Q: My mother is currently in assisted living and is broke. I am selling her house and would like to know the best way to handle the proceeds. I was advised to put the money in a single premium immediate annuity naming the estate as beneficiary and myself as second beneficiary. I thought annuities carried high fees. Will I be able to pay her monthly bills which will continue to increase from this type of account? And at some point, sooner rather than later I will need to apply for Medicaid so need to know best way to handle the proceeds in that regards. (Clairton, PA)
A: As you may know, there is a 5 year look back period when one applies for Medicaid funding. All transfers of the applicant’s assets for less than fair market value, can result in the applicant being ineligible for Medicaid funding to the extent of the value of the assets. If mother will be receiving Medicaid funding in the next five years, Medicaid will have an interest in these proceeds. There are more details that need to be known before you sell this home, and you should seek the advice of an experienced attorney who is versed in Medicaid regulations. Generally, you should only sell this home for not less than market value and have at least on appraisal if there is any doubt of the value. You should document everything pertaining to the sale. Once you obtain the proceeds, you should and use them only for your mother’s benefit, whether that is investing them for her or using them to pay for her care. An attorney can also advise what if any exemptions or exclusions from Medicaid may be available.