Last year my mother gifted property (which she had purchased for $1.00) to her granddaughter. How would Medicaid calculate the value of this?

Question

Last year my mother gifted property (which she had purchased for $1.00) to her granddaughter. How would Medicaid calculate the value of this?

Follow

Share

Last year my mom gifted an ill-kept property that she and my dad had purchased from my grandmother for $1.00 to my niece. Since then she has had a mild stroke and my sister and I have been providing care. She's 90 yrs. old and I'm terrified that if she should have a more severe stroke she would be ineligible for Medicaid for four more years. How does Medicaid calculate the value of this gift, given it was in grave disrepair and originally purchased for only $1.00 Poor planning on our part but I didn't know anything about any of this Medicaid stuff at the time.

Asset Limits Medicaid Medicaid Lookback

This question has been closed for answers. Ask a New Question.

21 Answers

Most
Helpful Newest
First Oldest
First

Probably the property value used to calculate the property tax. How long ago was the property purchased for $1.00?

Helpful Answer (2)

Report

Crowe - it sounds to me that it’s generationally passed down property. Not a traditional purchase. It probably reads “for $1.00 and other valuable consideration” in the paperwork filed at the courthouse. It wasn’t actually sold on the open market or other true “at arms length” sale for $1.00. The bead I’m getting is Grannie acquired it from someone in her family for $1.00 and now grannie (in her 90’s) has transferred it to a grandchild for $1.00 in 2017. Grandchild is Salutems niece. Property has assessed value of 250k but not clear to me if pre or post transfer value.

It’s all Lovely for grandchild.
But not for DPOA. If they need to apply for Medicaid, 250k penalty in a state that pays $175 daily room & board Medicaid reimbursement means 1,428 days of ineligibility for LTC Medicaid.

Yeah read that again.... 1,428 days. Basically 4 years ineligibility.
Salutems already run the math, that’s why she mentioned 4 years.

(1)

Report

As above stated- property value tax assessment. I don’t think there is any way around this. The house will need to be sold and the money used for your mother’s care.

Helpful Answer (1)

Report

The home is no longer owned by the mother. Therefore, she cannot sell it. The niece is the rightful owner.

(4)

Report

That's the nub of it, isn't it? - when did your parents buy the dilapidated property from your grandmother for a nominal sum, what has been done to it since, and therefore what was it worth at the time that your mother gave the property to your niece?

I'm hoping that it isn't now a very nice property which your niece has set her little heart on living in. You had better explain to your niece that a proper market evaluation needs to be done on it; and also explain to her what will happen should your mother need to apply for Medicaid within the next four years.

But Medicaid is interested in the value of a person's existing assets, not their original investments.

I mean, when you think about it, supposing that were to cut both ways? Your second car may be worth buttons now that you've had the odd misunderstanding with the garage door and filled it with dog hair and driven it cross-country with all your daughter's college furnishings piled on its roof rack, but its list price was $45K when you bought it...

Helpful Answer (5)

Report

Country, My grandmother originally acquired the property in 1921. It was used as a rooming house and had/has a wine cellar that was used to make wine during prohibition. My parents purchased it from my grandmother for $1.00 during the mid70's, as is the custom in this large Northeastern City. My parents rehabbed it in the early 80's, and again it had fallen into disrepair after my father died in the 90's. Wiring was bad, paint chipped, electrical fixtures not working, and an infestation of mice. It is now mostly rehabbed but still in the process of repair. The area has been regentrified, but due to the condition of the property it was assessed at only$250,000. My sister and her husband(who is a lawyer) have taken care of all of this for my sister's daughter. My other sibling and I have been pretty much in the dark.My sister is a powerful advocate when she wants to, and can nag incessantly till she gets what she wants. Anyway, I was remiss in investigating and researching and was very passive due to a lot of serious health concerns I was experiencing at the time. I have let go of this, and just resigned to the fact that they will do what they will do. I have decided to back out and keep to myself because it had been affecting my health. In the future, I will agree to nothing without my own legal counsel, and for now I am simply keeping to myself

(1)

Report

Medicaid will value it at Market Value. They don't care what u paid for it but what its worth now. Taxes are not based on Market Value. Its an assessment which is usually lower than MV. You could pay an assessor to value it? Then you at least have an idea. I think it will be considered in the 5 yr look back.

