Selling Home for Senior Care

I. Introduction

Nearly 70 percent of people over the age of 65 will require at least some type of long-term care services. That population is projected to grow from 4788 million today to 74.1 million by 2030, according to the Census Bureau. Only a small percent of people have long-term care insurance, so a home is often used to pay for moving to senior care or downsizing. Selling a home to pay for this care is a common practice.

II. Taking first steps.

  1. Contact the parent’s wills and estates attorney to see if the elderly parent has proper documents in place
  2. Ask this attorney to review any documents to make sure that the homebuyer or seller or one of the client’s siblings has the authority to act on the parent’s behalf.
  3. If the seller has been named agent or trustee in the parent’s will, those documents should be gathered together
  4. Contact the bank or mortgage holder
  5. The attorney can assist sellers with this by giving them a list of questions to ask.
    Hunt for the last bank or mortgage statement to find the account number of the loan and the balance.
    Look into whether or not there are loans and/or any liens against the property.
  6. Contact any service providers, insurance carriers, etc.
    Cancel non-essential services
    Maintain utilities and upkeep of property
    Continue home insurance
  7. Seller should contact the bank to become an authorized signer on account
  8. Contact the Social Security Administration
  9. The seller should take time consulting with you, the real estate broker or agent
  10. Make sure the rest of the family is on board

III. Medicaid Coverage

There are three circumstances in which persons who qualify for Medicaid coverage for nursing home care can transfer their own house to a family member without incurring any penalty from Medicaid, and without giving Medicaid any right to reimbursement from the house.

1.General Rules

Keeping property without disqualifying person from full Medicaid coverage of nursing home costs
Medicaid Liens
Giving property to family within five years of applying for Medicaid coverage

2.Special circumstances

Three circumstances permit someone to transfer the home to a family
member without either a Medicaid delayed-coverage penalty or a Medicaid
lien on the property
Adult child
Minor child
Family with ownership interest in property before 5 year look back

IV. Putting Home on the Market

1.Getting it ready

  • Getting rid of old furniture
  • Changing old window coverings
  • Removing wallpaper
  • Changing carpeting or other dated flooring
  • Refinishing hardwood floors
  • Applying a fresh coat of paint
  • Eliminating all signs of pet ownership, like stains and other damage
  • Installing new fixtures
  • Updating lighting
  • There is nothing more critical to the sale of a home than a proper cleaning.

2. Picking the right real estate agent is critical to your success

3. After Estate Sale Tax Consequences

Dealing with taxes.
See the IRS guidelines on estate sales.