What Happens to Proceeds When Condo is Sold on Behalf of My Stepfather in a Nursing Home?
My mother died at age 93. Her husband is in an assisted living facility. She had financial and medical powers of attorney. I am the successor agent on both. His Medicaid pays most of his facility expenses, with my mother paying about $1,100 a month. They own a condo with a mortgage of about $99k, and a value in its present condition of about $160k. No other assets of value. Since I have the POA, can I sell the condo or would Medicaid take over the property and sell it? If I do sell it, would those proceeds go to Medicaid?
I’m sorry to hear about your loss. I assume the condo was in joint names, meaning it now belongs to your mother’s husband. Your state Medicaid agency will not take over the property. If you sell it, your mother’s husband will have cash remaining after paying off the mortgage and be ineligible for Medicaid until the funds are spent down on his care. That still may be the best way to go, since it would relieve you of the carrying costs for the condo, including the mortgage payments. While the proceeds are being spent down, they may be held in a revocable trust or a joint account to avoid probate. In most cases, if there were funds remaining upon the husband’s death, they could avoid estate recovery and go to the family, but that depends on whether your state has expanded estate recovery beyond the probate estate.
If you did not sell the condominium now, it’s likely that at your stepfather’s death, all of the condo proceeds would go to the state in any case under the Medicaid estate recovery program. That depends on how long Medicaid has been paying for his care since estate recovery is only meant to reimburse the state for it’s costs, with any excess value in the property going to the beneficiary’s heirs.
As you can see, the right course of action may depend on how much Medicaid has already paid for your mother’s husband’s care and how your state administers its estate recovery program. I’d recommend consulting with a a local elder law attorney. You can find one at www.elderlawanswers.com.
While it’s too late for your mother, this is a good example of where minimal estate planning would have saved the condominium. We advise spouses of nursing home residents to transfer their homes into their own names and to execute new wills either bypassing their spouse in the facility or creating a testamentary trust for their benefit. These steps protect the property if, as in your mother’s case, the “healthy” spouse dies first. If your mother had taken these steps, then the condominium would either be held in trust for your stepfather or would pass to you and anyone else your mother named in her will. In either case, it or the proceeds of its sale would have been protected.