Dear Mr. Premack: My Mom is in the nursing home (3+ years) with Alzheimer’s disease. Twelve years ago she gave me a warranty deed reserving a life estate to her home. I am on total disability and the state has told me they will not recover any of the property or disqualify her from Medicaid. I also have both types of power of attorney where she made me agent. Can I sell the house with my power of attorney since it is deteriorating and being vandalized? Will my sister have any right to the money from the sale? Since I now have to pay all the taxes and insurance, do I even have to notify my sister? – BB
The deed your mother signed twelve years ago gave title to you, but she retained the right to occupy the home as her homestead. The deed says your mother owns limited rights to her home. Under the Medicaid rules, the transfer to you could have disqualified her from receiving benefits except for the fact that it was done so long ago. Medicaid does not impose a penalty for any transfer that was done more than five years before the application for Medicaid is submitted.
Now the house is being vandalized and you want to sell it. Ordinarily, the sale of the home would result in your mother receiving a certain percentage of the cash proceeds. Ordinarily, receiving that money would also disqualify her from continuing to be a Medicaid beneficiary. So do not sell the house in the ordinary way.
Rather, working with a certified attorney, you should take advantage of a special Medicaid rule. You say you are on total disability, which I assume means that you have been determined by Social Security to be disabled. If that is true then because of your disability Medicaid’s rules allow your mother to transfer full ownership of the home to you without any penalty. She would sign a new deed giving up her life estate and vesting full ownership in your name.
If she cannot sign (which is probable since she suffers from Alzheimer’s disease) then you could sign on her behalf as agent under the power she granted in the power of attorney – IF the power of attorney 1) contains the correct wording, 2) is otherwise legally valid, and 3) is recorded in the county’s real property records. The “correct wording” must include authorization to make gifts on her behalf, and the gifting amount cannot be limited in a way that forbids this transfer.
Assuming that you have proper authority, the new deed from her to you would cancel her ownership interest in the house. You, as full owner, could then sell the house. Your sister would have no claim to the proceeds and legally is not entitled to notice of the sale. Your mother would have no claim to the proceeds and would still qualify for Medicaid. You would receive all the proceeds. However, you should determine if the proceeds would cause you to lose any of your disability benefits. If you are on Social Security Disability Income (SSDI), you should not lose your benefits. But if you are on Supplemental Security Income (SSI) then selling the house could cause you to lose your own benefits.
On the other hand, if the authority granted to you in your mother’s power of attorney is not legally adequate, then you have no legal right to sell the house. In that case, you’ll have to leave title the way it is and wait for your mother’s death before you become full owner. Before you take any action, consult with a real estate attorney and with an Elder Law attorney to be sure that you stay within the bounds of the law.
Paul Premack is a Certified Elder Law Attorney practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, September 9, 2011