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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