She was in a nursing home 6 months up until her death. The bills were paid for by medicaid and her social security check. The house is her only asset and we are wanting to sell it and split the proceeds betwen her only two children. Does anyone know how long it usually is before there is contact with us regarding this?
Thanks in advance
Each state is different since Medicaid is administered through the states. Generally, the state will make a claim against the state for the proceeds of the house. This is known as Medicaid Estate Recovery. Again, generally, this will be 100% of the proceeds from the sale of the home. You will not be able to close the estate until the Medicaid claim is resolved. You will need to check with your state's Medicaid office to determine the proper procedures to begin the asset recovery.
Even though medicaid is federal $$, it is adminstered by each state.This is call "ESTATE RECOVERY ACT" (ERA), each state now has it in place & each is different. I'm assuming that she was living in her home (and had a homestead exemption on it and her property taxes reflect that she owned it solo) before the NH. This is important as it establishes it as her "home", if she lived with you and changed her drivers license or mailing address for legal stuff like her annual SS statement or bank accounts, then she may be viewed as having no "home" and the house can be viewed wholly an income producing asset.
Now you said her NH costs were paid by medicaid. What/How was she put into the NH? (keep in mind that NH are now called LTC=long term care OR SNF=skilled nursing facilities, they are different and medicaid ERA seems to approach them differently, more on this below)
What I'm asking is:
did you or your sibling do the paperwork for her to be admitted and provide the financial paperwork to apply for medicaid at the NH? OR was this the situation that she was in the hospital and then got discharged into the NH? OR
Was she already on medicaid before this, like was she on food stamps or had been on another program for the very poor? If this was the case, then her assets are probably out of radar of
ERA and not linked as she was eligible before ERA started.
Now if it was that you all had to apply for medicaid recently for her - let's say within the past 3 years then one of the papers signed was recognition of "ERA". More than 3 to 5 yrs ago, that would not be there and any assets owned are not subject to ERA so the state has no lein ability. All ERA is within the last 3 - 5 yrs. You can google each state to find out what/when, etc.
I just moved my mom from IL into LTC. The paperwork was 58 pages. I asked for a copy of everything. The admissions gal
said I was only the 3rd one in her 10+ yrs in admission to ask for & wait to get the copies. ERA statement is in that stack.
ERA allows the state to benefit before others on the sale of the house. They do this by placing a lien on it.
There may already be a state lien on her home. They DO NOT need to send you a letter to do that. When she got admitted to the NH and the papers were processed this likely was done automatically by the state. It takes them time but most state are efficient in this area - 2 mos or so and the document is filed with the property assesor's office or tax office or whomever does this for your state & or county/parish. Some states have
a notice posted on the front door of the property that is placed so that you tear it in order to open the door. They take a photo of this and if you say you didn't know, this is used to show that
an attempt was made to verify ERA.
You can find out if there is a lien but this is tricky as it doesn't always show up on credit history. Sometime it gets filed in the county conveyence office rather than a city's tax assesor's office. Each state/county/whatever does this differently.
Now you need to go through probate to settle her estate - which means selling her house, etc. Probate is done based on her will. Someone was named her executor in the will. That person get's the job to pull all the paperwork together to make things happen and should get paid by the estate to do so.
Now in probate, anyone who has a claim against the deceased has to come to a set hearing and present their claim to be placed in line to get paid. If you look in the paper, there will be notices in the legal section for probate hearings. The ones who are secured debts: the IRS, the mortgage company (if she still owed on the house); the state ERA etc have to be at or file for the hearing to get their paperwork in for their claim.
Now if you have been paying for mom's stuff, like property tax or property maintenenance, this is when you put your claim in for repayment by the estate. You really have to have documentation on this not just saying you paid whatever.....
The secured debts have to get paid but based on the assets.
Most probate judges are sensitive to being fair. But they can't dismiss some claims, like the IRS or the mortgage company or ERA, but they can encourage negotiation to settle the estate.
Believe me states don't want to inheirit a bunch of old houses owned by old people who probably haven't kept up repairs. There is lots of room to negotiate here, if you get my drift.
Unsecured debtors, like credit card companies, are SOL in getting paid unless they show up for the probate hearings.
Most don't as it needs to be the original debtor in most courts.
Selling the house:
You say you want to sell mom's house. As POA you can't do that as she is now dead. But the executor of her will can but you really need to do all this within the probate system.
Only by going through probate can the buyer be assured of getting a clear title. If you decide not to do probate and sell the house as the heirs of your mom's without doing this and the lein comes up later on then it's a clusterf**** of problems for the buyer and therefore for you as they can sue you for misrepresentation. There is title insurance any sensible buyer pays for that they can claim against but the TI company (which is nothing but attorney's) will in turn come to you for $$.
