My sister is in nursing home, full Medicaid, but has lifetime live-in rights to parent's house. How do we handle Medicaid and sale of house?

Unless you were paying out of pocket for the NH and you said Medicaid was paying - the house was no longer your sisters and would belong to Medicaid through the NH.

You'd be wise to seek an attorney ASAP. You really don't want to get into court with Medicaid. I don't know of a NH that doesn't make you sign over the rights to your home as collateral.

Freqflyer omg I totally missed the “Life Estate” aspect. Bad igloo....

TF how is property titled? If it’s in her name with a LE, and was distributed to her via your parents probate, then it’s way more complicated as LE can have remainder interest which has to be determined. It’s not a simple 1/3 each. Forget the plan to spend down 25k within this month. Not feasible. She’s going to be ineligible and someone in the family will need to deal with her re-eligibility for Medicaid after she does a documented spend down. The good part is she will have the funds to pay for the legal need to get through all this. Remainder interest has specialized tables to determine %. Usually you get a taxation atty to do these as it’s not ever a DIY and it will have IRS filings too.

Freqflyer is beyond right that you should check with an atty before the Act of Sale to see exactly what’s what legally. Doing this incorrectly will domino into a whole slate of issues for her Medicaid eligibility.

Again forget my prior post, you need a CELA level of atty for her & speak with before Act of Sale.

TFrancis, I am just curious about this case. By chance did you check with an Attorney to see if you could sell a house that has "life time" use? Normally your sister still has life-time use whether she is in a nursing home or not. And the house doesn't go to the siblings until she had passed. Then the siblings can sell the house. But I can fully understand the need to sell now to get money for your sister's care. Hopefully there are exceptions to this matter.

Being that the closing is May 18th, then County/City Title Search has been completed and nothing amiss has been found, so that is good.

Make an appointment with an "Elder Law Attorney" to see if this is something that is allowed in North Carolina. And what you should do next. Elder Law Attorneys know the ins and outs of Medicaid.

The month of the sale, the 25k is “income” and takes her over the Medicaid monthly income limit set by N.C. Then for all subsequent months, the $ becomes an asset and Medicaid limits assets to 2k. 

You are on the right track about getting her spend down done all in May to keep her Medicaid eligibility. She started May eligible, she should not owe for May if you can get all $$ moved ASAP. But you have to have a precise plan to the penny as to spending the 25k. It has to be for her care OR her needs ONLY. Full paid preened funeral & burial is a fab spend, but it has to be within Medicaid limits for funeral/burial for N.C. Medicaid rules. The FH should know what’s what. Some states limit it to under 10k and just hard costs (so no floral or celebration of life type of luncheon). So say 25k -10k, there’s still 15k to spend..... if she could benefit from dental care and could actually see a dentist this month, that could easily use up the 15k balance. Spending on things Medicaid never pays for or pays for minimally is what imo you want to do.... so dental, extra eyeglasses, hearing aids, a better walker or wheelchair are good spend down. Updating her legal if she could benefit from this & is competent to meet with an atty. A reasonable amount of new clothes & shoes. But all has to get paid and go through her bank account so the EOM of May clearly shows her under the 2k in assets allowed by Medicaid. She can’t have a check coming through in June, comprende? So she starts the month impoverished & ok for Medicaid and end the month impoverished & ok for Medicaid.

Otherwise she becomes ineligible and has to private pay for her NH and then reapply for Medicaid..... it will not be simple..... makes me tired to think of it.
I’d suggest you contact the Realtor to see if the Act of Sale can be pushed back to like June 4th if at all possible so it’s not a total rush. If not, get with FH this week to figure out to the penny that cost so you know how much you have left to spend down.

IMPORTANT- Remember she has a personal needs allowance each month from her SS & other income. (For my mom in TX it was $60 ea month). If the PNA is being held at the NH, in a account for her,  that $ too gets added into her asset total. Assets max for Medicaid is 2k. You need to find out what PNA is as your going be some kinda peeved & pissed if there’s $800 in the PNA and you didn’t know it and it takes her over the limit in June. Personally I’d try to keep assets under $1500 so even if the PNA build by a month or so, it’s not a panic. Good luck!

You should have done Medicaid research before you sold the house.
As my lawyer said, we now go from here. Prepaid funeral would be good. My funeral director said flowers and luncheon can be in the cost. Anything to do with a funeral. You cannot pay off her debts. All money goes for her care once on medicaid. You may have to private pay then file for Medicaid again. Deposit the money and then sit down with Moms caseworker to what you can do. Hopefully you sold the house at market rate. If not, it may cause a problem with Medicaid.