Seffner, FL asked in Elder Law, Estate Planning and Probate for Florida

Q: We want to sell my Mom's home in Florida, but don't know where to legally place the funds afterwards. Help please?!?!

I am Mom's POA. She has dementia and we feel skilled nursing is in her near future. Medicaid information is confusing us regarding selling, also, we fear we may lose out on moneys to care for her when she needs it the most. Thank you.

2 Lawyer Answers
Lauren Nagel Richardson
Lauren Nagel Richardson
Answered
  • Estate Planning Lawyer
  • Gainesville, FL
  • Licensed in Florida

A: You need to contact an experienced elder law attorney who can explain your options to you. If your mom's home is her homestead, and she is now in need of skilled nursing and may qualify for Medicaid, please take the following into consideration:

Homestead is not a countable asset; it is exempt. However, if you sell the homestead, then the cash from the homestead is a countable asset, and a single person (without a community spouse) can only have $2,000 in cash to be under the asset cap for Medicaid.

The children who would be the heirs of the estate have the option of taking over the responsibility for payment of the expenses to maintain the home, pay mortgage or pay property taxes, as they will be the ones to benefit someday by inheriting the homestead, and when homestead is part of an estate, it is exempt from creditors even if one of the creditors is the State of Florida for the Medicaid that the elder used. Another issue is that if you were to rent her home to a third party, then you are going to lose the homestead exemption for property tax purposes and in her estate, and then the property is considered by Medicaid to be an income producing property and the net income after expenses would be added to her income to determine the income cap. Once someone qualifies for Medicaid for skilled nursing (ICP program), all of their income except $130 goes to the nursing home. $130 is the personal needs allowance, which you can see is not enough to pay for maintaining the homestead; thus, this is why family members usually pick up the expenses to preserve the homestead, so it passes through the elder's estate someday, gets a step up in basis based on FMV on date of death, and then the heirs sell the home after the elder dies.

Another option if the family does not want to pay to maintain the homestead is to sell the home and enter into a personal services contract, which is based on the actuarial life expectancy of the elder and is a front loaded payment for future services to whichever child or children agree to serve as the elder's care manager. The payment for services is income to the care managers, but then after income taxes are paid, usually the family members set that money aside in case the elder has needs for which their $130 per month personal needs allowance does not cover. This agreement needs to be prepared by an attorney, as there are several steps that must be taken to make sure that the transfer of funds does not constitute a penalty transfer.

Again, you can see that there is some good planning that can be done to preserve some assets, but this will involve hiring an experienced elder law attorney near you to make the full assessment and advise you regarding your options.

Bruce Alexander Minnick agrees with this answer

Jason E. Neufeld
Jason E. Neufeld
Answered
  • Estate Planning Lawyer
  • Plantation, FL
  • Licensed in Florida

A: There are a variety of legal and ethical ways to protect the proceeds of the home sale and qualify your mother for ICP-Medicaid (which pays for nursing home care). Depending on the net amount, the medicaid-complaint strategies would change.

Bruce Alexander Minnick agrees with this answer

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