Could MY home be taken by nursing home?

[Torellian]

What is the name of your state? WI

I saw my insurance agent yesterday to update my policy, and he informed me of something troubling. He asked me about what names are on the title of my house, and I told him mine and my Dad's. That's because my Dad loned me the money 9 years ago to buy my current house and we agreed that his and my name would be on the title as joint owners until I paid off the loan to him, then his name would be removed and I would be the sole owner. My Dad wrote up a paper he called a promissory note that we both signed that states all this.

Well, my agent said that if my Dad were to end up in a nursing home, they would be able to take not only everything he has, but also my house too because his name is on it. I guess they could take half of it, actually. ALSO, once I pay off the loan, which should take just 2 more years, there would still be another 7 years that would have to go by before I would be safe from having my home taken! But if I am paying off a loan, and I can prove with reciepts that I PAID for my Dad's half, then how could a nursing home still take it? It's basically like he SELLING me his half. If a total stranger were to buy my house, a nursing home couldn't take it from them, so why would they be able to take it from ME?

Please help me understand this. I've been stressed out ever since I was told about this yesterday! Thanks!

[nextwife]

The wiser way to have handled the loan would have been for dad to have a loan against your house.

[Ozark_Sophist]

Refinance and pay off dad now.
Make the loan agreement official with assistance of RE attorney with deed of trust.
Estate planning.

[Torellian]

Originally Posted by Ozark_Sophist

Refinance and pay off dad now.

What does that mean exactly? Does that mean selling Dad's half to the bank and then paying off the bank loan? I already have most of Dad's half paid off.

Sorry! I've never had a bank loan before (this is my first house), so I'm not familiar with the whole process.

[Ozark_Sophist]

Originally Posted by Torellian

What does that mean exactly? Does that mean selling Dad's half to the bank and then paying off the bank loan? I already have most of Dad's half paid off.

Sorry! I've never had a bank loan before (this is my first house), so I'm not familiar with the whole process.

One way would be to borrow from a bank against the value of the house to buy Dad's share of the house ((or borrow enough to pay back dad and cover closing costs). At closing, you and your dad would transfer the house to your name only. You sign the note. The bank gives your dad a check. You make payments to the bank.

There are tax and estate implications. Best bet would be to talk to a local attorney (free consultation).

[Torellian]

Well, paying him back would be easy enough since there's only about $5,000 left of the $45,000 loan (the house was originally $50,000). It seems the main concern now is the so-called "lookback" period of 7 years when they supposedly could take my house even thuogh I've already paid it off and it would only be in my name.

I just don't understand why they'd be able to do that if I have essentially bought the other half of the house from my Dad! If a total stranger bought the entire house from me and Dad, and Dad ended up in a nursing home, there wouldn't be this problem, right? Just like when I bought this house in the first place, I didn't have to worry about the previous owner ending up in a nursing home. Why is this different? Or is it different???

[Texas Pooh]

OP,

the problem is that while you and your dad meant to create a loan, it wasn't structured properly at the beginning. Therefore, it doesn't look like a loan and won't be treated as a loan for look-back purposes.

Best advice is to seek counsel, do some estate planning for Dad, pay off the debt, and start the look-back period from running.

[Torellian]

[quote=Texas Pooh;1923590]OP,

the problem is that while you and your dad meant to create a loan, it wasn't structured properly at the beginning. Therefore, it doesn't look like a loan and won't be treated as a loan for look-back purposes.
QUOTE]

If they didn't want to originally treat it as a loan, but then I protested and showed them the promissory note that my Dad wrote and that we both signed and have a copy of, and I showed them all the reciepts my Dad has given me for each month I made payment, would they consider it a loan then, or do they just look at the 2 names on the house and consider that to be the only factor that would count? (In your opinion)

[garrula lingua]

OP, speak with an Elder Law attorney.
They specialize in Medicaid issues.

There is usually an exemption from Medicaid reimbursement if it's a house with a spouse or a child living in the residence for a period prior to an owner being in a Nursing Home with costs paid by Medicaid.

Post this under "Elder Law', a subsection of Wills and you should get more responses regarding Medicaid reimbursement policies (they differ from state-to-state).

[Torellian]

Thank you! I'll take a look there.