I want to purchase my mother's house for appraised value, and she is in a nursing home (private pay). What do I need to do so it will not affect her Medicaid?

Contact a local lawyer that specializes in elder law. He/She can probably give you the best answer to your issue.

dahorn: You should retain an elder law attorney.

Im not sure about laws in your state, but I am trying to give my home to my son, and I am learning that a living trust keeps the new person from being responsible for inheritance taxation as well as property tax increases. Not trying to say this answers your question, but if you mother is willing and capable to agree to this and you get your sister to remove her position as POA regarding this it might be in your interest to find out.

Dahorn, the advice that Connie, who answered below, is specific to a situation where there is a "Community Spouse" involved.

Please consult an eldercare attorney about your mother's specific situation in HER state.

Yes! Elder Law Attorney. I just spoke to one about selling my home to be prepared for self pay and was promptly told, "No, no, no..........you're sitting on your nest egg and Medicaid will NOT even discuss the value of your home because it is not a factor in what they insist must be spent before they will start paying."

That is the way the system works, so you must allow your loved one to be financially dependent so that Medicaid will get approved and you will not have to sacrifice your home. I will make another appointment to see if we could refinance for some cash and avoid selling the nest egg until AFTER Medicaid gets approved.

Call an elder lawyer. It WILL affect Medicaid

As others have said, so long as house is sold at FMV, there should be no problem with Medicaid. A realtor can run comparable sales and there can be an appraisal from a professional appraiser in order to come up with a fair price. If you do a private sale and there is no commission involved, the buyer could pay a slightly lower price than a broker sale and your mom would still net the same amount. If not buying/selling through a broker, you should use a good real estate lawyer and title company. Because this is a sale to a family member, Medicaid may look a little more closely at the transaction because selling below FMV can be considered as gifting.

We recently had a situation where my brother in law, who's on Medicaid, was joint owner of land with my husband and another brother. My husband is POA. The town appraisal, which is what we had to put on his Medicaid application, has always been way too high. The caseworker advised us to get two professional appraisals and send them copies so they would be on file. That way, if they sold the land for under the town-appraised amount there would be documentation that it was at FMV. Sure enough, a year or two later they did sell the land, and it was for well under the town appraisal, but there was no problem at all with Medicaid. Now, of course, with this extra asset brother-in-law will have to pay back Medicaid for some months of his care, but that's fair.

work with an attorney who works with Medicaid applications and challenges to Medicaid denials. That way if there are some snafus down the line, the person who gave you guidance will be in the best position to untangle the snafu.
Very state specific question. Good luck.

I'd suggest being referred to a good Elder Care attorney to advise and assist you through the process. It's worth it.

If Mom is now in on private pay, and you buy the home, she will continue to be private pay. Mom's assets are meant for her care. After she spends the money from the sale of the home she can apply for governmental assistance of medicaid.
Your Mom does not NEED to sell the home now. If this was Mom's only home, her primary residence, she can keep the home. The home will stand to pay her medicaid debts after her death, however, so in any sale of it a lot of the money will go to medicaid clawback.
You should attend an Elder Law Attorney with your Sister to see what your LEGAL options are for your State. This is not something to ask a Forum of strangers. This is something to get EXPERT advice on.

Having just finished the Medicaid approval process for my mom that had a similar situation I can tell you that in our case the closing papers and appraisal proof that my brother purchased the home at appraised value satisfied everyone. Each state can be a little different though and you might consider using an attorney who either has experience with estates and Medicaid, a practice that has attorneys with each specialty so they can advise one another for the purchase/closing and or call the Medicaid application department in your mom’s state and speak to a case worker, they should be willing and able to answer your question even though your simply preparing for the possibility Mom might need to put an application in once the funds from the sale run out.

You may want to discuss this with an attorney in her state who specializes in elder law.

your mom technically as the property owner should be the one who orders and pays for the appraisal. Not you. You don’t want it to be you as it looks like self dealing. Appraiser should have a state license and place a seal on the report.

If appraisal comes in less than the current tax assessor placed value, that appraisal establishes why it’s less. It’s a legal document. So if Medicaid should actually need to be filed for in the future as mom has run out of $, and there is any question why it sold for less, the appraisal establishes why.

if you wanted to go a step further in all this, your mom could get the house inspected first and then that inspection report is given to the appraiser to use as a reference in their report. If house has lots of delayed maintenance &/or the majors (roof, electrical, plumbing) are old / vintagey, you might really want to get it inspected first. Inspector will go in detail on how beyond code the situation is. Will lower its value a lot. Best of luck in your quest!

Call a reputable realtor in the area and ask for recent sales and listings for the area. Determine the average square footage price. Multiply that by the square footage of moms house and compare to appraisal price. It should be very similar. Keep a record of addresses and listing/sales price with your documents. She should be thoroughly covered with all this data. Some houses sell higher than appraisal especially these days with soaring sales prices and cash buyers.

The appraisal will prove it was purchased at FMV.