Does a Deed of Trust protect me from Medicaid seizing my Mom's house once she passes?

jericho, do not attempt to put together a Trust on your own... one misplaced or let out word could ruin the whole thing.

Jericho, you need a lawyer NOW, because there are many kinds of Trusts. It's just not a simple process. And if you don't follow his advice,(like imsaknco) nothing is protected.

how would I word a tust to prevent Medicaid from collecting my rental property if I want my children to inherit when I die

imsaknco1: The date you took your father's name off the account is the date of the gift. The five-year lookback period starts on that date. So if your father applies for Medicaid within the next 4 1/2 years, then that transfer will count against him as a gift to you, and result in a disqualification (penalty) period.

The revocable trust is irrelevant in this case, since the money is not in the trust.

7 years ago my father made a revocable trust. I am his primary trustee. At that time the lawyer told me to take the money out of his name. The names on his savings and checking acct. were both are names. I didn't do anything with the money, it stayed in a regular savings acct. , with both are names. As time went by I finally took the money out of his acct. 6 months ago and put in my name. Now he is facing possibly nursing home placement. Will Medicaid look at the financial records, or will the revocable trust dated 7 years ago suffice and not take his money?

Your state laws and state management of the Medicaid program will make a difference in just what happens both when they are alive & especially after death. MERP is very much tied into probate so your states stance on estate & death laws will be a huge factor.

Based on the original post, Savannah's parent in TX has a Miller Trust & supposedly a "LadyBird" Deed done. If those were done correctly then:
-the Miller, which is a way to get those with just too much income each month to be under your specific state set monetary ceiling, left-over funds will pass to the state. For some states Miller is a pass through so upon death there is no excess but for other states the excess builds with state as the beneficiary for the excess income.
Whichever is the case, the Miller funds are the state's.
- for the LadyBIrd aka Enhanced Life Estate Deed, it means that the property has been set up to transfer or pass outside of probate. There are just a handful of state that allow for ELED's (TX, MI do). Now it is through probate that MERP - Medicaid Estate Recovery Program is done. In theory, no probate = no MERP.
If it is correct, then whomever legal Savannah & her mom saw knew what to do to make things work entirely legally to have the state pay & to the families best advantage to inherit the house.

If Savannah's mom's ELED was done correctly, whomever is named in the ELED gets the house and the state's Medicaid / MERP cannot do a thing about it. But they kinda have to let the state know so that the state can send a release statement from MERP. It is important to get this so that if in the future and you need to sell the property, or get a loan using it as collateral, you can show clean & clear title with no state of TX MERP claim.

How MERP is done depends on state law. As Kathleen said, for Mass the children or spouse have to agree for MERP & you have 9 months to sell a property. For TX, you do not have to sign off to agree to MERP, it is an "acknowledgement of MERP" which by applying for Medicaid means you accept whatever & however Medicaid & MERP runs and if you sell the house, it sells when it sells whether the day after it goes on the market or takes up to the full 4 years allowed for probate.
All states have exclusions or exemptions to MERP and also have to allow for appeals.

The key is either doing planning before a NH or carefully documenting all whatevers to file MERP exemptions or exclusions (property costs, caregiver exemption, heir low income exemptions, etc.) after they die. All this done within the short time-frame required by your state. For most family they are still bereaving and just cannot do what is required to use the exemptions or exclusions to their best advantage or be able to present in probate court as they need to so they need a good attorney to represent them.

I live in Massachusetts. I took care of mother at home. I say now Thank God! But, your best bet is to get the best Eldercare lawyer in your are even if it costs you $750-$1,000 per hour and they do cost that much in the northeast and get all your questions answered. The law keep changing and the general public cannot keep up with it. I know even if you pay for your nursing home care and the money runs out. If you own property you the children or spouse etc have to agree for Medicaid to put a lean on your property. To get you parent in a NH if you won't agree to this with Medicaid. This mean the NH is not getting paid. You will be told to take your love one home and care for your love. NH cost $12,000-$15,000 per month. By the time Medicaid pays the NH. The most they will have is $8,000 reimbursement per patient. It would not take long to go through the value of a house. I know there is a state rate. The federal government must be the same for all 50 states. At the end they want the property sold within 9 months.

