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Mom is currently living in her home which she continues to pay the remainder of the mortgage out of Social Security. Family members are paying for utilities. We are in Arizona. Various family members are pitching in when needed, but she currently is being cared for by caregivers.

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The mortgage - if I’m not mistaken- will have to be paid off in order for a title to be transferred. Whether it’s to a Trust or to another person, it has to be a clear title to do this. The mortgage is secured lending. So unless she can pay that mortgage off in full, there won’t be a Release of the Deed of Trust from the mortgage lender to change its title.
BUT….
Here’s what I’d be more concerned about, find out if the Medicaid program she is on currently is included in the Estate recovery / MERP system. Folks tend to think it’s only LTC NH Medicaid, but some States will attempt recovery on all community based Medicaid programs (like in home care, PACE) and some will do it on Medicaid health insurance premiums as well. All for those first applying on over age 55. She might already have a Medicaid tally that the State will attempt to recover from her after death assets done via estate recovery/ MERP. If she already has a lien from years of in home care paid by Medicaid, she may owe more than her equity left after paying off the mortgage.

it’s looking like your mom is almost at imminent need of a NH, thinking about asset shielding and Medicaid planning via a “trust” is imo a waste of time, energy and emotion. That ship has sailed. I’m not trying to be harsh, it’s the reality of the situation.

Please do realize, She can go into a NH and onto LTC Medicaid and continue to keep her home as an exempt asset for her lifetime. But her income will be a copay to the NH. So family will need to pay the mortgage & all property costs. And pay for & deal with whatever after death needed (probate and Estate Recovery). If heirs have likely exemptions or exclusions to MERP, it can make sense to do this if they can afford it and are ok on risk that it may not work out. Most of the time, the #’s just don’t work, so house gets sold.
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AlvaDeer Sep 2023
Such great information, as usual.
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Ddelgreco, it depends where you live. I am not sure this is possible in Arizona. In Texas the home can be covered by a "Ladybird Deed" which is an enhanced life estate deed for the transfer of the home wherin the grantor retains control of the homestead for their lifetime and the deed can be revoked at any time. It avoids the medicaid lookback period as the grantor has not given the home away, retains control of the home and can use it and can revoke the trust at any time, and also avoids MERP, as the home transfers outside of probate to the grantee immediately upon the grantor's death. This is perfectly legal here. No taxes have to be paid by the grantee until they actually own the house and the grantee receives the home with a step-up in basis. Check with a certified elder-law attorney where you live.
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Guestshopadmin Aug 2023
Arizona does not allow Ladybird deed.
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Mom's house should be used to pay for mom's care. So, I'd ditch the idea of trying to protect it so you and/or others can inherit it. Is it time for mom to move into a facility? If not, I'd look into having her move into gov't housing that has you pay what you can afford. Then family members would no longer have to help pay her bills and can save for their own retirements instead.
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Medicaid recovery will very likely have recovery "clawback" with a lien on Mom's home. I HOPE they do. It is unfair, if Mom owns a home that the taxpayer have to pay for her care so that her children can inherit, imho.
See an elder law attorney. If there is some way you can accomplish what you hope to DESPITE the government and its taxpayers, that will be the person to ask.
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Pjdela Aug 2023
Is it fair that California is going to use no asset limit for medicaid in the future and other states cap assets outside of a home and car at $2,000? Is it fair that medicaid recipients can't save to put a new roof on that house without exceeding their asset limit? Who is going to repair the house from the now existing mold from the leaking roof?
Is it fair that the person can't have enough money on hand to replace an air conditioner? Who is going to pay for that? The family who you think it is not fair to inherit the house?
What about renters who can't have over $2,000 without being disqualified? What's fair in the way of medicaid distribution, lookback and clawback seems to be determined by whichever state you live in. So one state's residents are allowed one thing and other state's aren't? Which state's rules are fair and which ones aren't? Doesn't seem like the system is fair, either.
And don't tell me "some people saved for their retirement". There are people who have have saved have lost their savings through adversity, circumstances, or no fault of their own. Or been unable to save for the same reasons. Some people who have the means to fund themselves had help from other's along the way or better circumstances or luck than some whether they recognize it or not, and contrary to their own opinions are not all powerful and completely and solely responsible for their own fortunate situation.
What is fairer--for the families of those with little means to be able to protect the home from medicaid and inherit and so possibly improve the futures of those kids and grandkids or for the rich to use their tax loopholes to avoid paying into the system and pass that unfairly accumulated wealth down? But, "gee, they didn't have to go on medicaid and so they must have been more responsible people who worked harder and planned well". NOT!
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Its too late. Most States have a 5 yr look back. Her house is considered an exempt asset when on Medicaid. Her SS will be used to offset the cost of her care. So someone else will need to pay the Mortgage, the utilities and upkeep or sell the house. If the house is sold, it has to be at Market Rate and proceeds are used for her care. If she has the home still after she dies, a lien will be placed on it by Medicaid and if no Community Spouse, Relative with a Caregiver allowance or disabled child has been living there with permission from Medicaid, then the house needs to be sold to satisfy the lien. I am giving you the basics. You can talk to a Medicaid caseworker or an Elder Lawyer for more info.
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