Helpful Answer (7)

Report

well, the place was in awful condition when my mother gifted it. it has since been rehabbed however I'm not sure that at all matters. I think there's a five yr. look back and that's about it. My mom now claims at age 90 she'd like to start saving for nursing home care should she need it. This is what I'm dealing with. After two weeks of taking care of her in her home I already need a break. How do people do it 24/7?

Helpful Answer (2)

Report

That's what I'd like to know. God bless those who can do it. It is far from easy and worlds different from taking care of a child. Very stressful. I tried taking care of my mom for 10 months and almost collapsed in the grocery store with her. Got a glimpse of myself in the mirror and did NOT recognize myself. Looked as if I had aged 20 years!!! I was exhausted to the bone, limping, angry and resentful. My life was no longer my own and I didn't have the strength or energy to continue. I was circling the drain to tell you the truth.

Then I heard stories about caregivers dying trying to take care of a loved one. When they need 24 hour care one person just CANNOT do it! It takes a team of at least 8 people. You MUST take care of yourself too and have breaks/respite from it. You're human, not a machine. I read a story on here some time ago where the caregiver said she could only scream in her pillow.

Things are okay now. Mom is in memory care and doing great. But those first 10 months were hellish. Unbelievable stress that can kill you. The constant barrage of adrenaline to your system is not good.

(0)

Report

Oh crumbs.

Well, is your niece, being of Generation X or whatever they're called by those in the know, as keen as they all seem to be on taking pictures of absolutely everything?

Hoping she's got several megabytes of Before and After pictures. Because - I'm sure you're way ahead of me - what has to be done somehow is a valuation of the property at the time when your mother gave it to her.

"Come what come may, time and the hour run through the roughest day" - if you're tired and stressed you'll do better to look at this again over the weekend and work out some numbers then. Better to add up the worst case scenario if only so you know what it could be.

How are you doing in yourself? And how is your mother?

Helpful Answer (4)

Report

This transaction would indeed be part of the 5-year look back for determining Medicaid eligibility. Medicaid would look at the market value of the house, then consider that as the amount of the gift. You need a couple of numbers to do the calculation, but you can do the calculation yourself. Since Medicaid is overseen by the state, you need to know what the the state determines as the cost of a care facility, say a nursing home, and you need to know the market value of the home. In my state the average cost of a nursing home has been determined to be $7,828/month. If the market value of the house was $75,000, you've got 9.58 months that your mother would not be eligible for Medicaid. But, if your mother has other assets, say her own home and an annuity/savings account, she would have to "spend down" those assets before applying to Medicaid anyway. Let's say her current home is worth $150,000 and she has a savings of $50,000 -- she has $200,000 (25 months of living in a care facility that costs $8K/month) to spend down first before applying for Medicaid. Longevity is a crap shoot, so the granddaughter's gift may not enter into this situation anyway.

Helpful Answer (6)

Report

The value of the home when gifted. That may be the creative answer. What did the county assessor value it at the year it was gifted? Then what was the value after the repairs? Hopefully daughter got building permits, etc which would trigger a new valuation. Otherwise call assessor, apologise profusely, and ask for reappraisal. No charge to have that done and county appraisals are rather conservative.

Helpful Answer (4)

Report

yes I’m on the same track as to value based on date of gifting.

My experience with co appraisals differs from you. I have not found them to be conservative but skewed to reflect higher value therefore higher taxes as data is based on recent sales which are overwhelmingly full on renovated or tear down/costly rebuilds. So that means increased improvements (house) AND land value. So the elders house could be total blight POS house with minimal value but has high property taxes as the land value is high.

