[WSBAPT] Medicaid Estate Recovery w/Private Refinancing of a Reverse Mortgage & a Tenancy-in-Common Arrangement

[David Faber]

Can o' worms time:

C's elderly parents' guardian established a trust for the elderly parents,
deeded their home to the trust, and reverse mortgaged their home in order
to pay for their care (I have no idea why the guardian chose this path
instead of turning to medicaid). The reverse mortgage grew to $245k before
both elderly parents died. The trust then directed that the house be
distributed to C and C's (B)rother, which was completed last month and
title is now held by C & B as tenants-in-common.

B is 65 years old, disabled, and on public benefits (medicaid long-term
care), and the reverse mortgage is now due and owing. C has resources and
wants to pay off the reverse mortgage in order to allow B to remain in the
house for the remainder of his life, and because a primary residence is not
disqualifying for medicaid, this seems like it will work just fine. C wants
to take a Note for the payoff of the reverse mortgage, 15 year amortization
but with no installments, 3% *per annum *interest, and secure the note
against title via standard form DOT.

Now, the questions:

(1) Would the Note would have priority over a Medicaid lien for B? C does
not want to be on the hook for B's medicaid debt or to lose repayment of
the Note.

(2) With B & C tenants-in-common due to inheritance from parents, medicaid
estate recovery for B would only apply to half of the remaining equity in
the real property, correct?

I just want to make sure that this structure will work. Client wants B to
have the support he needs without having to lose the house. Just trying to
navigate to the best option available.

Best,
David J. Faber
Faber Feinson PLLC
800 Polk Street, Suite B
Port Townsend, WA 98368
(360) 379-4110

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