I have a dilemma regarding the transfer of a property from an elderly friend of the family to me. This lady is 90 years old and now lives in a nursing home. At present she still has assets and I paying the nursing homes expenses privately. She doesn’t have any family (including children) and wishes to give the house to me free and clear. The problem is that soon she will be required to begin applying for Medicade to cover her monthly stay once she runs out of money. The house is an asset and typically needs to be liquidated. I was wondering if anyone has experienced anything like this before and if so what advice you could offer. Medicare has specific rules about property transfers with penalties etc. if violated. I wondered if using a land trust would work or just have her will it to me upon her death (along with the lien Medicade is sure to attach since she never sold it). I could probably still live in the home meanwhile. Any suggestions would be greatly appreciated.
Problem is the state can challenge it as a fraudulent conveyance, since you gave her no consideration.
Instead, offer her a note for the property (no money down), at a 20% discount off the price (courts generally find that 20% discount is “reasonably equivalent value”, which is the standard for avoiding a fraudulent conveyance).
The note will belong to her estate, which she can leave to you via a will, then you cancel it out. This assumes, of course, she is lucid and understands what she is doing so nobody can challenge it later.