(2)

Report

See 1 more reply

It would be a very good idea for you to consult an elder care attorney familiar with Medicaid rules in your state. There might be options for you.

Helpful Answer (6)

Report

If you can prove the purchase price was $1 - make sure to give the proof to Medicaid.
If problems occur, get in touch with an Elder Attorney.

Helpful Answer (2)

Report

Hi.. maybe im misunderstanding this query, but she can have a home. My folks have a one million dollar home, no money over $2000, in accts, & a car. They both have been on Medicaid for along time. This one dollar home is just that. Gifted. Before Medicaid?
I don't know how anyone can be held responsible for Acts prior.

Helpful Answer (0)

Report

Clou - your folks are NOT both residing in a NH and on Medicaid. That’s LTC Medicaid which has set limits as to value on their exempt assets like house and a car. For homes, it varies by state, for most states it has to be a home with homestead exemption and under 550k-600k assessor value. Some states - east coast mainly - it’s higher like 850-900k. But once over 1M, not eligible for LTC Medicaid.

For some elders, that lil house was bought back in the 1950s-1960s for a whopping 35k and over time, values have skyrocketed so it’s now maybe 680k. They really didn’t care as their taxation is fixed as it’s got homestead exemption and their over 65 so whatever else senior tax breaks (like pay no school taxes). Unless their homeowners or other peril insurance requires a re-evaluation so property insurance must be high enough to cover replacement costs, the increased value doesn’t affect their wallet.

They are - I’ll bet - on community based Medicaid or only 1 in a NH on Medicaid, which has totally different criteria as to how assets are looked at.

Hopefully they were on Medicaid and did not at all change the type of Medicaid program they were on after their state adopted Bush era DRA (deficit reduction act).

DRA placed between 2006-2010 by all states. DRA requires state to attempt a recovery of all costs Medicaid paid from the estate of the deceased who was on Medicaid. It’s done via MERP. That 1M house will be part of their Estate. It may actually have a tally building on it by everthing Medicaid has paid for on both your folks if they enrolled / eligible after DRA. If they are on Medicaid of any type - community or LTC facility - once they die, Estate Recovery will send out a NOI (notice of intent to file a lien or a claim) to determine what path recovery will take to get the debt repaid.

(7)

Report

Redbird1, that is not true. This falls under the 5 year “lookback” period so the nursing home or Medicaid can come after the asset.

Helpful Answer (6)

Report

What is not true? That at this point the niece has purchased the house. I understand about the 5 year look back. However, it is no longer the mother’s asset. It has been sold to the niece. Therefore, it cannot be sold once again to pay for her nursing care. It is now the niece’s asset.

(0)

Report

See 3 more replies

Salutem - it’s going to be layers of issues for Medicaid should mom apply for LTC Medicaid. I think you should talk with mom & Sis ( perhaps with Sis first) about mom getting with an elder law atty next mo in a January that is NAELA or CELA level to lay out options as to how to deal with the obvious issues for asset transfer. So you’re doing this all proactively.

personally to me, you & Sis have to totally forget “but but but it’s only $1.00”. Good luck to get mom to break that thought...... Folks often sell property for $1.00 or $10 as a transaction is required to have a minimum value in order to be considered “legal” to be recorded. That sold for price is not it’s assessed value. Tax Assessor has placed a value on the land and it’s improvements (aka the house). The tax collector (assessor/ collector maybe different departments & heads within country/ city government) has sent out bills based on that value. To get around this would be you as the property owner do a hearing during contention period ( usually in the spring - mid summer) to get assessment reduced with documentation as to why it’s less. You can get it inspected and appraised and take these items to the hearing to establish why it should be less. Take pitiful fotos of the property. Otherwise it’s set at the assessment for tax collections.

