My mother has dementia. She is currently living at home alone. My husband and I are over there a lot, I have POA and have taken control of most of her finances. My mother's house is in a revocable trust; my sister and myself are the heirs. My sister and I have discussed transferring the house into our names. Our mother has gotten royally ripped off in the past, and we continue to be worried that she would do something stupid when our backs are turned (precendents for this). We could still sell the house if we need to to pay for her care. However, I've seen some older posts that seem to be against this idea, that it complicates things with medicare. Any ideas?
If a deed hasn't been prepared transferring title to the Trust, the house is not "in the Trust." Assets have to be retitled in the name of the Trust in order to be "in it."
To the best of my knowledge, only your mother can be a Settlor and transfer title to the house from the Trust to you and your sister.
You write that you're the heirs; are you also the Successor Trustees?
Given her dementia, the possibility of executing a deed from your mother to you and your sister raises a significant issue of whether she could be considered mentally able to make that decision.
I'm not trying to be cruel in this response, but rather to address the underlying issue of whether the transfer could be done at all.
Before going any farther, this is an issue you should pose to the attorney who drafted the Trust.
What often comes as a surprise to family, it that the now on Medicaid parent must do a copay or SOC (share of cost) of all their monthly income to the facility. They are allowed a small personal needs allowance of $35-90 a month which usually is in a residents trust account at the NH. There will be none - nada - no - zilch of their $ to ever pay on anything house. If family is living in the house, they are expected to pay on house costs without an exclusion of those costs. If the house is empty, you need to make sure that your states Administrative Code allows for whomever pays house expenses can file these costs after death against the MERP tally and as a claim or lein on the estate in probate but must have documentation on those expenses. For my moms state (TX), TAC has a rule for exclusions for reasonable property maintenance & caregiving expenses AND these costs can be entered as a Class 2 or 3 claim by executor or heirs and ahead of MERPs class 7 claim AND there must be a positive cost benefit analysis for the MERP class 7 claim (done by outside contractor) to go forward determined by TXDHHS done; and all presented in probate (TX allows 4 years from when letters presented). It is not simple.
If the costs & upkeep on the property are manageable and totally affordable to you for years & years, and there is a reason to keep the house, and someone in the family can keep very detailed documentaion & receipts on every penny spent, & get things done in set timeframes, then go for it. But realize that you are going to have to go to probate & deal with MERP. to me, it's like having 2nd or 3rd home but without guarantee of ownership. Most of us cannot afford a 2nd home & most of us are risk adverse.
My understanding is that It's usually that the house is put into a living trust so that the house can pass outside of probate to heirs. Mom continues to be in the home and benefitting from senior status on the home but home is in a trust. If the elder dies never applying for medicaid, then doing a trust is excellent estate planning.
But if they end up in a facility and need to get Medicaid to pay, the trust poses an ineligibility issue. Medicaid now requires that estate recovery is done (MERP). And MERP is done as a probate action as MERP is a claim or a lien on the estate (which & how depends on your states approach to probate, death, property laws). A home in a trust - since it passes outside of probate - cannot be subject to MERP. So what the states have done is to have it so that property in a trust is an non-exempt asset for Medicaid. Non exempt assets are limited to 2K, so parent will never be eligible for Medicaid.
So family have a choice: ,keep house in a trust and private pay for facility & never ever apply for Medicaid. OR use the revocable feature and move house back to total ownership of Medicaid needing parent, so house becomes an exempt asset for moms lifetime but subject to MERP once mom dies. Doing this poses $ issues (I'll do another post on my thoughts on this). OR uses revocable feature and places house up for sale & uses the proceeds from the sale towards parents care as their spend down to eventually qualify for Medicaid.
Estate planning and Medicaid planning are not necessarily on the same track.
Another thing to check into is what your income taxes would be when you transferred the house. Most houses can be inherited without any taxes. Transferring the house is a different matter. I would be very careful and consult with an attorney before doing it. Spending a little may save you a lot.