Can We Protect House Under Reverse Mortgage from Medicaid Estate Recovery?
Both of my parents are living in their home. They have a reverse mortgage of about $250,000, but they have not borrowed the full amount. House is worth a lot because of the land but only came in at appraisal for $380,000. My father has dementia that is worsening and needs nursing care. If he goes in for a year or so and then passes, will the state take my mother’s house upon her death? There’s no trust.
In most states, there would be no claim against your mother’s estate under the scenario you describe. The house would pass to your mother and the state would have no claim against her estate for benefits paid on your father’s behalf. Click here for an explanation of Medicaid estate recovery.
However, there’s always the risk that your mother passes away before your father. In that case, the house would pass to him and be subject to claim at his death. This possibility could be avoided by transferring the house into your mother’s name and her changing her will either to disinherit your father or to put the house in a trust for his benefit under the will. These planning steps may or may not violate the terms of your parents’ reverse mortgage. I’d recommend consulting with a local elder law attorney to figure out the best course of action for your parents.