Buying my grandmothers house...questions

[Kirby Allen]

My grandmother moved into a retirement home type facility a little over a year ago and her house has been sitting empty since while she still pays the mortgage on it. Recently it has been brought to my attention that she needs to get it out of her name if she plans to recieve any government assistance from medicare or medicaid if she was to have to move into an asssted living facility. The house has to be out of her name for atleast two years. Here is where my questions begin.

The house would end up being left to my mother, which would in turn be left to me, my brother and sister. My mom asked me if I would want to purchase it for whats left owed on the house. I believe the amount still on her mortgage is approx 48k. The house is worth around 100 conservatively.

Has anyone dealt with a situation like this previously? Legally im just trying to make sure we are all swuared away.

Would i need to go ahead and place my brothers name and sisters name on the deed to avoid having to do it later when we sell it? I know the first fear is family screwing each other in most cases, but not an issue here.

I want to turn it into a rental as it is in a great location for our town, but have so many questions...

[Jon Holdman]

You're potentially on some very shaky ground here. I've been through a bunch of this recently, but this is complex stuff.

First medicare and medicade are two very different beasts.

Medicare: Health insurance for the elderly. Only provide limited benefits for any sort of assisted living or skilled nursing facility. Basically, you need to spend (IIRC on all of this) three midnights in a hospital you can get skilled nursing benefits for a short period of time. 21 days comes to mind, but I'm not sure. Assets are irrelevant.

Medicade: Health insurance for the poor. Does provide some skilled nursing or assisted living facilities. Assets do matter. They do a five year lookback, not two. If your grandma sells you a $100K house for $48K, they will find it and she will have penalties for Medicade benefits.

If your grandma sells you the house for fair market value, there are no penalties. But she will end up with the amount of equity, $50K in this case, as a cash asset instead of property. So, it doesn't help her case for getting on medicade, if that's the goal here.

Notwithstanding the medicade penalties if you buy the house for $48K, if you buy this, its now YOURS and yours alone. Not mom's. Not your siblings. After grandma passes, what does your mom expect? You to give the house to her, since she was going to inherit it?

The bottom line is there is something like $52K of equity floating around (less after selling costs.) That's grandma's money. That money has no effect on any medicare eligibility, but If she (or the rest of you) want to eventual have medicade paying for her housing, the proper procedure is for her to spend that $52K first. Medicare is very well wise to people "giving away" assets to make themselves appear poor.