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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10127
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My brothers and I inherited a home that my parents left us

Customer Question

My brothers and I inherited a home that my parents left us in 2008. My mom had a life estate until leaving the home in 2013. We just sold the home last week. The lawyer advised us to decide the money with my mom to avoid Medicade which she is on, from coming back on us at a later date. The Medicade person at her nursing home says we should not do that because it could keep her. Rising home bills from being paid. Should we have left mom out of the money split for that reason and just bought things for her with the money? Thanks, Ouida
Submitted: 6 months ago.
Category: Finance
Expert:  Lane replied 6 months ago.

Yes, the attorney was wrong here (OR you misunderstood what she/he was saying)

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When you create a life-estate you are essentially splitting the ownership of the home into two: the present interest (Mom) and the future interest (the son).

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What this does is restricts all parties' ability to sell the house without each of the other other party’s consent.

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It also means that as long as the house is not sold during the mother’s life her life-estate has no value for MEDICAID purposes.

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But, once the house is sold she's ENTITLED entitled to a sum of money equal to her life-estate interest.

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(So what the attorney may have saying is that the law in this situation REQUIRES that she be given her share of the sales proceeds.

Expert:  Lane replied 6 months ago.

What needs to happen now that the sale has happened (it should be noted that even if she refuses the money, the sale is considered a transfer for value and that amount is considered as available for medicaid) is her dollars should be spend on the items that may be allowed in your state under what's called a spend-down program.

Expert:  Lane replied 6 months ago.

What medical bills can be counted toward a spend down?

° Her medical bills.

° Any spouses's medical bills.

° Past unpaid medical bills (sometimes up to 6 years old) .

° The part of any medical bill not covered by Medicare or private insurance.

° Medical expenses (including insurance premiums) paid for you by certain public programs, for example, the Elderly Pharmaceutical Insurance Program (EPIC) and the Child Health Insurance Program (CHIP).

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What types of medical expenses count toward spend down? Many types, including:

° Paid and unpaid medical bills from previous months.

° Transportation expenses to get medical services (sometimes).

° Medical expenses or payments to therapists, day treatment, drug and alcohol programs, nurses, personal care attendants, and home health aides (as required by a physician).

° Prescription drug bills

° Payments made toward surgical supplies, medical equipment, prosthetic devices, hearing aids, and eye glasses (as ordered by a physician).

Expert:  Lane replied 6 months ago.

There are also other items not counted as available for Medicaid purposes, such as a pre-paid funeral, and a car

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But the remaining dollars should be used to pay FOR her nursing home costs, so that she doesn't lose her spot while Medicaid is unavailable ... The person at the nursing home who deals with Medicaid can help you with the spend-down items and coordinating things.

Expert:  Lane replied 6 months ago.

Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the smile or stars on your screen, and then clicking “submit”)

I receive no crediting at all unless you rate in this way.

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Thank you!

Lane

I hold a law degree, (concentration in Tax Law, Estate law & Corporate law), an MBA, (specialization in finance & tax), as well as CFP and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, since 1986.

Expert:  Lane replied 6 months ago.

Hi,

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Did you see my answer? Did it help?

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let me know if you need more here

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Thanks,

Lane

Expert:  Lane replied 6 months ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

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Let me know…

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Thanks

Lane

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