Q. My partner and I are not married and we have a reverse mortgage that we have had for about 10 years. We did not receive any money from the reverse mortgage, but he now has dementia and Parkinson’s disease and may need to take Medicaid and enter a house. Speaking to a state, I was told that because their name is on the deed as well as mine, even though we have a reverse mortgage, Medicaid would have preference over that. I would have to buy his half of the house, but I don’t have the financial means. This is why we have opted for the reverse mortgage. I am also disabled and have life rights with the reverse mortgage agreement. Can the state kick me out of my home?
A. We are sorry to hear about your partner’s health problems.
It’s a complicated situation.
Under the Medicaid New Jersey Estate Recovery Rules, although there are five exceptions, properly paid benefits may be clawed back by Medicaid from the estate of someone 65 years of age or older when the person has received medical assistance, said Jason Marx, president of Tax & Estate Planning and Elderly Law and Special Needs Planning Groups at Curcio Mirzaian Sirot in Roseland.
For Medicaid to recover, your partner would first have to be eligible for Medicaid benefits, Marx said.
In the scenario you present, your partner’s interest in real estate held jointly with you would be considered an accounting resource, and Medicaid would expect the value of that resource to be spent so that they could even claim the benefits. benefits, said Marx.
In other words, your partner’s interest in real estate could make them currently ineligible for Medicaid benefits.
As a partner and co-owner of the property, you could buy your partner’s interest in the property, Marx said.
If you can’t afford a cash purchase of the full value, as you noted, you can issue a promissory note to your partner, he said.
“This note would still be an accounting resource and would have to be spent in order for him to qualify for Medicaid,” he said. “However, as the owner of the building, you would not risk Medicaid seeking to reclaim this asset.”
Another option is to get married, Marx said. There are other Medicaid planning options for married couples that may help you manage this situation. Additionally, assets passed to a surviving spouse would fall under one of the exceptions to Medicaid’s estate collection rules, he said.
“It’s a complicated situation and there are timing issues,” he said. “I strongly encourage you to seek the assistance of an attorney who specializes in elder law and Medicaid planning issues.”
Email your questions to [email protected].
Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly electronic newsletter.