Mom went into a nursing home in Nov,2007 due to the progression…

Given that the transfer was over five years ago (so it is outside the applicable lookback period for medicaid purposes), your focus should be solely on the value of her life estate, which is determined by IRS life expectancy and life estate tables, which you can get from the IRS website http://www.irs.gov/ (you may have to search a bit before you find them).

In this type of situation, one technique that is often helpful, is for your mother to sell her life estate interest in the property, then spend that cash down or pay it to Medicaid so she continues to qualify for aid.

As you can imagine, the market value of a life estate interest, especially one held by an elderly person in the last years of life, is quite low, so you won't find anyone willing to bid on the property, which gives you and your sister the opportunity to legitimately purchase the life estate interest for next to nothing.

If this is all done correctly, you will have nothing to worry about.

Which is why you should speak with a local estate/medicaid planning attorney to come up with an appropriate strategy to confront and resolve this issue.

In the end, you really have nothing to be concerned with -- there is a fix for the situation. But you should take care of it before you spend any money remodeling the home.

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