When To Sell The Home

                Dave called me because his dad had just recently suffered a stroke and was in the hospital but ready to be discharged.  Dave told me, “Dad can’t go home.  We’ve been able to keep a promise we made to keep him home but at this point the family recognizes he needs nursing home care.”

                I then asked him about Dad’s finances.  “He has only $30,000 in the bank but he owns his home”, Dave said.  “It’s not in great shape but we can probably net $200,000 after paying off his home equity loan.  I’ve called a realtor and I am going to immediately put the house on the market so we can use the sale proceeds to pay the nursing home.”

                Dave figured the money would last 18 to 24 months and he would then apply for Medicaid.  So we turned our conversation to the past 5 years.  I explained to Dave that Medicaid will ask for and scrutinize Dad’s account statements over a 5 year period dating back from the filing of the application.

                “Did your dad make any gifts or draw out a lot of cash”, I asked Dave.  That’s when he told me that Dad had helped out Dave’s brother, Joe when he was out of work.  Dave estimated that Joe received maybe $20,000 but I could tell that he wasn’t confident of the exact amount.

                I told Dave that before he lists the home for sale he needs to know the answer to my question as well as what other surprises may or may not be in those 5 years of records.  Dave was surprised by my statement.

                “I thought we would worry about all that later if we have to apply for Medicaid”, Dave replied. “The doctors aren’t even sure if he will make it through the next 6 months.”

                 That’s where Dave could be making a big mistake.  I again reiterated to Dave that he not sell the home just yet.  Next week I’ll share with you why.