A recent thread on an advanced elder law listserv involved a client who plans to “sell” her residence to her granddaughter for the value of the reverse mortgage owed on the house. It was estimated that the property is worth at least twice this amount. The inquiry generated a thought-provoking response that shows the many perils and pitfalls lurking in such situations.
Grandma desires to continue to live in the house as a “roommate”, and granddaughter agrees. The attorney acknowledged the Medicaid penalty if grandma needs nursing home care within five years based on the gift of the excess value to granddaughter, and the tax issues depending on whether grandma will be receiving “services” or just sharing expenses or paying rent. Grandma wants to have an enforceable right to stay in the home for as long as she is able. Granddaughter works out of town four days a week.
When the attorney asked how this arrangement could work, a Certified Elder Law Attorney sent back the following reply:
I would walk this plan through with Grandma with the following VERY common scenario.
Grandma is failing, granddaughter comes home every weekend to find the place a disaster. Maybe even worse – that grandma has been on the floor for 2 days or the stove has burned out ‘cause the burner was on for a week.
– Note to granddaughter: make sure the house stove is electric with a circuit breaker that can be switched off in a locked breaker panel.
– Note to granddaughter: if there are any pets, make sure there is daily care for them.
Granddaughter starts with home care — grandma hates all of them and does not want strangers in her house. Calls granddaughter 10 times a day at work.
As other elder law attorneys have written about: Grandma has always said, “I will let you know when I need help.” But when Grandma does need help – it is WAY too late for her to realize it.
Granddaughter planned to be home on weekend after a stressful week at work and realizes that now she has a full time job as a caregiver and is the only caregiver that grandma will tolerate.
Granddaughter realizes it is not safe to leave grandma at home and now the house cannot be sold to pay for the cost of non-Medicaid covered assisted living because granddaughter did not arrange to be named as grandma’s agent under a Durable Power of Attorney or as successor trustee, and now, grandma does not trust her and/or lacks capacity to sign anything.
Plus, where would granddaughter live if she sold the house to pay for grandma’s care?
And even if it could be sold – and when all is said and done –
Grandma tells everyone at the assisted living home that her granddaughter took her house and put me here. Someone on the day shift never sees granddaughter come to visit nights and on the weekend and agrees with grandma that the family has abandoned grandma and calls social services about elder abuse and neglect.
When the investigator questions the family, because the protocol is that the target is the last person that the investigator contacts, their story is “granddaughter cheated us all out of our inheritance because she bought Grandma’s home for a song, and then used some over-priced shady lawyer to get Grandma on Medicaid and put her in a home.
The moral of the story: Before doing family deals that sound good, talk to a Certified Elder Law Attorney. Call us at 601-987-3000.