My grandparents finished estate planning last year by executing a lady bird deed, in the state of Texas.
I have a situation at home which an uncle is financially exploiting my grandmother. And He is pushing for them to sign the deed to him. (Thats not going to happen while my grandfather is alive)
House is currently titled to grandfather, but grandmother technically owns 50% of it because it is her community property.
Grandmother has agreed to revoke her interest in the house and give it to her husband (my grand father), in case grandfather dies in the future and uncle creates trouble.
Grandfather will then execute new lady bird deed, which he grants (me) once he passes away.
Grandmother currently does NOT use medicaid, but in case in the near future she does need medicaid, would this be a red flag? would she be denied an a penalty period be raised?
I know you can transfer your house to your spouse without any penalty. However, tricky part is once grandfather dies and house goes straight to me, while grandmother is alive. would that be a problem?
I talked to an elder law attorney just an hour ago, and she said that should not happen, and her firm does these types of transactions all the time for medicaid planning. However, I am skeptical.
But TX legislature can change laws. Like some states are now seeking recovery from Life Estates, which were considered outside of MERPs reach. Medicaid is a huge budget buster for the states. And with current POTUS planning on reducing Medicaid program overall, states are going to have to look deeper as to how to recover costs paid.
But what seems to be often overlooked in the "keeping maw's house" scenario is that somebody will need to pay all costs on the property from now till beyond elders death and the legal niceties are worked through the courthouse. Your grandparents own the property till they die & right now I assume they are paying all costs on the house. They each get SS and perhaps other income too. BUT if either should need to go onto NH Medicaid, they will be required to have that months income become their copay or SOC (share of cost in Medicaid-speak) paid to the NH. Once on Medicaid, all they get to keep is a $ 60 personal needs allowance. That's it, $ 60! If just 1 of them goes into a NH, then the other can apply for Community Spouse Resource Allowance but CSRA is to me not ever a DIY project, they will need a elder law atty to shepherd both the Medicaid application and the CS part. It would be best to get a NAELA level atty imo for anything involving CS (community spouse).
If your grandparents are financially stressed already & have issues with keeping the house up, paying taxes, etc., the LBD does not solve those problems.
If they both end up in a NH, family will have to pay ALL property costs. Taxes, insurance, utilities, maintenance & whatever else comes up. Assessor could change it from homestead to nonexempt as they are living in a facility so taxes increase. If they are in a facility, homeowners insurance cannot be underwritten so you will need vacant dwelling policy. Keeping an elder home & dealing with MERP can be done - whether its a LBD or via probate process - but there needs to be the $ to pay the costs if needed and have he $ to do so without knowing the endpoint.
There was a poster on AC who dealt with NH Medicaid mom with TX LBD. Her mom was in a NH about 2 years. 2 siblings as equal heirs but only the daughter followed through on responsibility on property costs & upkeep. Took about 7 months for LBD to work through. MERP still sent out NOI on Medicaid claim which her atty dealt with and it was sold for about assessor value with proceeds divided 50/50. She shouldered all property costs for about 3 years.
Please please review all costs on property. Can you afford to pay all? You just don't know when they could need a NH or will die…. a fall or an accident can change plans overnight. If there is a mortgage (horrors!!) or a HELOC, monthly costs will be hefty and must be paid. Taxes must be paid. Insurance really needs to be in place. An emergency fund for the unexpected too. So realistically is the $ there if needed? If your uncle challenged the LBD could you afford the legal costs for litigation? The atty you spoke with do they do litigation? not all do and the costs will be higher.
LBD can work. Ideally they both die at home, with their income & assets to pay all costs on the home & for all caregiving private pay & have a fully paid funeral pre-need done and never ever apply for Medicaid; and leave $ in a POD bank account to cover a year or so of property costs (while paperwork is getting done to transfer property) and family is in agreement with their estate planning decisions. LBD are not quite a simple as they are marketed to be.