Can I Sell Home Owned Jointly with Mother Without Causing Problems With Her Medicaid?

Attorney Thomas B. Burton, of Burton Law LLC, in Eau Claire, Wisconsin is joined by Attorney Matthew Underwood, of Underwood Legal, LLC, in Madison, Wisconsin to answer a reader question about a home the reader owns jointly with her mother, while the mother is receiving Medicaid assistance to pay for her nursing home care. Attorneys Burton and Underwood discuss the facts of this situation and provide advice regarding steps the reader may wish to take before selling the home.



Transcript of Video: Can I Sell Home Owned Jointly with Mother Without Causing Problems With Her Medicaid?

Okay welcome back today I'm joined by

attorney Matthew Underwood who operates

Underwood Legal, LLC a boutique estate

planning and elder law attorney in

Madison Wisconsin so Matt thanks for

joining us

yeah thanks for having us and I'm happy

that I'm in the warm Caribbean here

while everyone else is doing the

coronavirus thing at home exactly it's

lovely to be here in the sunshine today

we're going to jump right into our first

question which is from Wisconsin and the

writer asks the following I am disabled

per social security I own a home with my

mother as tenants in common and we want

to sell it she has been in a nursing

home since April on Medicaid since May

and plans to move back to California

after the house is sold will this cause

any problems with Medicaid? So Matt

there's a lot there I'll hand it over to

you what do you think yeah so this is a

this is a good question and we get a

lot of people asking about how to

protect assets from long-term care costs

how can we use other benefits programs

out there like Medicaid to try to cover

some of those long-term care costs so

this question really touches on a

few of those issues so whenever we're

working with Medicaid or long-term care

issues I just you know can't caution

clients enough when going through this

the laws are very nuanced so we want to

make sure that we're being very careful

and really following all those laws or

you know could mean that some of that

protection we thought we were getting

can suddenly be removed or go away if we

do the wrong thing so I do recommend

that you know anyone attempting to do

this speak with the qualified elder law

attorney so you know kind of the basics

of this question though we're really

dealing with you know a house which is

an exempt

asset and exempt just means that if you

go to apply for Medicaid Medicaid isn't

going to consider that house to be one

of your assets if it's your primary

residence so in this case it looks like

mom who's in a nursing home she

was able to keep her house and still

qualify for Medicaid and really to

qualify for Medicaid you need to have

$2,000 or less so and what we can do

with the house is we can say that's an

exempt asset so it won't count towards

that $2,000 limit now the problem is going

to come into play when they attempt to

sell the house because what what selling

the house does is it converts that

exempt asset the house into a non exempt

asset which would be the cash so it

might mean that once that house gets

sold all of a sudden mom has too much

cash if she's over that $2,000 limit and

now she's going to be disqualified

so she wouldn't be able to qualify for

medicaid services

reimbursement until she would go back

under that $2,000 limit so there's a

there's a number of ways to get around

this if the goal is to sell the house

because you know they're moving out

of state or they don't need that

residence anymore we can do things like

you know taking the proceeds from that

sale of the house and putting them into

a special type of trust or pooled trust in

Wisconsin we have Wispact trusts so

there's ways that we can sell that

property but then we must do something

with that cash if we still want mom to

qualify for Medicaid on you know

some other options they could take that

cash and purchase a prepaid funeral

policy purchase another house or just a

vehicle so we can take that cash from

the house and purchase more exempt

assets that's one of the strategies we

can use or we can you know we use

special type of trusts but again because

this is such a specific area the law in

that you know we have to be really

careful with whatever we're doing with

Medicaid planning so I really encourage

anyone looking to do this to speak to a

qualified elder law attorney right so

Matt you gave a lot of good options

there of what they could do and

you and I are both just kind of we're

just reading this brief question and

trying to sort of flesh out what we

think is going on and I see the same

issue as you here it looks to me like

the mother probably qualified based on

the other assets like you were saying

the cash and such was below that $2000

level because she got on to Medicaid

and the house was an exempt asset

meaning they don't look at it basically

for getting on to Medicaid but I

think what they're anticipating doing

here is what you and I don't know is how

much the house is worth and if there's a

mortgage and things like that but

immediately I know I had a case like

this where Medicaid eventually told the

child they needed to list the house for

sale and then we were in this exact

situation where if they sold the house

there was about sixty thousand in equity

in the house that cash would go into

mom's bank account and every month you

have to be below those levels meaning

that two thousand dollars and suddenly

she would be not eligible for Medicaid

for that month and with the average cost

of care now private pay I was just told

by another attorney friend it's between

eight to nine thousand dollars a month

it's quite expensive whereas before

Medicaid was paying her bill so what I

think I'm for the reader what I'm

cautioning you against is doing

something like selling the house and

getting all that cash without a plan for

what to do with it would you say that's

true Matt yeah I think the key word there

Tom is having a plan so I think

you don't want to go into this and say

well let's list the house for sale and

then once the house is sold we're going to

deal with it then I don't think that's

the way to do it I think you need to

have a plan from the beginning so if the

house does get sold we know

what we're going to do with the proceeds

from that house so I think you're

exactly right Tom is it you know we need

to have a plan before you do anything in

this case right and I'll just add I know

from the case I dealt with the timing on

this is really critical okay so we were

able to sell the house and put the money

into one of those special trusts that

Matt mentioned like a Wispact trust but

we had to do it all literally within the

same month so the same 30-day period so

that the mother didn't lose the Medicaid

eligibility so my suggestion is you

talk to Matt or another elder law

attorney right away and get the timing

set up because if you do find a buyer

for that house I would try to set the

closing for the early part of a month so

you get the proceeds and still have time

to do the other asset funding so your

mom can stay qualified for Medicaid so

that's just a timing thing here and even

if you work with a lawyer they can't

change those dates for you so right

overall I think this is a great question

there's a lot going on here thank you

Matt for unpacking it and again to the

reader I would talk to a qualified elder

law attorney before you proceed with any

of this so thank you for joining us and

thank you Matt and we'll see you next

time thanks Tom!

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Transcript and captions provided for ease of access for the hearing impaired.

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