What Happens to Lease Holders if Nursing Home Takes Property?

[why1942]

What is the name of your state (only U.S. law)? Oregon

I'm working on my planning my parents' estate and had a question. They own their main residence (house + business buildings on same property) and have a mortgage on it. They gifted me their business last year when they retired and I rent the part of the property from them that the business operates out of. I have a 20 year lease. My question is: if one or both end up in a nursing home, will the nursing home/medicaid go after the property and what does that mean for my business?

Would my lease be binding to new owners if the property was sold to pay fro their nursing home stay? Or, would I be better off to just sell the business along with the property at that time, if the situation arose? What exactly is the process for the nursing home/medicaid to go after assets to pay for medical expenses?

Also, they owe on their mortgage just about what the property is worth (they've spent a lifetime refinancing and using their property foolishly as an ATM), so a sale right now or in the near future would basically zero out and produce no profit. Do nursing homes/medicaid look at that and pass because there's no quick profit? Not sure the process.

why1942

 

[LdiJ]

What is the name of your state (only U.S. law)? Oregon

I'm working on my planning my parents' estate and had a question. They own their main residence (house + business buildings on same property) and have a mortgage on it. They gifted me their business last year when they retired and I rent the part of the property from them that the business operates out of. I have a 20 year lease. My question is: if one or both end up in a nursing home, will the nursing home/medicaid go after the property and what does that mean for my business?

Would my lease be binding to new owners if the property was sold to pay fro their nursing home stay? Or, would I be better off to just sell the business along with the property at that time, if the situation arose? What exactly is the process for the nursing home/medicaid to go after assets to pay for medical expenses?

Also, they owe on their mortgage just about what the property is worth (they've spent a lifetime refinancing and using their property foolishly as an ATM), so a sale right now or in the near future would basically zero out and produce no profit. Do nursing homes/medicaid look at that and pass because there's no quick profit? Not sure the process.

why1942

The lease would have to be honored. However the nursing home wouldn't necessarily expect the house to be sold, the other option would be for the house to be rented to someone and the rental payments (less expenses) remitted to the nursing home. Since the house has a mortgage, its honestly unlikely that there would be any profit to remit to the nursing home, but the rental income would likely support the property so that their other assets were available to pay towards the nursing home expenses.

I should also add that if only one of them needs a nursing home, the house is completely off the table as it would still be the residence of the other spouse and therefore could not be taken.

 

[OHRoadwarrior]

The "gifting" of the business may fall under the look back period for fraudulent transfers.

 

[why1942]

The "gifting" of the business may fall under the look back period for fraudulent transfers.

Isn't that 5 years? They are nowhere near nursing home status yet, but they're health is not good and they're only a medical incident away from it. Not a matter of if but when. But, in typical baby-boomer style, they both seem to think they're perfectly fine and will never need a nursing home. ;-)

why1942