My mother is in a nursing home. We are private pay at the moment. We will soon be spending down to get her qualified for Medicaid. The only things she owns is her home and it is not very valuable. Her household goods are not valuable either. Her grandchildren could use some of the furniture and dishes. Can we let them have them or would this be considered as transferring funds? She will probably be eligible for Medicaid in about 6 months. She will not have any money left to pay taxes on the house, but we can pay that rather than sell it. When she dies, Medicaid will probably take it, but we don't want to sell it now because we would just have to spend it down anyway. We are just wondering if we can give the contents of the house to the kids. The stuff is just sitting there ruining.
Also, it's my understanding that her money has to be spent on her and not taxes. However, you might check with her county's tax dept. Some places have reduced or even waive property taxes for the disabled, if you have a doctor's letter confirming it.
It's my understanding that there may be a lien placed on property, but, I don't think they actually sell the property. Maybe, someone who knows more will chime in.
That tag sale $ could come in very handy unless you & your siblings have the $ to pay all moms property costs for however long it takes to sell house. Taxes, utilities, insurance, etc. It will add up. And be able to pay without any assurance of getting reinbursed. Unless your mom has done some sort of promissory note or property agreement before now, that $ family spends on house if reinbursed from the proceeds of the act of sale will more than likely be viewed as gifting by medicaid. It will stall her application as it will cause a transfer penalty inquiry.
Personally it's my view that for the "maw's house & Medicaid" scenario, either family is planning on keeping it (paying the whatevers) from now till beyond death & deal with probate or other non-probatable estate asset transfer months or years from now; OR house gets sold ASAP to as close to FMV possible and it gets done BEFORE ever doing moms Medicaid application. As to why on the latter, well once the house gets sold, it will take mom over the 2k asset max allowed for medicaid..... So she becomes ineligible....goes back to private pay....then has to spend down (again) & reapply for medicaid. That sale is recorded to the penny and if it's not there in her bank account to the penny, it's Hello! Medicaid Transfer penalty inquiry. Really Medicaid tends to look at any $ spent by family on mom or her property as done out of a sense of love & familial duty without repayment or reinbursement.
Transfer penalty is basically a math equation. Each state manages its Medicaid program uniquely and determines what the daily Room&Board reimbursement will be. Avg is about $ 180. That's the denominator. The $ transferred is the numerator. There's a couple of other factors but that's the basics. Say moms state pays $200 a day R&B; sells home for 100k; BUT BIL gets 15k for repairs to house he did & Sissy gets 9k for taxes & inspection & new water heater. That 24k would place a 133 day transfer penalty on mom. Even though mom is now in a NH and has spent down her $ and qualifies for Medicaid, she is ineligible for medicaid to pay for 133 days due to transfer penalty. It can be appealed but unless there's a promissory note or other binding agreement already done when mom was still competent & you get a elder law atty. to shepherd the inquiry, the state is going to want to view the $ as gifting. It's the DPOA who is going to have to deal with this mess. Btw the appeals process, like the estate recovery system, has pretty precise time frames on submissions. If you don't get on it within the appeals or submission window, your toast. Appeals can be successfully done but imho the DPOA better be very, very almost OCD organized type and a bit of a pit-bully to get things done. If bro just won't kick back the 15k placed as penalty or get you the info needed to do appeal, it will not be pretty at the next family gathering.
Really my suggestion is get house sold asap at FMV. And before ever applying for medicaid. If house has significant issues and flat will not sell at FMV, get it appraised so you have the documentation to show why it sold under FMV. Get a Realtor who has a track record of DOM (days on market) under 90 days in the area where hous located. This is kinda not the time to let your neice handle the listing unless she is a killer Realtor. Ditto on doing it FSBO.
Good luck, try not to get too too overwhelmed & if your the DPOA make family realize the Medicaid process has no real grey areas or wiggle room.