My mother-in-law owns property and her only income is social security, and she is on medicare & medicaid for her medical assistance. She does own property (her home & land). If & when she needs long-term care, will these assets need to be liquified, in order to pay for her care? If so, should she consider selling now? She is 79 and in "fair" health. We live in South Carolina.
1. once mom goes into LTC in a NH on medicaid, she will be required to do a co-pay or her SOC (share of cost) of all her monthly income to the NH. So mom will not have any of her SS, retirement funds to pay on anything " house" ever again. Yes the house is an exempt asset - which is just terrific - BUT someone will need to pay on all house expenses from day 1 of her move into a NH and then through probate after her death. And will need to keep meticulous records on all funds. As we all have lost that crystal ball....well mom could live 6 mos or 6 years. House costs over time could be manageable for your purse or wallet, or perhaps not.
2. If you are or will be interdependent on other family to pay or do on moms house, well that is likely going to be an issue. Brother doesn't cut the yard as he promised; SIL pays taxes but not insurance......yada, yada....the DPOA enforcing responsibility from family is fraught with problems even if everybody is kum-ba-ya.
3. The house once she dies, goes from an exempt asset to a nonexempt asset of her estate. The states are required to do an attempt of recovery all costs paid on moms care by Medicaid from the assets of her estate. This is MERP or MERS.
Most states allow for exemption & exclusions to merp & if you qualify then keeping the house can make sense. But you still have to be able to afford basically a second or third home but without a guarantee of ownership so runs a risk.
4. Most state also allow deductions on the normal costs of maintenance of the vacant house paid by family from the Medicaid tally. But you have to document this in detail and within whatever time frame required by MERP for your state. These akso can be entered as yiur own ckwim against the estate. Then once in probate all the costs that the executor spends for probate and the house can be management or executor claims. For a more modest home, claims by family could be high enough so that MERP is not done as it will not be cost effective. The probate judge can dismiss claims presented as well. Also the executrix can negotiate with those presenting claims.
But outside of that, there will have to be some sort of settlement with MERP to get the claim or lein released. You will need to have this done in order to sell the house later on.
Most of the time the scenario is that family is all gung-ho on keeping the house but within 6 mos to a year interest & funds fade and house gets sold. The sale causes an increase in assets so mom is now ineligible for medicaid (this what Pam was getting at) and the proceeds from the house can be clawed back to reimburse for costs paid by Medicaid. Unless you have some sort of legal agreement or note done by mom in advance, any costs family paid on the house will be difficult to ever get reinbursed for from the proceeds of the sale as the MERP claim takes precedent at closing.
Really it's just not simple. I'd suggest you take pen to paper and figure out just what the "nut" on the house is and whether it's affordable for possibly years & years. Her taxes may increase if your area has tight homeowner exemption rules. You may need to get a vacant dwelling policy for insurance as most homeowners policy won't work. VDP are somewhat expensive with limited coverage. You could rent house which requires additional paperwork by Medicaid to be ok & has taxes to deal with. And lastly, you need a really good sense of humor & great neighbors by your moms house.