Find the old tax collector bills and it should have an overall tax bill and then broken down as to the 2 parts. Hopefully there is a wide gulf of difference from the value of what your mom gave granddaughter and what it is appraised at now that it’s legally titled in GD name and owned by GD.

If its not, things are going to need to be done to show why GD now renovated $$$ home was not the home $ gifted by Grannie. It will not be simple. And GD may not be at all happy as she’s expecting to pay a tax bill based on what grannie paid and now it’s like quadrupled+ as it’s basically a totally renovated property. Like GD doesn’t want tax assessor to know there’s a new kitchen, bathroom, etc. add and IF building permits haven’t been pulled and some stuff done on the down low, GD is really NOT going to be happy.

If GD isn’t your child - it’s Sissy’s- there could be friction btw you & Sis on this.

Also when your looking for old tax bills, if you run across old homeowners insurance policies, get those to. They too should have a wide gulf of what the insurance was. Mom’s crappy old, decades of delayed maintenance house should have had significantly lower coverage as opposed to GD totally redone house.

If house should be in an area where land values are high, that will be super hard to get reduced assessor/ collections bills. Land value is flat just fixed..... getting around that imo too hard to do for average property owner. Like you’d have to show that it’s part of or abuts wetlands or has limited egress to get past the laughter at the hearings.

Helpful Answer (2)

Report

Hi... Im in Calif. Both my parents just passed. I just sold the home in trust, & the 1,000.000$ is being divided amongst 9 siblings.
Our attorney finished filing a claim with Medicaid.
All is good. No liens. No p a ybacks
just a inheritance. Which I posted a question about yesterday & u seem to be the best & most knowledg able one to answer it...
Thx

(0)

Report

See 1 more reply

There are times when I so wish that AC could tag a new question so we all could read or RE-read prior answers, this is one of those. The original posts from Salutem in Sept are very insightful.

The property appears to have a 250k value.
its unclear whether 250k is:
A. assessor figure from last yr that grannie owned & paid taxes on
or
B. since the transfer to GD and based on new renovated value based on various permits pulled. Most places require the permit seeker to put a value on the project.. like roofing co gets permit for 30k replacement, or electrician files for 20k new to code wiring, Smith construction 85k for 1,000 sq ft addition. So assessor knows what the changes are.

If it’s A, property could be worth oodles more in value for GD. So to me it’s super important that the older lower value be able to be verified. Cause that’s what the penalty will be based on.

If it’s B, and if GD didn’t get proper permits done, so all properly filed down at the courthouse / safety & permits, this is even more issues.

Salutem, with the holidays approaching, can you possibly have time to find out what exactly has been recorded at the CH? There needs imo to be a family meeting regarding for your mothers care and paying for it. Between the stress of 24/7 caregiver shared btw you & Sis and your worrying about your own financial insecurity if mom has to go into a facility, your going to crater. The last posts were about waiting a yr to do anything so it wouldn’t affect taxes, which I assuming was coming from GD and the estate planning attorney (not a Medicaid elder law atty); so now the line being touted is “it was only worth $1.00, so not an issue”.

I’ve got to ask..... Whose child exactly is free house GD?
Why this kid to get grannies house vs. other relatives?
GD parent is not the other caregiver sibling, right?

Helpful Answer (1)

Report

igloo572 thanks for your response. If you feel you've responded to something in the past, or that it is repetitive, by all means don't reply. Thirdly, it is my sister's child who was gifted. I have no children.

(0)

Report

salut: With that many questions, you'd do yourself a favor by hiring an elder estate lawyer.

Helpful Answer (0)

Report

I intend to; but from all I've researched, I don't think there's an answer other than to wait out the five year penalty, which is fine for now but she's 90.

