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Question:

My mom has a life estate. She may have to go into a nursing home. I need to sell her home. I have P.O.A.  My brother and I are also on the deed and my brother has passed away.The bank won’t do a title because my brother has not been dead for at least four years. Can a judge over rule this? If this gets straightened out do I put her portion of the sale proceeds in my mother’s name to take care of her in nursing home first before Medicaid will pay?

Response:

This sounds a bit complicated and may depend on local property and probate law. If I understand the situation, your mother holds the life estate in the house and you and your deceased brother are the remaindermen. In most states, you would need to be appointed personal representative for your brother’s estate (which may also be called “administrator” or “executor”) in order to convey (sell) his interest in the property. This would involve probating his estate if that hasn’t already happened. If it has, you may need to reopen the original probate action. Then once you’ve sold the property, your brother’s interest will have to be distributed to his heirs. If he had a will, it would go to whoever he said. If not, it may go back to your mother unless your brother was married or had children of his own.

In terms of dividing up the proceeds of the sale, your mother’s share will be based on a combination of her age and interest rates at the time. Rates have been going up quite a bit this year (2022). As of this writing the so-called section 7520 rate is 4.0%. The higher the rate, the greater your mother’s interest. If she were 80 years old, at 4% her interest on the IRS tables which you can find here would be 26.5%. This means, by way of example, if the house sold for $500,000, $132,500 would go to your mother and $367,500 would be split between your brother’s estate and you.

I’m providing these numbers by way of example. You need to use a life estate valuation that is acceptable to your local Medicaid agency which may or may not use the IRS tables. To make sure you get this right and because the four-year rule to which you refer may have to do with state law, I recommend that you consult with a local probate or elder law attorney. You can find one at www.ElderLawAnswers.com.

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