House in Living trust,owner of trust in nursing home,must sell house,willed to children upon her death,who gets $$$

Asked over 4 years ago - Hays, KS

House property is in a living trust - the owner is in a nursing home - the house must be sold because of upkeeping financial burden. The house was to go the children upon owner's death. When the house is sold before owner's death - who gets the $$$ - is the owner entitled to whole amount or a percentage of sale?

Attorney answers (3)

  1. James P. Frederick

    Contributor Level 20

    Answered . There are a whole lot of issues involved in your short summary, and not enough information to provide a basis for a complete answer.

    You do not state how the nursing home bills are being paid. I would assume that they are being paid from the patient's own funds. She would not qualify for Medicaid benefits, with the house being in a living Trust, under any circumstances. If the house were in the patient's name alone, then it would be an exempt assets, for Medicaid qualification.

    By keeping the house in the Trust, and or selling it, you run the risk that ALL of the proceeds of the house would need to be exhausted paying the nursing home, before the patient would qualify for government assistance.

    If the house were title in the patient's name alone, (ideally with a quit claim deed conveying title back to the Trust, upon the patient's death), then it would be an exempt asset, and assuming the remainder of the patient's assets were used up, then she would qualify for Medicaid, possible preserving the entire value of the home. Of course, the children would need to pay the expenses of keeping the home, such as taxes, insurance, maintenance and any remaining mortgage payments).

    The best choice in your situation depends on the facts of your situation. You would need to consider all of the assets and income available to the patient and determine the likelihood and desirability of Medicaid qualification. I would suggest that you discuss these matters with an elder law attorney and make sure that you know all of the options available. Obviously, the patient's condition and long term prognosis would have a major impact on the decision.

    Best of luck to you!

    James Frederick

    ******************************************
    LEGAL DISCLAIMER
    Mr. Frederick is licensed to practice law in the State of Michigan and has offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration.
    I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer.
    Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your state. The law changes frequently and varies from state to state.

  2. William A. Swendson II

    Contributor Level 11

    Answered . The trust governs what happens. There are provisions in the Trust governing who gets the benefit of the assets and income of the Trust. There is probably a provision in the Trust designating which state law governs. You need to get an attorney to look at the Trust who is experiences in trust administration in the governing state.

    If there is no or insufficient long term care insurance and insufficient assets and income to cover the costs of nursing home care for the life expectancy of the owner, do not do anything (particularly make distributions or gifts to others or charity) without the owner consulting with a Medicaid (Title19) attorney in the state in which he/she lives. Get the owner in now to plan for these costs and qualifying for Medicaid. Do not do anything that will jeopardize the owner from getting this assistance.

    Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship. You are strongly advised to contact an attorney to obtain legal advice before taking or refraining from taking any action with respect to the above.

  3. Catherine Hammond

    Contributor Level 13

    Answered . I agree with the answers already posted to your question. I wanted to add that - other than Medicaid issues - if the home is sold most likely all of the money will still belong to the Trustor (or "owner" of the Trust). When someone creates a Living Trust, that person is typically the only one entitled to the assets of the Trust during his or her lifetime. It is possible that the Trustor also provided for his or her children during the Trustor's lifetime, but unlikely if they are not disabled or minor children. The children's rights to a portion of the home typically do not vest until the original Trustor has passed away. As mentioned previously, the exact terms of the Trust will decide who gets the money if the home is sold.

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