Another bad scenario is that you put mom's house up for sale and right before the closing you find out that PRESTO SUPRISE there is a lien against the house for 400K or whatever the total amount medicaid paid for her care. Realtors are some kinda mad, buyer gets earnest $$ back and takes you to small claims for their expenses (inspector's fee, appriser's fee's, etc that the buyer usually pays for) on the property they can't now buy as you misrepresented the property. In this current real estate market you don't want that to happen as no good Realtor will list the property afterward with clouds over it.
There is a whole series of steps that need to be done in probate. Some of these you can easily do yourself and save on attorney expenses on. I have done it both with & without an attorney involved. I would never again do it without having a estate attorney doing it for me who has a practice in the county where she lived & owned property. It's not really expensive and comes out of the assets of the estate in the final wash. If her assets are in the black, then you & your sibling have to pay the probate attorney's fees. You want someone who does these
as their primary practice - they know how to do it most efficiently at the lowest cost and understand the nuances of legal in their area. This is very much work done by paralegals, so the costs are usually very fair.
I was executrix for a maiden aunt (actually a 3rd cousin). I had no idea I was named (others were not happy about it). She had a primary homestead, debts and charity directives and a bunch of "empty" sections. Long story short, thank god for estate attorney's - there wasn't much $$ but lots of unclear paperwork since the 1940's that are now legally filed and gone.
LTC vs SNF:
LTC is pretty low day rate as opposed to SNF. Medicaid reinbursement is based on code of what is done for the resident. For some the day rate may actually be close to covering what their SS or other retirement income payment pays. In large LTC's, ambulatory residents who can dress, go to bathroom but really just need medication and bathing supervision can be as low as a $ 80 reinbursement day rate.
While a SNF resident who is 100% dependent for anything and has dialysis cost's $ 8,000++ a month. It's important that you know what the true costs are as your negotiating with the state on ERA can be based on this.
Mom had NO will:
If your mom did NOT have a will, then the state steps in an assumes the role of executor. You cannot dispose/sell/move
or whatever any of her property at all. IMHO if there is true $$ involved then you need to get an attorney to represent you and your interests if there was no will. If there is nothing but debt which the sale of her house won't come close to covering, then let the state have it.
This is alot to deal with. You have to be really organized and have a sense of humor and be all kumbaya with your sibling. Good luck.
how it is handled is somewhat "fluid". Whatever happens between you & the state needs to be document in writing or via email. You can negotiate the amount.
But you need to know the true costs the state paid for her to do so. The monthly NH rate on the brochure is not it.
Keep all medical records and costs paid. If she had a secondary insurance, part of her expenses could have been paid through that. I've found that the secondary insurer payments don't get deducted from the overall cost that medicaid bases things on. If you weren't getting the secondary insurer statements (like Humana or Blue Cross statements, you wouldn't ever see that). So you want to get copies of them.
For example, if she got PT done and she had 2nd insurance, the gap probably was paid by her secondary insurer (and the monthly for that is coming out of her monthly retirement before the balance is paid to the NH).
With Medicaid, if they get additional retirement income then the entire amount is added to their social security for establishing their assets. So say mom's SS is $ 1,000 a month, but her retirement annunity is $ 800 a month BUT she pays $ 150 out of it for her secondary insurance. For medicaid eligibility, her income is $ 1,800 a month NOT $ 1,750.
Now even though they are on Medicaid, if they have a really good secondary policy (like Blue Cross) I've found that the NH prefers that type of resident over one who is entirely medicaid.
Same for doctors and other providers as medicare reinbursement is so low.
Most ERA is looking at what they were billed for the final cost to get from her estate which may not be the true cost paid.
ERA went in before all the states were in bad financial shape as they seem to find themselves in now. I don't think the possible problems was thought through properly. If the states are going to go the "we get 100%" route, then families are going to let grannies house go to ruin and not pay any taxes, insurance, utilties, yard upkeep, etc. It will take years to get properties cleared to sell. Can you imagine the blight?
Remember as executor, you can drag probate out to forever.
You don't have to wrap it up quickly, although others may want you to. You can use this to your advantage in negotiating with family and any creditors. On retrospect, I think that's why my aunt named me instead of the 2 greedy cousins as I really took the time to find out what her intentions based on her will, correspondence, etc. were for the charities mentioned in her will. The expression on their & their wives faces when told how things were to be distributed was priceless.
But back to your question, you have to remain sensible. If the house can really sell for 400K and her true debts are 200K, then IMHO then it's worth negotiating as there is real $$ there for everybody to get something from the estate. If it's the reverse, then you might want to resign as executor and let the state deal with it.
