My brother loaned $40,000 to my mother over the course of 5 years to help cover living and medical expenses. He wants to sell her home and repay himself the money. The loans came out of his personal account and transferred to my mothers. What kind of documentation does he need? How will this affect her ability to be eligible for Medaid?
My experience is that it needs to be a legit promissory note or memo of understanding that was done between mom & him and that it was done with signatures, witnesses and notarized in advance of any funds spent to firmly establish its intent & position years ago. And it all get reviewed & done by an atty. Then he’s going to need to put in a lien on the property filed at the courthouse ahead of any act of sale using this promissory note to place the lien. (If mom should die before this gets done, then it gets entered as a claim against her Estate.)
So that at Act of Sale his existing & filed 40k lien on the property will cause a cloud on title and the cloud has to be paid in order for a clear title to be there in order for title insurance to be issued. Title insurance will be needed for any traditional mortgage lending.
Mom cannot easily just repay sonny from the $ she gets paid at Act of Sale herself, as that will be considered “gifting”. Sonny’s lien gets paid ahead of her, similar as to how Realtor commission or other liens (like a Mortgage) are paid. Otherwise it’s $ paid to mom then gifted by mom to bro. All real property transfers are recorded to the penny so Medicaid will know what mom got paid and fully expects every cent used for her care or her needs.
If he's thinking mom will just pay him from her $, imho, Medicaid will be totally push back on allowing it and I’ll bet a case of Prosecco that her application will be ineligible as they will place a transfer penalty on the full amount IF she pays him this way. Whomever is doing her Medicaid application will have to file an appeal for her as she’s gonna be denied. The issue with that (denied / ineligible) is the NH will get the denial info as well and more than likely shift mom from being ok for “Medicaid Pending” to instead be totally private pay for her old bill (while she was on Pending) and any future bills till she is determined to be eligible for Medicaid. Appeals to me are never ever a DIY except in rare situations. So whomever is her dpoa is gonna have to pay for an atty.
It cannot be imo paperwork drawn up now, it has to be done before any funds started to exchanged between them. If bro doesn’t have this, it’s toast.
Realistically if your mom gets penalized 40k, will bro make up the $ to private pay for her during the set by # of days transfer penalty??? If your her dpoa and have any qualms about your brother, resign dpoa and let him deal with all this.