My Father deeded his interest in the house to my mother who intern named me as the grantee of a Lady bird deed on the house. Due to the upkeep costs we are considering selling the house. There is $100,000 in equity and we would like to know if selling now can trigger a MERP claim or would they have to go through a penalty spend down period before my mom or both parents can requalify for Medicaid. Can they gift me $50,000 and use the remaining $50,000 to self pay during the penalty period: $50,000/ $172= 290 days if calculated on just my mom or 145 days if both were penalized.
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Remember terms of Lady Bird do not enter till they are both dead.
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That Lady Bird Deed your folks did will mean property will transfer outside of probate and outside of any MERP action. HOWEVER it cannot be done till they both die. Not to sound harsh, but average NH stay is about 18 months. Any feasibility to pay till they both die? Perhaps do things to reduce property costs (pull utilities) or spread it out so less but to your wallet (like quarterly tax payments). Renting could be an option if fmv rental doesn’t pose issues for their monthly income maximum needed for Medicaid and property is feasible to be rented & it’s feasible for family to deal with rental paperwork.
Right now as far as I know for all counties in TX, the assessor just sent out the notices of future value on the property for 2019 due property taxes. You can file paperwork to protest value (to get lower taxes) and then you do whatever to show why lower value at the hearing. The protest has to be postmarked by May 15th. Hearings are over the summer.
TX law does not allow for unsecured creditors to put a lien on property. MERP, like credit cards, are unsecured lending (Mortgage is secured lending). After they die, however MERP can become a claim and for TX probate it’s a Class 7 claim. That it’s a Class 7 is mucho importante as TX is a Level of claim by class so all in Class 1-8 are paid in that order.
Right now as they are alive there won’t be a MERP lien & or a “claim”. Although that sounds terrific, what can happen is that title companies can ask seller (your parents or you as their dpoa) for a statement or release as to Medicaid LTC & MERP status. Which can pose a glitch for sale to go through.
If & when they sell house, what will happen is that the proceeds from the sale will make them both ineligible for Medicaid as of the month of the sale so they go onto private pay for care. TX Medicaid requires notification as to any change in income or assets. So Medicaid must be notified. Then later on when they die, if they die with money in their bank account, that $ becomes an asset of their estate which MERP can file a claim on. TX uses an outside contractor- HMS - for MERP & they are very proactive for recovery.
Realize that Medicaid has info on property value and what house sold for as all these details are dovetailed into state databases. It will surface and to the penny.
If house sold for 100k, that’s maybe about 6 to 9 months at the most of private pay NH for the both of them. A NH does not have to charge you the TX Medicaid daily R&B reimbursement rate of $172.65, NH private pay could be lots more. 6-9 months is really not very long & starts the month of the sale. If the house sells for 100k it’s not enough $ - to me imo - to ever be “gifting” any $ at all, like that 50k you’d like. A house selling for close to the TX Medicaid house equity/value limit of $572k, yeah gifting 50k out of 500k that can work as they’d likely die before running out of $. But 100k sale is just flat not enough $, their needs are more immediate & should come out of all house sale $.
Lady Bird Deed are great but heirs / family has to be able to afford all property costs should their folks go onto NH Medicaid.