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LegalGems, Lawyer
Category: Family Law
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Experience:  Experienced Family Law Attorney
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I paid the down payment on my mother’s home back in 2003 and

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I paid the down payment on my mother’s home back in 2003 and she has made all payments on the home since. She is going into assisted living and will end up on Welfare in six years. I have a special warranty deed from 2003 that warrants 1/2 interest to her and I. Not as tenants in common, but with rights of survivorship. She will have to sell her home to go on Welfare in a couple of years. According to the Welfare rules will I be able to take out my down payment from the proceeds of the sale of her home? If so will I be able to take out a percentage of the equity? We live in Portland Oregon.
Thank you,
Dennis & Alethea

Hello! I will be reviewing your question and posting a response momentarily; if you have any follow up questions please respond here. Thanks!

When you mention she will be on welfare, do you reference Medicaid's program for nursing homes? Also the home is jointly owned with right of survivorship - you mention a 1/2 interest to her and you; it's presumably 1/2 interest each, and there is not a third party correct? Also, is the down payment documented as a loan via a promissory note or written contract?

Customer: replied 9 months ago.
the Medicaid program for nursing homes, we both own 1/2 interest with no third party. This was a family deal and No we did not document the down payment in any way, shame on me.....

OK; (it is not uncommon for family members to not document transactions- it is often a handshake deal). A few more minutes please as I want to look into something.

Thanks for your patience;

So there is a 5 year look back period where the state can access any property that is tranferred without fair market value consideration (so below value, or a gift). That is authorized per 42 USC 1396p(b)(1). Under Oregon Statute(###) ###-#### the "estate recovery" includes property that is held in joint tenancy with right of survivorship, allowing the state to access the recipient's portion of the interest in the property. Medicaid receives priority above all other debts (ORS 115.125) so a contract re; the down payment without a security interest would not be effective.

So basically, since there is a 5 year look back, an individual may transfer property so long as they will not need to apply for services in the next 5 years. If they do need to apply for services, it will affect their eligibility (basically take the state monthly average cost of nursing home care, and divide that into the FMV of the amount of the gift, and that is how many months the recipient would need to "self pay").

Here are some examples of transfers-some that will affect eligibility and others that won't.

There are other situations where the house can remain exempt- for example, if an adult child caretaker lives there, and that delays the recipient's admission into a nursing home.

But when the anticipated date is 5 years out, transfers are allowed, along with the creation of an irrevocable trust, which can help protect assets from the estate recovery plan. If one wishes to use an irrevocable trust, versus a transfer, then it is best to hire an attorney and not use a "trust mill" based on several attorney general advisories - for example see here

But generally, money spent on an attorney to help with estate planning will pay itself back, then some, as there are many considerations to take into account that can save quite a bit of money, but the attorney would need to do a complete analysis based on property, debt, particular needs, heirs, etc.

Further questions? Please post here to continue the chat.

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Information provided is for educational purposes only. Consultation with a personal attorney is always recommended so your particular facts may be considered. Thank you and take care.

Hello again; just checking in to see how things worked out;
if you have further questions please don't hesitate to reach out to me here on Just Answer.

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