This deceptively simple question is most often phrased as a sentence: “I am going to sell the house.” Unfortunately, if the property does not belong to you, it is not enough to simply hire an agent and list the property, even when you have the authority to do so. Furthermore, it may be a mistake!
Assuming that your parent is alive, you must first ensure that you have the proper authority to sell the home. Determining whether you have that power requires carefully reviewing your powers as trustee or Financial Power of Attorney, as applicable. Additionally, it is important to find the last recorded deed in order to determine how title to the property is held. If the necessary authority has not been granted, then a court conservatorship proceeding may be necessary and court authorization to sell the real estate should be requested.
Once you have determined that the authority exists, you must consider the financial realities of your parent’s situation and whether selling the home is wise. If your parent receives Medi-Cal benefits (Medicaid elsewhere), the home is exempt for the purpose of counting assets to qualify. However, once the home is sold, the proceeds from the sale will likely disqualify your parent from continuing Medi-Cal benefits. Similarly, if your parent receives VA Aid & Attendance Non-Service Connected Disability Pension benefits. the income from the sale may lead to the benefits being yanked. Often, the desire to sell the home comes at a time when the parent’s physical state requires additional attention in a nursing facility and the extra liquidity would be useful. However, simply selling the home may provide liquidity, but only at the expense of needed benefits!
If your parent has engaged in some pre-planning, particularly through the use of a QMap Trust or QVap Trust, the decision may be simpler. These special trusts allow flexibility for the successor trustee specifically to avoid the predicament selling a home can cause. Through careful drafting, a QMap Trust or QVap Trust avoids eligibility problems that arise while preserving certain tax advantages that go with home ownership. Without proper advance planning, it may be necessary to explore other available options in order to protect and preserve eligibility for benefits.
If your parent is not currently receiving Medi-Cal benefits or Aid & Attendance, it may be useful to determine why not. Because the home is an exempt asset, it could be best to keep the home in its current form and determine what other assets are available to pay for care and living expenses. There is a tendency for many trustees to want a lot of liquidity in order to ensure that as bills come due, there is always money to pay them. However, it may be advantageous to strategically decrease the amount of cash and other non-exempt assets on hand while preserving the home.
Eligibility for Medi-Cal and for Aid & Attendance benefits can be very complex and should not be considered a do-it-yourself endeavor. An attorney who is experienced in these matters and VA accredited should be consulted before you take major steps, like selling a home!
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