Remember, if mom qualified for medicaid, then there isn't $$ to pay for repairs that the house may need. If that's the case then it - if it is an older house - may need some level of repairs in order to sell. Most people buy homes VA or FHA, and the FHA inspection process is now pretty tight. So if the house needs
20 K in repairs, either you have to pay for it OR it will get deducted from the sale price. If the problems are foundation issues, then no FHA at all. So it would need to be a cash or conventional sale. There's way too many foreclosures out there for the cash buyers to choose from so mom's old house isn't attractive to buy. All of these issues need to be evaluated.
If you sell it privately to a family member, it must be a fair offer.
Otherwise you run the risk of ERA not releasing the lien for the sale. Remember in order to get clear title all liens must be gone. Alot of property values had huge increases in the past that there is no way the house could sell for now. So if it seems that might be an issue - for example Cousin Jim wants to buy it for 50K but the county appraisal is $ 100K - then you need to get a property appraisal from a Realtor who can do that (not all Realtors can) and state that the property is valued at only 50K.
You may need to get a nonRealtor appraisal done.
Again, the lien must be released in order for clear title to be obtained. All the mortgage companies are going to need to see this in order to release funds from the buyer.
You may find yourself as executor having to go to a closing where all you do is sign off on the sale and no $$ to you if
her medicaid bill was high. Most probate courts will encourage the leinholders to pay the executor a fair amount for what they do. Remember you can drag probate out....The amount is based on the county's average or the valuation of the estate. Your probate attorney has all this info.
It's hard to do all this without emotion attached to mom & mom's stuff. But you kinda need to in order to work it out.
Good luck.
My experience with Medicaid has been in TX, LA & FL. LA seems too disorganized to do the legal followup to enforce ERA. My FL experience was before ERA was enacted. TX seems to do ERA recoup for Medicaid dialysis expenses. Now those patients have HUGE costs so I'm thinking it is the amount of $ paid out that triggers the ERA recoup.
ERA recoup programs are new so it's kinda hard to find data.
My SIL has notice of ERA lien on her mom's house in NM -
but all the paperwork is being sent to the house, which no one has lived in since 2002. This situation was that none of the family wanted the house (or to deal with the mom), so it's been abandoned with no taxes paid, with an occasional lawn mowing by a neighbor. The mom was very difficult......
As I've said, Medicaid ERA probably sounded really good when it got floated out 8/9 years ago when real estate was increasing in illusionary value. But now, with property values dropped and huge amount of foreclosures decreasing the values of comps
for those who want to sell, all make for less hard $$ for ERA to recoup plus the states administrative costs.
You mention estate recovery (MERP)is a factor in all this. You can contact your state program regarding any claim or lien as a valid heir. Many states are outsourcing MERP and who the contractor is should be on your states Medicaid / dept of health & human services website. I would do this in writing and send the letter certified with return registered receipt.
Second - your ? was attached to a post originally done in 2011 which I posted answers to back in 2011!!! It's interesting especially to me as estate recovery in the past 5 years has become much more of a distinctive play book in what is done & some of the things I thought were accurate & the correct approach are not so! Its amusing to reread my posts from 2011. Biggest is that states have outsourced MERP - 2 main companies - which approach recovery as debt collections do. If there are exemptions or exclusions that has to be heavily documented. Whether a lien or a claim can be done on the property is dependent on your state laws for both probate & property rights; it's not an automatic but dependent on state law. So if there is a will and heirs open probate, then probate rules get involved. But what seems to happen is that family either doesn't open probate or doesn't respond to MERPs intent to file, so a claim or lien is placed by default.
But back to your ?, was there skulduggery? Could be. Is there any reasons why family could not have gotten in touch with you? If there is a document filed with your forged signature? If so that's a issue you need an attorney to deal with.
Now Would you have gotten a piece of the estate? For this you can kinda do the math to see where this stands....find the tax assessor value of the home the year she died. Then find out what your state medicaid pays for daily room & board @ a NH. Multiply this by the # of days mom was in a facility & also the costs of any other Medicaid paid for programs mom was on. This will give you a base figure of MERP claim or lien against the estate. If house 50k and state spent 165K, state not ever going to be reinbursed fully. If BIL & sissy paid for house costs (taxes, insurance, maintenance, etc), those could be deducted as well. If the final figure in all this is somewhat low, it could be there was a settlement of the MERP claim or lien with whomever in family had their own expenses. And perhaps family paid whatever amount the settlement was if the amount is over the cost effectiveness of the value of the estate to get the house. Property transactions should also be on file at the courthouse. A lot of courthouses have documents available as a download for very nominal cost, like warranty deed for $10. Spend the $ to get all the filings on the property to see just what was done. Then if you still have concerns, take the paperwork to an estate or probate attorney who does litigation to review.