I don't know the answer to that question. It keeps changing. But, I know the federal government will squeeze every penny they can. We spent a lot of money to do my mother's federal and state returns this year. Even though her estate was in a trust. We sold my mother's home last August and we had a low tax liability. Because what the house was worth at the time of her death and the actual money we received. Was taxable, but we had to put in a septic system in to sell and we did another big job which where right offs. I took care of my mother for 12 years at home. There was no Medicaid involvement. But, tax time came almost 3 years after her death because we didn't sell the property. The final tax form read the estate of my mother. You better have good bookkeeping. My sister is a CPA. They check every penny in and out of the trust. They went back many many years to make sure she had paid her tax returns. If there was any money due. The federal government they are going to expect the children to pay their parents taxes owed, penalties etc.

There are two problems here. First, the house was transferred within the five year look back. Second, it is in a Miller Trust, which will go to Medicaid. You would need an Estate Lawyer to try to find a loophole that would allow you to keep the property. I don't think you will get to keep it, plan on moving.

In Massachusetts, if a child has lived in the home caring for a parent for 2 years. If a parent has to go into a nursing home. When you go into the nursing home after the application has been accepted. The nursing home will make the home Medicaid except. But, you have to prove you have lived in the home. The best way is to register to vote in your parent district and vote. The home will transfer to the child automatically.

Get some legal advice where you live.
Blessings are....

I am estate executor in CT and the house left to my father's children was sued for and won by my stepmother's children as her POAs to pay for her incarceration in a Nursing Home. The will states the house was for her live in use only. She was not on the deed and the house was purchased before their marriage. They kept all their finances separate during their entire marriage. Her POAs spent down her asset pool over 5 years and as soon as the 5 year loopback period passed, they sued us for the house 1 month later. I settled rather than drag endlessly through court. We settled for 67% of the house sale to a woman who had been amply supplied with other assets from my father's estate for her care and who then turned around and cheated her stepchildren out of their share of the estate.

FedUp - CT I would imagine has open-records law for anything in the state budget. So in theory you should be able to look at CT Dept of Aging or Health & Human Services or whatever the department is called for CT state govt. Probably for 2010 annual state of the state report or annual budget hearings or even maybe 2011 to see what the % recovery & the amount of income was from the MERP program & also the award for the contract to the outside vendor (like an HMS or PCG) will be a state record. It will not be a simple Google search, you will have to do a lot of drill-down within state budget archives. The easiest way I've found is to go through a WestLaw portal to state government. For those not dealing with legal (WL has a contracted fee), some better libraries have it as part of their services for the general public. Another way is IF whomever is the chair or member of the committee that has HHS does a blog, they may have the details on their state rep or state senator website for the details. If they are your state rep or senator, then I'd email them your request for this info and really a staffer will get back to you.

MERP was within the law but pretty much a non-starter for most states till 2005 - 2006 as most states did not have any paperwork in the Medicaid application to be able to enforce MERP. Like for TX it is only those who have applied to Medicaid after 2005 that can have MERP as an issue after death. So the stats before that are kinda useless as no real enforcement.

Interestingly MI 86'd HMS last year from doing MERP. If there is anyone on this forum from MI who has an ideas as to why, I would love to know the details.

BTW the GA & AL site for MERP are really consumer friendly and do a good job of explaining what MERP is and what HMS does within the MERP process.

Thank you, Pamstegman. Much appreciated. I couldn't find out the % Conn. keeps for 2013 or anything.

Fedup, latest MERP report was for 2004, Connecticut spent $1Bn on Medicaid but only recovered $8M. And of course they don't get to keep it, they have to return the federal matching funds to the feds. Got that from AARP

What is the HMS or MERP % of recovery for the state of Conn? If no one knows this information, where can I find out? Thank you.

Thanks In Col. Ohio here and will check our elder law attorneys. Each state is different..but law can be tricky...not set up for you to come out ahead. For sure!

For those of us whose state who has outsourced MERP, it is really important to understand what that means. I know I'm repeating what I posted earlier but really this is so important. If your state has outsourced MERP, their interest may be in opposition to the interest of family as they get a % of the MERP recovery. They are acting similar to debt collectors and get a % of the money.

For TX, Texas Health and Human Services Commission (THHS), is the Medicaid agency, & has ultimate responsibility for the Medicaid Estate Recovery Program (MERP). However, many of the administrative functions have been delegated to the Department of Aging and Disability Services (TX DADS), and the actual collections are handled by a contractor called Health Management Services, Inc (HMS). Thus, HMS is often the primary contact that the decedent’s family or heirs have for MERP.

