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No. It would count as gifting and she would be penalized.

Has she been paying for her own way while living with you for 20 years?

She should have been paying you rent and a portion of utilities. As well as food.
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Newfiemom Oct 2019
Yes she has paid rent and toward her food. My dad also was here for the first few years
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Yes she has paid rent and her own food . My dad was also here for a few years
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Nope absolutely not. That would be considered a gift. Not allowed at all. Now she can pay rent and contribute to the monthly household expenses but she cannot give away a large sum of money. She cannot pay off anyone else’s mortgage.
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Newfiemom Oct 2019
Yes she has paid monthly rent and toward household expenses. She gave me money to sustain household bills when I was out of work for surgery. Is that considered gift or paying expenses?
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If she paid your expenses as well as her own, it’s gifting. If she has money to pay mortgage, go to an elder care attorney and have them review the activity to prevent any unpleasant surprises should she need Medicaid.
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Cali, I knew that. I always think of Supreme court in terms of district, so I didn't associate the term. Derher!
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I believe she can gift each child about $14,000 annually without penalty. Check the gift amount allowed for your state, most are the same. Get busy gifting! State/Fed/Facility can't touch her house (or car) until she has expired even if she is in a nursing home
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worriedinCali Oct 2019
This is wrong. The OP is asking about Medicaid rules not IRS rules. Medicaid does not allow gifting period. It is the IRS that allows up to $14k in gifting per year, with no tax consequences. NOT medicaid.
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I'm sorry, and there are people here with more knowledge about this than I, but Cat's answer is wrong. Gifting is a tax rule, NOT a Medicaid rule. Anything given within 5 years before she applies for Medicaid will absolutely be counted against a penalty period. Don't give anything away without consulting an expert and document clearly in real time any expenses she pays you for. You can't retroactively charge for anything to recoup expenses/rent you feel you are owed.
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Unfortunately CAT is wrong - my sister can tell her. Sister's MIL sold her house and gifted each of five children the IRS amount each year - say $14K per child - which is $70 per year. This spring MIL fell - hospital, rehab, dementia started - nursing home and Medicaid application to pay for nursing home. Medicaid denied because of this gifting - there is a penalty period equal to about $350,000 in costs - I don't know how many years - because MIL gave her money away. Medicaid does not allow IRS gifting - gifting is gifting. Medicaid sees the MIL should have paid that money for her own care. Now WWIII is going on as the five children are taking turns caring for MIL in their homes and she needs more care than they can provide. But Medicaid is out for a long long time.

Get advise from a lawyer that understands all of the rules.
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Her intentions are good, but no, she cannot pay off your mortgage. The only thing that can be done, if she is living with you, is to come to a "rental agreement" and even this should be passed past a good Elder Law Attorney to make certain it will not count against the medicaid 5 year look back at gifting (2 years in California). I would have to be by contract, written, with records kept, and with your recording it as income for tax purposes. You should definitely consider buying an hours time from an Elder Law Attorney in your area to see what legally can be done, and what cannot.
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Have you looked at the entire economic picture and compared alternatives? How do you know you will need medicaid? What if you don’t? Have you figured the write off on taxes vs the interest you are paying? etc etc. Wild thought - sell the house to your mom then inherit it back at the end? :-)
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Kimber166 Oct 2019
If mom owns the house - Medicaid will place a lien against the house to recover their costs of providing care. It is part of MERP program. My stepmom is going to sell their house - dad died a year ago. Medicaid has a lien against the house for $120,000.
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