We had to make the difficult decision to put my mother in a memory care center. We will need to sell her house in order to pay for her stay. Once we are 6 months from running out of money we will apply for Medicaid. My question is if I am POA and I pay fair market value for her house (because we want to keep it in the family) will that pass the Medicaid test when we apply for Medicaid?
State will look - in my experience- at the last last tax assessor/collector bill for the value on the property. The issue often is that that assessor value is off. It’s whack and often by a lot as it’s based on recent sales aka “comps”. & the comparable are not at all what your moms place is. The comps are renovated properties or tear downs and way higher value and meanwhile you moms place perhaps with decades of delayed maintenance ends up being over valued. It’s really common for elders to have either their taxes frozen or to be seriously reduced so their actual tax bill is low EVEN THO the “value” in the assessor/ collector statement is way higher… but as their tax bill stays low they don’t challenge (or protest) the assessment.
If this is what your moms place is, how to get around it is to have an appraisal done. A real appraisal done by a professional and should have their State registration and seal on the report. If the place has loads of issues, I’d suggest that you get it inspected first (again get a pro who has license & state registration) and then that inspection report is given to the appraiser. I would suggest that you let the appraiser know this is being done NOT for bank financing (like a HELOC). That …. ahem… a more conservative appraisal is what is needed. Anyways that appraisal value is what you need to buy her house for to have it considered FMV for Medicaid.
Being POA has it such that you should not do anything that could ever be considered “self dealing”. Have an independent appraiser do their report for your mom (make sure it ordered by mom, not in your name) process a buffer for anyone who want to bring up a challenge that you were self dealing. Not just Medicaid but also just in case someone in the family starts carping…
if the appraisal is way off, and lots less, fabulous for you! Also you can take the appraisal to the annual tax statement review (often called the protest period) to have its value reset so taxes get adjusted to match down to the appraisal report. You may find that doing all this will seriously lower the property taxes and for years forward so it’s well worth the $300/$500 to have it done. For my moms place we did these and also had a residential structural engineer report (this was the hardest to schedule for us) as there were foundation failures and creek line / road abatement issues; lss the house came in at roughly 40% under assessor value. Nice!
often folks assume that a Realtor done market “listing price” type of paperwork will work for this….. but it’s not considered “legal”.
Good luck in your quest.
Good luck
also fwiw in my experience Medicaid tends to take the position that whatever we do or spend on our folks or their home is done out of a sense of familial responsibility with zero reimbursement expected. Trying to challenge that will not be easy. So should it NOT be feasible for you to acquire the house & you end up putting it on the market, try to sell the place “as is”. And make sure the Realtors you look at clearly understand that ya mean this. Realtors will tend to want sellers to do things to make it market ready & beyond declutter & cleaning. I’m imagining that in the current environment with higher interest there may be less buyers so sellers have to do things to make the property more attractive. And that takes time & money.
if there r things that kinda have to be done, like a safety issue that would keep a mortgage co from doing lending, try to do that now while mom still has the $ to pay for the repairs from her own wallet.
And property taxes tend to be due in Jan. Should mom not pay them, they will come out from the Act of Sale $ & over to the assessor to get clear title. This may be a better use of her $ rather than her or you paying them. Good luck in all this.
My MIL had her home sold whi h allowed for a good couple of years in private pay. Try to choose a good home that accepts some Medicaid. Once you file, she should go to the top of the wait list as a current resident. Family chose a multi level care facility for MIL which started in MC then advanced.