Updated: Feb 4
Dear Mr. Premack: I submitted a question to you on Sept 9, 2011 about selling mom’s home when mom has Alzheimer’s. She is on Medicaid and I am designated as disabled. You said that if her power of attorney had been prepared properly with gifting authority, then as her agent I could transfer her house into my name without a Medicaid penalty. I checked on the power of attorney and the paragraph that had to be initialed for the gifting authorization was not initialed. So it won’t work the way I needed it to work. We made the power of attorney ourselves from a form we downloaded online. Another great reason to always to consult an attorney! Since that will not work, I have another question. Someone told me I could file for foreclosure since my Mom can no longer pay any of the taxes, insurance or upkeep for the house. I have almost gone through my entire savings to keep her house going (taxes, insurance, upkeep, etc.). I have devoted the last four years of my life to taking care of her, and now my money and health are not cooperating. Is there another way to sell the house and get out from under the burden of sinking more money into the house? B.B.
You are like so many other people who are being too trusting of the internet. If you had invested a few dollars in consulting a qualified elder law attorney, you would have a proper durable power of attorney which grants to you the authority you need to fix all your problems. Saving a few dollars by downloading a too-simple flawed form has cost you hundreds of times more than it would have cost to consult an attorney up front.
Now “someone” has suggested that you “file for foreclosure”. There is no such thing. Yes, foreclosure exists, but it is a legal process that is initiated by a creditor with a lien against the house, or by the taxing authority after exhausting all other remedies to collect past due taxes. You cannot initiate a foreclosure on your mother’s house by filing any papers anywhere. One thing you can do, however, is file for a deferment of her local property taxes with the local appraisal district. The taxes, plus interest, will have to be paid when she dies, but it is a way to help with your tight budget.
You ask if there is any other way to sell the house to get out from under the burden. You may have authority to sell the house pursuant to that otherwise flawed power of attorney. If it is a “statutory power of attorney” then one of is clauses should give you authority to manage and to sell your mother’s real property. Selling the house is different than gifting title to yourself, because after the sale your mother still owns the net sales proceeds.
But even though you may have authority to sell the house, you may not want to do so. Why? Because your mother is on Medicaid. As soon as the house is sold, she will lose all of her Medicaid benefits. All of the money from the sale of the house will be dedicated to paying for her nursing care and will be consumed. It is possible that some of the proceeds could be used to repay you for the expenses you have paid for your mother over the years, especially if you have clear records that you paid her taxes, insurance and home upkeep for her. If she had signed promissory notes borrowing the money from you (or you had created them using the power of attorney) then you would clearly be entitled to reimbursement. When all the money from the sale is gone, she can reapply for Medicaid.
On the other hand, you could try to keep the house by placing a family member or other trusted person there as a house-sitter. In exchange for a place to live, the house-sitter could pay rent exactly equal to the taxes, insurance and home upkeep. That would lift the expense from your shoulders and preserve the house for your future benefit (because in your September letter you said you already have the remainder interest in the house under an old life estate deed, and consequently will own the house when your mother dies without having to pay a MERP claim).
Paul Premack is a Certified Elder Law Attorney practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, April 9, 2012