Often family or heirs assume that HMS is the final authority on all matters MERP. That is, the heirs accept at face value whatever they are told by HMS staff regarding whether a claim will be filed and the amount of the claim. It is important to remember that HMS represents the State in the estate recovery process. It does not represent the interests of the decedent’s family or heirs. For this reason, HMS’s position may be in opposition to the best interests of heirs.

The Texas MERP rules allow numerous exemptions from estate recovery, certain deductions from the estate recovery claim, and waivers of estate recovery based on undue hardship. There are special rules addressing undue hardship waivers involving a homestead. The rules further allow for a review of the denial of a request for an undue hardship waiver. Because HMS is the State’s representative (not the heirs’ representative), it may not assist the heirs in the pursuit of allowable exemptions and deductions. It is up to family or heirs to find out about any exemptions, exclusions, etc and do the follow-up to have those place in to offset, reduce or cancel any MERP claim. In theory, you can do this yourself if you have been all OCD on everything on your elder's house and finances and are totally comfortable in a courthouse situation and doing "legalese". But the reality for most of us, is that you need an elder law attorney who clearly knows just how MERP is approached in your state and you work with your attorney on the documentation needed to remove or decrease MERP's claim.

When the patient dies, any money/assets remaining in the Miller Trust must be remitted to the state Medicaid program.

Trust law and how each state interprets estate recovery of Medicaid payments varies from state to state. However, in order for a transfer of a house (or other property) from the Medicaid recipient to a trust to offer protection from estate recovery, the trust must be carefully drafted. For instance, in some states if the Medicaid recipient retains an income interest, the trust will still be deemed an available asset, while in other states it will not. In some states only "probate" assets are subject to estate recovery while in other states trust property, joint property, and even life estates are subject to estate recovery.
Since I am not licensed to practice law in Texas, I am not able to give you a specific answer, which in any case would require me to review the trust in question. Thus, I echo what others here have said, that you need to consult with an experienced elder law attorney in Texas with Medicaid knowledge.

below from Texas Administrative Code

TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 373 MEDICAID ESTATE RECOVERY PROGRAM
SUBCHAPTER B RECOVERY CLAIMS
RULE §373.213 Deduction Allowed for Expenses for Home Maintenance and Costs of Care
(a) An amount equal to necessary and reasonable maintenance expenses and taxes may be deducted from the Medicaid Estate Recovery Program (MERP) claim for maintaining the home of the deceased Medicaid recipient, provided that sufficient supporting documentation of these expenditures, such as receipts, is provided to MERP by estate personal representatives, heirs, or legatees. Necessary and reasonable expenses for maintaining the home include real estate taxes, utility bills, insurance, home repairs, and home maintenance expenses such as lawn care.

(b) An amount equal to the necessary and reasonable expenses for the direct payment of the costs of care (including payment of personal attendant care) provided for a deceased Medicaid recipient that enabled the recipient to remain in his or her home and thereby delayed the institutionalization of the Medicaid recipient may be deducted from the MERP claim, provided that sufficient supporting documentation of these expenditures, such as receipts, is provided to MERP by estate personal representatives, heirs, or legatees.

(c) Requests for obtaining allowable deductions from MERP claims for expenses under subsections (a) or (b) of this section must be made in writing within 60 days after receipt of the Notice of the Intent to File a Claim by MERP. All supporting documentation must be attached to the request and sent to MERP, Home Maintenance/Costs of Care Request, P.O. Box 13247, Austin, Texas 78711.

I was in the same situation, we did an irrevocable trust and added my name to the house before mom went in the nursing home. I had an elder law attorney take care of it. I was still concerned and Illinois tweaked some of the law, so I went to the top elder law attorney in our county. He went through everything and said I was in great shape. I have letters from neighbors, church people, family friends and her doctors saying she couldn't live alone, they weren't required, but I got them for back up. Mom is still paying for her nursing home care, but will run out of money by the end of the year.

robjr100 - actually "LadyBird" has nothing to do with LBJ. It was first done by Jerome Ira Solkoff in Florida in the early 1980's (LBJ died in 1973). Solkoff used the names Linton, Lady Bird, Lucie & Lynda for the family he created for his examples. It became an urban myth that LBJ used it for his wife. "Bird" was pretty savvy businesswoman from a wealthy family, I doubt LBJ ever had to do anything for her that she couldn't already have people do for her if she didn't do it herself.

