Many elderly homeowners choose to use a variety of different option to convert equity they may have in their homes into cash or income streams. The products used to do this vary from Reverse Mortgages to private annuities and trusts. These options are excellent for individuals whose day to day living expenses exceed their fixed income from social security or other means.
Medicaid does not prohibit the use of these methods; however, it does subject them to an important condition: The homeowner must receive full and fair market return as a stream of cash payments, lump sum or the right to use and enjoy the property.
When needing to qualify for Medicaid, the government has a 60 month look-back period to determine if there were any asset transfers for less than fair market value that would disqualify or delay the receipt of Medicaid benefits. When receiving cash from a reverse mortgage, the risk isn’t necessarily a look-back risk, but rather a spend down risk which would require the community spouse to spend the assets down on property that is not recoverable by the state.
If the income from a reverse mortgage is received as a monthly payment or line of credit, it is important to make sure that the tenure payment is not in excess for the needs for the given month it was received.
If you have questions concerning reverse mortgage products or how to qualify for Medicaid, please contact our law firm now.
The Law Office of Dennis J. DiSabato, Jr., LLC
3888 Renee Drive, Suite 201
Myrtle Beach, SC 29579