Second Marriage Issues – Part 5

In last week’s blog post, I was in the midst of telling you about a dispute between Husband and his deceased Wife’s children regarding the sale of their home.  Although 50% of the home was titled Husband and Wife joint with rights of survivorship (the other 50% owned by Wife’s children), the children insisted that their mom had always intended for 100% of the home to go to them.  That’s what would happen if Husband dies before all of the children, the most likely scenario given their ages. (That’s because each 50% share is also owned jointly with right of survivorship.)

Husband insisted, however, that Wife had made clear when she added him to the deed after they married, that if he needed to sell and use his share of the proceeds he could.  That was the reason why she added him to the deed.

The children asked Husband to agree to turn over his 50% proceeds to them after the sale.  I explained to them that Medicaid would view this as a transfer subject to a penalty.  Their claim to 100% is not supported by anything in writing, is counter to what Husband said he and Wife discussed and the deed is clear.  Medicaid will rely on that deed, the only documentary evidence.  

The children then offered to contribute $20,000 towards Husband’s care in return for the proceeds.  I again explained that this would not work.  The home was worth approximately $300,000.   Giving them $150,000 (for the promise to provide a much smaller amount in the future) would result in a Medicaid penalty of about 12.5 months.  The cost of Husband’s care for that period of time could be $150,000 or more.  Obviously, their $20,000 offer was not going to be sufficient.  

I made clear to them in no uncertain terms that any option in which Husband gives them a part or all of his share of the proceeds would be to his detriment if he needed to apply for Medicaid.    As I explained last week, Husband was facing additional transactions that would cause other Medicaid penalties.  The additional sale proceeds would likely delay his needing Medicaid for a sufficient amount of time to make these troubling transactions fall outside the 5 year look back.  Thus, any penalty would be avoided.

In short, I told the children that their proposal would be nothing more than a gift by Husband resulting in a penalty and that their attempts to characterize it as anything other than a gift was unsupported by any evidence.  The deed with Husband as now a 50% owner said it all.

So where do things now stand?  Husband in an attempt to move things forward contacted a realtor and signed an agreement to list the property for sale.  The children, however, refused to sign the agreement.  It appears that they are attempting to prevent any sale until Husband dies, taking advantage of the joint tenancy designation which would then give them 100% ownership.  Husband has retained a lawyer to file suit to force the sale, hoping to obtain a court order on an expedited basis.