Solkoff was really a pioneer in elder law and planning for aging. Amazing man.

savannah - more on MERP…..assuming your ELED is ok, then you still will have to deal with getting the title moved over to you. Really you do not want to be one of those who inherit a house and do not get the property fully transferred to your name. I can tell you all kinds of sad stories on these situations…..

Now it is critical that you get a "Release of Claim" from MERP. This is a 2 page document that comes from TX DAD's out of Austin. Each one is unique as it has to read for the county in which the property is. You need to safe keep this document. Now you can go to the courthouse and have it entered as legal to the property. So that in the future, when you go to sell the property it has been recorded and added to all the other legal attached to the parcel.

Why? because of title insurance issues. With HMS now doing MERP, there is a huge increase in claims placed on properties. It seems that so many just do not respond to MERP "Intent to File" letter in the strict time-frame and so what happens is that allows for MERP to place a claim by default on the property just like a debt collector can place a lien or a claim. As was mentioned, the contractors are acting like debt collectors and get a % of the recovery plus fees. The claim has to be lifted for the property to sell so that the buyer can get a clean clear title. If you are at their point, there isn't much negotiation available to the property seller either, you are stuck having to pay off MERP in order to ever sell the property.

Most people buy a house via a mortgage. Mortgage companies require that the home be sold via a warranty deed and require title insurance so they can be assured there is clean title on the property. The title companies are now putting a form for the seller to fill out regarding if the property owner if over 55 has gotten any funds from the state. If so, you have to get the release from MERP before they will issue insurance. Otherwise you as the seller will have to buy an indemnity policy before the title company will provide the report that the mortgage company requires.

MERP's claims or liens are odd in that they don't come up on the radar initially. It is not till a title company is doing it's search that it shows up and this right before the act of sale. Can totally kill a sale. Even if you aren't selling it can be a factor, like if you want to get a home equity loan, it too want's good title before funds are released; or you want to get the title changed and it can't be done till MERP claim or lien released.

Now you may be living in mom's house now but you need to think about what happens in the long view if later on you want to sell the house or want to give it to your family. You want to safeguard that you can do this and without any MERP issues from years ago. Understand?

If you have the MERP "release" and all the ELED paperwork, you should be able to go to the courthouse and get the change done. If for some reason it doesn't work this way, you can do a "Muniment of Title" done if mom has a will and names you as her beneficiary. TX allows for Muniment - they are really easy and I think of it as probate-low-calorie version. If all the assets mom had were her home and has no debt, then you can do a muniment. You file in probate court (to establish the death and who you are) and then a bit later come back to file to whom the transfer is to (via the will or ELED) and then about 4 -6 months later file the final document that shows the property transferred to the heir. In the bigger counties (Bexar, Harris, Tarrant) you don't even appear before the probate judge either, you just do a filing. Maybe $ 300 - 500. If you are comfortable in a courthouse and have your paperwork and are a legal resident of the state, imho you can do this on your own.
Good luck and really do whatever you can now so that you are not in a panic after your mom's death.

savannah- Ah Miller Trust, what a great thing. OK for MERP….My mom is in a TX NH on Medicaid & has her home so I try to keep up with all things MERP. There are 2 different tracks to keep in mind for MERP - 1. how probate is done & 2 - the validation of MERP claim. This is going to be long, so get a cup of coffee...

MERP as an aspect of Medicaid is run by each state rules just like all Medicaid programs are. MERP being an after death action will be VERY interdependent on each state's laws on death & property & probate. MERP is ultimately enforced ONLY ON PROBATABLE ASSETS. Some assets fall outside of probate, like any POD bank accounts, or life insurance. For TX, property via a properly done "Enhanced Life Estate Deed" aka Lady Bird deed falls outside of probate. So in theory, no probate = no MERP.

You need to make sure the deed meets the criteria to be a ELED.

If not, then all is not lost as your can use probate to your advantage. Probate for TX can run up to 4 years. TX probate is a level of claim state. MERP is a Class 7 claim. This is important because TX probate requires that claims are paid by Class. So everything in Class 1 - 6 get paid first & foremost. There could well be very little money left once 1 - 6 are paid or the claims for 1 - 6 taken into consideration for payment from the sale of the home. So a MERP claim does not have the cost / benefit to be worth MERP doing.

