Spouses each own a 50% equity share. A fair market value of 140K today minus sales/closing costs would leave about 65K each. So off goes 65K to the state.
If it sales 4 years later @ 130K, net proceeds for spouse and decedent's estate will be less. If it sales for 150K, net proceeds will be greater for each. Fair market values fluctuate and so do sales prices.
I would like to know what criteria is used to assign a value to the estate when it comes time to settle the bill.
- find out if your state does Medicaid recoup ability as a predeath (TEFRA) lien or only as a post death lien or claim. It to me makes a difference as to how to deal with & plan ahead. If it’s predeath, less in property owner or heirs favor to work within imho.
and
- you clearly find out IF your parents state Medicaid MERP (Estate Recovery) does Recovery at all if there is a surviving spouse still living in the home / living in the community. Some states do not but it is up to the spouse to fill out the paperwork usually sent with MERP NOI (notice of intent) and file for an exemption or exclusion to recovery.
- find out if MERP done by the state or by outside contractor.
Then
- if a recovery is done, realize your mom does NOT have to sell the home immediately. Imho actually it’s better positioning not to sell it ASAP but instead to let her bereavement settle, not rush into changing her status quo. Medicaid is not in the real estate business per se.... they can wait. She does need to pay whatever property costs are and you should keep track & documentation on all this to the penny.
- if there’s a valid will, you or mom can open probate. Once that happens everything - in my experience- then shifts into however probate laws and rules run.
- if this is lower value property - like under 100k - it may we’ll be that your state considers this to be within a hardship limit. No recovery will happen but again you have to apply for the exemption or exclusion. Or your state has a property value limit that they don’t seek recovery from if under that limit. Like MS has this & it’s either 65k or 75k.
Now finding an atty who is experienced on after death nuances of Medicaid and MERP may not be an easy find. Most elder law attorneys imo are focused on doing wills, Trusts or asset planning ahead of ever filing for Medicaid. You may need to call several to find one what knows whats what in post death stuff for Medicaid recipients & has a probate atty that they work with.
also keep in mind the supposed FMV may be whack.
If so, property may need an inspection and appraisal done. If you open probate, the appraisal is entered as a legal document to establish the value of that asset of the Estate. Once judge signs off on that Asset filing, thats what value is.
Also once he dies, if your mom gets a letter from tax assessor regarding ownership, don’t ignore it. Might come within 90 days as courthouse is synched to state database for everything. Usually they will transfer the tax valuation for how tax collector bill is sent to be in her name without presenting final order from probate court. It’s kinda assumed if both names were on property records, it flows over to her name. This is a time sensitive document. Be sure to do it cause otherwise the property taxes could increase bigly and then to get changed back will need some sort of signed order.
If Medicaid is permitted to assign a value at any point in the recovery process, I would expect a value to be assigned at whatever point in time would maximize Medicaid's ability to collect more. This would be easy and straightforward if everything happens fast - sale, Probate etc. If any delays the value of an estate or a property varies. If a person later tried to sale a property for less than its fair market value, Medicaid would still have a definite figure to work from because there is only one date of death value and that won't change.
My thoughts, if I am understanding your question, is that the cost of care will not change based on the value of the house. The recovery amount will remain the same. Maybe Medicaid tacks on some interest for time from death to time of sale. I don't know, wouldn't think so, but it would be understandable.
Pre and post liens are filed depending upon the situation. I know in my spouse's case it will be post - I've checked public records to determine so far there is not a pre-death. I've asked 2 real estate agents if they have ever handled a property with a Medicaid lien, and they have not.
During the application process for my spouse, I would have made the major mistake of becoming "over resourced" upon sale of our condo or moving around a few funds I had in my name only. Nothing was hidden or undeclared during the application process. There was no reason to not answer such questions, but for Medicaid's potential to get more pay through misinformation. Key facts don't get spelled out along the way. An incorrect strategy can result in depleting everything because families have no idea what's allowed/not allowed. It is not in the state's interest to have an educated public on the eligibility side. I have no doubt it goes the same for the recovery side.
So I can not understate the extent to which I believe a lack of information at the recovery end can also result in unnecessary hardship to survivors.
In our state hardship is for those with a small farm or income-producing property. It is in some instances available if it significantly delays the survivor's qualifying for public aid. There is also an arbitrary rule that hardship it is not designed to help maintain a "lifestyle".
So who decides an appropriate or fair lifestyle of an aging community spouse? If I didn't know better, it might lead me to believe our expenses cheapen as we grow older. Sounds like Paradise to me. But what do I know??
So Igloo has a very good list of items for me to continue along the way.
Additionally, gladimhere's comments address a portion of the backside of this issue. How a debtor arrives at a final figure for amount owed should be spelled out to the extent that anyone in the profession can answer questions that are non-personal and therefore, in theory at least, applied equally or uniformly.
Since so many facts are left unsaid during the application process I have no faith the state will conduct itself any different on the collections side.