MIL in nursing home. What risks if I take over her mortgage

[dianne]

I haven't been around in a while but I have always found this to be the place get advice on basically everything. I'm hoping someone can help.

Regardless of the fact there can be so many variables to this situation (and better planning could have avoided it entirely) I am going to do my best to condense it to short and simple:

MIL admitted to nursing home in June. Her son (my husband) and I both serve as Power of Attorney. We pay the nursing home her entire monthly Social Security payment, minus $30 she is allowed to keep, and Medicaid pays the remainder of her nursing home costs. Her only asset is her home, which has a small mortgage balance which cannot be covered with the remaining $30. DH and I plan to take over the mortgage payments simply to keep the home out of foreclosure and we will also pay property taxes. At this point, we will most likely sell the home once she passes. Medicaid will expect to be reimbursed from the Estate for the total amount of care costs paid on her behalf.

I am not trying to cheat Medicaid out of what they are due but it seems senseless to let this home go into foreclosure for a mortgage that is less than 10% of what the property is worth. Plus, if she were to die in the next few years, the Medicaid reimbursement costs would not take all the Estate funds, leaving my husband with some type of inheritance. We would lose this opportunity if we allow the foreclosure.

My question: Are we able to recoup the money we pay toward the mortgage and property taxes? We are in NC.

Thank in advance.

 

[amc80]

Re: MIL in nursing home. What risks if I take over her mort

I would ask to have this moved to Hangout, since you'll get more responses over there.

 

[dianne]

Re: MIL in nursing home. What risks if I take over her mort

I would ask to have this moved to Hangout, since you'll get more responses over there.

I certainly will. Thanks, amc80, for the suggestion.

 

[Queenie60]

Re: MIL in nursing home. What risks if I take over her mort

This is a question for an Estate Tax Planning Attorney in your State to answer. I would think that you should place a second mortgage lien on the home to insure that you are paid off when the home is sold.

 

[the_mother_thing]

Re: MIL in nursing home. What risks if I take over her mort

I'm no attorney, but wouldn't selling the home now (vs. after her passing) allow those funds to help cover costs now and put you/hubby in control of those assets (vs. the state/medicaid)?

 

[StonySilence]

Re: MIL in nursing home. What risks if I take over her mort

If she dies while the home is mortgaged, it must be sold. And it will be sold by the bank, who owns it, at the price that THEY choose, and you will get out of it what's left after their cut and Medicare's cut is taken. You wouldn't even be guaranteed to get your money back. A second mortgage lien might offer you some protection from Medicare, but as a second mortgager, you'd be...second in line. I honestly don't see how that would help unless the house is so expensive that you'd get sheltered from some inheritance tax that way (doesn't sound like it).

You can be added to the mortgage now, before your MIL dies, if you wish, but then you would have to pay capital gains on the full amount that you get when it's sold (if there is any--as you say, probably not) because it's not your home unless you move into it.

You can pay it off right now so that it's your MIL's free and clear and avoid both scenarios....but why, if it will go (mostly) to Medicare?

Honestly, though, I'm baffled as to why you would want to take over the mortgage at all. Medicare wants to be paid back, so what's the advantage?

She could give you the house and you could sell it if she wasn't already on Medicare, but after gift tax and capital gains, she might be worse off than if she had to pay more, anyways, and I think that's a legal hot water situation waiting to happen.

I just don't see why you'd want to do this at all. No matter which way I look at it, you lose out (from the property taxes). If you can get her ahead by renting it out, yes, but otherwise, no.

Sell the house and give your MIL $100 of your money to spend on stuff a month instead.