MERP in TX - as what is happening in other states - is now being outsourced. TX, AL, CO, Arizona, NJ, all have HMS as the contractor and they get 16% of the recovery. PCG does FL & WV and are at 12.5% of recovery. I'm sure other states use these groups. HMS does compliance for CMS in another division and they are very very good at what they do and have whole algorithms developed for compliance.(I imagine if they do background for Stark Law filings for CMS.) If you are in one of these states, you could be essentially dealing with MERP as a debt collection process if you do not file the exemption, exclusions to MERP. A slight twist to how MERP is being done.

When your elder dies, the state will send out a letter to responsible contact for the Medicaid recipient on file. This is the "Notice To File A Claim". It will read something like "we're sorry for the death, but they owe the state $145,679.35 for the care the state provided to them via Medicaid" & will state "if there are any exemptions or exclusions to claim, you need to provide them to the state within 30-60 days of the date of the letter". It will state the full amount spent on the elder's care for all things Medicaid paid for & will be likely a huge sum. It is not a warm & fuzzy letter but very direct. It is CRITICALLY IMPORTANT that you respond to this letter & well within the time-frame indicated. If you want to read examples of this, google Randy Drewitt who is an elder law atty in big beautiful Beaumont.He has samples on his blog. Pretty scary but it will have you prepared.

TX DAD's site has a list of the exemptions and exclusions to MERP. Google DAD's site to find those that apply to your situation. You likely will qualify for the caregiver exemption, BUT YOU HAVE TO LET MERP KNOW THIS. They could well ask for documentation that your caregiving kept the elder out of a NH or off of a Medicaid provider service. That means getting a letter from the elder's doctor on this - some MD's just flat won't write one either. If you have a full time job during this time, the caregiver exemption could be denied too.

Now if you do have an "Enhanced Life Estate Deed", that is an exclusion to MERP. ELED's fall outside of probate for transfer.You have to let MERP know within the time frame any & all exclusions or exemptions to their claim. I would suggest this mailed to MERP/HMS Dallas address via certified mail with the return registered card (the green postcard) via USPO. It will be the best $ 8.00 you ever spent for piece of mind. If you know of other things that could be filed as a claim against the estate, you can let MERP know that too as those claims will be likely be paid in Class 1 -6 and before MERP can get paid.

State is required to do a cost / benefit analysis to determine if a claim is going to be done. But you have to let them know and be able to provide the documentation on the exemptions & exclusions. If you start this now, you won't be overwhelmed at the period of time after death when you are still bereaving and just can't go searching for mom's house tax assessor statement from last year.

another post to follow on house title issues…..

In IL. my friend's husband was able to live in the house, until his death. Then, it had to be sold to recover the money spent for his wife's care.

I see that you completed the deed of trust in 2010. In my mind, that does not clear the 5 year look back process. Spending a little bit to see an attorney, will save you a lot of worry.

My dad owns the house we live in & I was co signer on loan but not on title. His trust says I am to get house (I am caregiver & trustee) after he passes. Do we need to do a deed or will it automatically transfer to me? We will sell house when he passes but are trying to sell now as heat is too much for dad and we want to move to cooler climate but I don't think with his health we can move right now. We live in AZ & want to move to OR. I get paid thru the VA Aid & Attendance program to take care of him which will stop at his demise along with his SSI, so I have to sell as I cannot afford to live here and make the payments. Any advice on what to do? He probably has a few months left maybe more but not sure.He has severe copd & is on o2 24/7 with a bunch of other breathing meds & he seems worse.

You need a lawyer! It's my understanding that the state can put a lien on the property and possibly force the sale unless one of the original owners (your parents) is still living in the house. The state doesn't care about your inheritance, and frankly, as a taxpayer, I agree with them. If I am paying for any part of your mother's care with my tax dollars, then I should be repaid by her estate before you inherit anything.

In Colorado a trust does not protect any assets including the house. Medicaid can attach everything there. This is one thing that is commonly misunderstood. I think the reason mom set up her trust was to guarantee herself income for care when she needed it, though she would never remember that now. She also had a long term care policy that was in the trust, but unfortunately it lapsed probably at the beginning of Alzheimer's disease when she was forgetting to pay bills and not making wise decisions.

I have to concur with the other folks, posting. We just moved my In Laws to live with us, and we are buying a larger, more Handicap friendly, home. We are all going to be on the loan. Susan A43, sounds like you have done your homework. But do get yourself a Elder Law Lawyer. It is the best decision we have made.