My Daughter has been living in my MIL's house as her caregiver and now wants to buy the house when we move the MIL in with us in another state. My daughter was adopted by my husband when I remarried after her father died so she is not a blood relative of the MIL. Your advice please.
For homes owned by the elderly, often the property is not accurate for assessor value as was bought ages ago and has decades of delayed maintenance. Since their property taxes is often frozen, the increase in value over the years by the tax assessor has not been challenged to be lowered, so the assessor value is way way over true value. If this could be your situation, I'd suggest to get the house inspected (needs to be done by someone registered with license) & a report done & then get it appraised (also by someone registered with license) to get a true figure as to value. A comps report from a Realtor would be another good item to have as well - although you should make it clear that you are not interested in listing the property when you speak with a Realtor to do this.
MIL selling the property undervalue usually places a transfer penalty in which although mil is now qualified for Medicaid they are ineligible for Medicaid to pay for their care. The penalty period starts on the date of their application (& NOT the date of property sale) and is roughly based on a formula of what your state reinburses to a facility for day rate for room & board. If your state is a low medicaid reinbursement state (like TX), this could mean a long long time of ineligibility. Like TX rate is $ 155 a day; so a 50K transfer would mean 322 days of ineligibility. That is a long long time that someone will need to private pay for MIL in a facility. It doesn't matter if it's you & hubs or your daughter that pays for her stay but Medicaid won't. MIL is impoverished so she has no funds, someone will either have to pay or move mil into their home for her to live till the penalty period is over.
If a transfer penalty inquiry is done, you can likely expect that the caseworker will want additional documentation on MILs application. One item done incorrectly means others have been done as well.......
If penalty done, the facility will get a letter from medicaid on this as well. They are going to want family to sign off on a contract to pay for MILs stay and settle all past due. If not, mil gets a "30 day notice" & as mil is not on medicaid the safeguards on placement to another facility required by medicaid is not there. Facility will turn over her debt to collections most likely.
Transfer penalty on real property is really hard to get around as the info is just there and down to the penny.
Blind faith really needs to make sure to have all documentation all above board as the house is a within family sale and it sounds like they will be dealing with paperwork & eligibility standards for two (!!) different states on grannies eventual Medicaid application. It is probably not going to be a simple review for her to qualify. Really perhaps best to get inspection & appraisal & then speak with a NAELA certified attorney in the new state to see what sort of issues grannie will face in becoming eligible for Medicaid in the new state.
Whatever the case, Grannie needs to sell house (and document the proceeds from the sale spent down for her care or her direct needs) before moving to new state as owning a home in another state is probably a nonexempt asset for Medicaid. By & large their home is exempt if it qualifies for a homestead exemption, which it won't if in another state.