The purpose of the advance would be to pay a grandchild's tutition or a child's credit cards and could be paid directly to the school, the child, or the credit card company. If her spouse goes into a nursing home within the year....would the advance on the reverse mortgage be counted as an asset or a gift in her medicaid application?
What may work in this circumstance is a promissory note. There is no prohibition against a prospective Medicaid applicant entering into a loan agreement as long as a fair market interest rate is being charged, there are no "balloon" payments, and there are no "forgiveness" clauses...essentially establishing what can be considered an "arms length transaction". With interest rates so low, this may be the way to go...exercise the institutional loan and then create the personal loan. (The loan should be made by the well spouse).
If it is a RM, does the contract require the couple to both be continuing to be fully residing in the home in order to be in compliance?