-living and neither of our houses are conducive to her moving in mainly due to lots of stairs, etc. My sister came up with an idea that maybe they could buy Mom's house for half of the fair market value and give me my half now and then , when Mom passed my sister could sell and get her half . She and her husband would keep their house yet move in with Mom . I don't have a problem with the idea , because I told them I would not use that money anyway until Mom passes, because technically it's still her's . But since the house would be sold for well under fair market value, if Mom were to have to go into a nursing home at some point, I understand my sister could lose the house once Mom passes away if it's before five years. I just want to make sure we cover our bases before doing this . Can you help us?
- Category: Medicaid
- Date:
- State: Alabama
Answer:
The look-back period for asset transfers has been extended from three years to five years. This means that when someone applies for Medicaid, the state will check if they transferred any assets for less than fair market value during the previous five years. If they did, Medicaid may deny benefits for a period based on the value of those assets.
In your situation, selling your mom's house for less than its fair market value could be seen as a transfer of assets. If your mom needs to enter a nursing home within five years of the sale, this could impact her eligibility for Medicaid. The penalty for such a transfer starts on the date she applies for Medicaid, not the date of the transfer.
Additionally, if the transfer is done with knowledge of a potential Medicaid claim, it could be challenged as a fraudulent conveyance. A transfer is considered fraudulent if it was made to hinder, delay, or defraud creditors or if the person did not receive a reasonably equivalent value in return.
There are certain exceptions where transferring a home does not affect Medicaid eligibility, such as transferring it to a spouse or a disabled child. However, selling the house to your sister for half its value may not fall under these exceptions.
It's crucial to consult with a legal expert to ensure that you understand the implications of this transfer and to protect your mom's eligibility for Medicaid in the future.
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.