(0)

Report

Ok I do understand where you are coming from. I have just gone through a similar situation that was just settled last month. I have been divorced and living with me mom for many years. She signed her home over to me on October of 2014. Entered a NH this Spril due to increased dementia and other health issues as well. Medicaid has a 5 yr look back period. First you definitely need an elder care attorney. My mom had nooo savings and I ended up paying 13000 out of my pocket to get this settled. Thank God it worked out in my favor, with such an incredible amount of stress. I’m on New Jersey and the NH is 11500 a month. She maxed out her time with Medicare and her secondary insurance on Sept 5. Would not be eligible for managed long term care Medicaid until spril 2019. This meant sell the house at market value, and give the NH the money, than I would need to find somewhere to live, or take out a 100000 home equity loan to pay the facility in order to keep the house. Well in the past 2 years, I spent 65000 of my own money to fix the house up like new. I was prepared to take out a loan as losing it to a nursing home was not an option for me. To your answer, now. You said you and your sister have been taking care of mom???? An elder care attorney can help. Your niece could put the house into her moms name. This way if on the next 4 years she needs skilled nursing, your sister can say she was moms primary caregiver. This is an exemption for Medicaid. It is a ton of paperwork, and a lot of stress, and the lawyers fee. In the end I prevailed. So 13000 for the attorney vs. a 100000 grand loan is a huge difference!! BTW New Jersey is the second most difficult state to prove this exemption. My attorney was a shark!!! I wis you all the best of luck and will pray for you.

Helpful Answer (3)

Report

Darla3 My mom has medicaid in NJ. Are you aware, that, during the 5 year lookback, a transfer of resourses have to be returned after the medicaid recipients death. A lien is not pkaced on the home until the death, its called mediaid asset recovery. In other words, the transfer that your mom gave to you (the house,a resourse for medicaid purposses) was hers during the look back. Unless you purchased the home, for fair market value, at the time of the transfer, a medicaid lien will be placed on the home for asset recovery. Medicaid in NJ can't force a sale if a "caregiver child" lives in the home and cared for the parent 2 years prior to placement in the facility.

(0)

Report

Clou - your folks did NOT actually own a 1M home.
That Trust - which is its own legal entity- owned the home. The atty was - I’d bet a case of Prosecco - totally able to quash a claim by CA Medicaid as your folks had no asset to which the state could affix a claim against.

Somebody did really good medicaid planning in your family!

Helpful Answer (1)

Report

From what I've read I need a 'certified elder care lawyer' which I am having some difficulty finding. So, I am planning to call the Phila. Bar Association which gives free referrals to local attorneys specializing in the need you have.

Helpful Answer (2)

Report

Try searching for elder law attorney instead. Don't know if it will help, but worth a shot.

https://www.naela.org

(0)

Report

See 2 more replies

Yes I’m totally aware of this. The courts approved that i was the primary caregiver so they cannot come after the house ofwvwn after she had passed

Helpful Answer (1)

Report

My understanding of Medicaid Laws say that the home has to be sold for "Fair Market Value."

Helpful Answer (1)

Report

My understanding in my state is that transfers to family members in the 5 year look back period can be undone by the state and the property sold at market value. Another option the state has is to place a lien on the gifted property that must be paid before any future transactions can occur. To avoid getting the transaction rescinded or a lien placed the gifted family member must pay full market value at the time of the gift to support the elder's care.

Helpful Answer (1)

Report

yes, I've read this in my research of the subject. there is no way around this. Presently, my mother does not need Medicaid. She has had a mild stroke but is functioning with help from my sister and part time nurses. She does need a full time live in aid but she refuses this. She is very frugal. Both my sister and I have chronic health conditions, but my sister does visit almost every day when she is well enough. I was staying for weeks at a time but much to the neglect of my own home, my physical health, and my emotional health. I live much further from my mother than my sister does, and I can no longer drive due to unpredictable insulin reactions.
After my last three week stay, the toll it took on me was too great. I just can't do it and feel very guilty about this.

(0)

Report

This question has been closed for answers. Ask a New Question.

Last year my mother gifted property (which she had purchased for $1.00) to her granddaughter. How would Medicaid calculate the value of this?

21 Answers

Recent Questions

Popular Questions

Related Questions