My father passed away and was in the process of getting his will complete but did not make it long enough to sign it. There was money in his checking to be TOD to us three children and there was a life insurance policy that also name us as bennys. The division amounts to... approx $27K each. My brothers are under 55 years old and we live in the state of Ohio. Is this considered income and needs to be spent down? Does my father's home also need to be considered in the Medicaid recovery? One is high functioning and the other not so much. They have always lived with my parents and now my father has recently passed and I have the responsibility to take care of them. Can anyone help?
I’d be the most concern about how to deal with all things “house”. Having them buy a place will to me in the long run be all sorts of problems as eventually 1 bro will need in a facility care before the other..... Medicaid LTC gets applied for..... MERP for that, etc. then the one in the house can’t afgord it on his own....... I’d suggest you ask atty IF they could do a SNT or an ABLE account that pays “rent” and this rent covers the cost of the mortgage on a small handicapped accessible house that you buy. You buy the house they move into. It would mean for you dealing with investment property for taxes, etc but may be a way to keep things simpler in the long run. Ask about buying house as an LLC too - LLC will give distance for any Medicaid transfer penalty issues plus you cannot be held personally responsible if something crazy happens at the house.
If you already have a home/mortgage, then it would be 2nd home lending. Probably conventional at 30% down. So you could use all or some of your 27k for the 30%. Now FreddieMac/FannieMae do 2nd home lending at lower dp, maybe 20%, but in my experience you need to have a banker who already likes you, plus it would be in your name & not an LLC. Whatever the loan, Personally I’d keep it at 20k max for down payment. You’ll need the 7k to deal with insurance, utilities, etc as everything will be more as it’s not owner occupied nonsense. Then their SNT or ABLE pays rent & its all legal above board with a rental agreement done, witnessed.
ABLE accounts are kinda new. It has strict entrance & $ eligibility, mainly for those who have a profound disability from childhood to about age 26. They can put in 14k annually but the $ is outside of any Medicaid limitation to around 120k maximimum. Some states are allowing an initial ABLE set up to be beyond the 14k. ABLE is self directed (unlike an SNT which has Trustee) so if the bros can still do for themselves, it could be ideal. You want the rent to be direct deposited though, just in case!
If you would please post an update as to what options are suggested & what you decided to do. We do all learn from each other....
If he wasn’t on Medicaid then there’s no concern about estate recovery / MERP on his house as that’s tied only to Medicaid enrollment if over 55.
If dad was on Medicaid then if just the 3 of you as heirs would mean that your 2 brothers would probably qualify for disabled heir exemption for their 2/3 share. But the sticky is that you won’t. But there might be another exemption for you or maybe cost effectiveness route for MERP.
Have you been able to find out what is needed to be able to transfer the property? If there’s not a valid will, dads considered to have died “intestate” & your going to need to find out from a probate attorney just exactly what OH requires for intestate death with assets. You may need to have atty establish a lineal heirship. If so it’s not a diy.
Other than the house are there any other assets that could be in his estate?
Life insurance is designated beneficiary, so no probate needed there.
Bank accounts are POD/TOD, so no probate needed there also.
To me it seems an atty that does disability law might be best as brothers are disabled rather than elderly. Perhaps creating SNT (or maybe ABLE accounts) for each of them but with you as conservator or as guardian for them; and get some sort of arrangement to have funds property costs. 27k isn’t that much $ but enough to cause ineligiblity if they are on any financially “at need” programs.
I am very sorry for your loss. I am not sure but I wonder if an elder law attorney or social worker can help.
I will bump up this thread and hopefully others can give more insight.