Dear Mr. Premack: My parents own a paid-for house, and I live in it. Dad moved to a nursing home on Medicaid due to his dementia. Mom made a Will leaving the house to me, and Dad does not have a Will at all. My sister is agent under his power of attorney. Mom died recently. Will I lose the house since Dad is on Medicaid? Can he make a Will in his condition? – O.M.P.
Where to begin? First, you need to realize that your mother’s Will controls only the assets that she owns. Since Texas is a community property state, she only owns one-half of the house. Your father still owns the other half – unless your mother owned the house before they married, or inherited it, or received it as a gift, or they signed a legally binding contract making it her separate property.
Second, even though her Will leaves to you her one-half interest in the house, her executor should see a qualified certified elder law attorney and probate her Will for it to take effect. If it is not probated, according to Texas law, she is assumed to have died intestate and her half of the house becomes your father’s property.
Third, the Medicaid estate recovery program (MERP) does not spring into action until your father dies. He is the Medicaid beneficiary. Thus, your mother’s death does not trigger a government claim against the house. There is, however, a risk that when your father dies there could be a government claim against the house.
How can you deal with that risk? Learn the rules to see how the government has placed limits on its own authority. There are two opportunities that come to mind:
1) You live in the house. If you in fact lived there for at least two years before your father moved to the nursing home, and you provided assistance to him that helped him stay home for those two years, and you can get proper documentation of those services from a qualified medical professional, then the house can be transferred into your name without penalty. Then you don’t have to be concerned about getting your father, who is of questionable legal capacity, to try to make a valid Will.
2) After your mother’s Will is probated, you will own half the house. Your father has named your sister as agent in his power of attorney. If her authority is broad enough, she would talk with the same attorney to make a “lady bird deed” for your father’s half. He will retain life estate, and the remainder can pass to you (or all the children) without a claim from the government. Again, this method avoids the necessity for your father to have a Will.
Dear Mr. Premack: My mom has Alzheimer’s and we think she’ll soon move to a nursing home. She already has Medicaid. She owns her home (Dad died years ago) and has a Will requiring that we sell the house once she dies. Some of us would rather keep the house. Can we buy the house from the government since they will probably take it away because she is on Medicaid? Thank you. – D.A.
Your situation is very similar to the one posed by O.M.P. The first thing you need to review is whether your mother owns 100% of the house. When your father died, did he have a Will? Was it probated? If yes, did it leave the house to her? If no, you need to see a certified elder law attorney to create documentation of her ownership via the intestacy laws.
Your mother made a Will. Has she also signed a durable power of attorney? If yes, and if the authority she granted to her agent is broad enough, the agent can sign a “lady bird deed” for your mother. The deed will accomplish two things: 1) it will pass title to the house directly to the children without reference to her Will, avoiding the requirement of sale, and 2) it will eliminate the government’s ability to make a estate recovery claim when your mother dies.
Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2012) practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, October 5, 2012