If an Adult Child Makes a Loan to an Elderly Parent, Will It Be Repaid if Medicare Sells the Parent's House

Question

If an elderly parent needs a loan from a child in order to pay things such as property taxes, will the child be repaid if the parent enters a nursing home and the parent's house is eventually sold via Medicare Recovery Act?

Assume that the parent signs a note stating the terms of the loan. Assume the parent is hardly able to make regular payments and the family does not want to use a reverse mortgage, etc. (The loan will sort of a "balloon" that is due to be repaid all at once.)

Answer 1

Have true loan papers drawn up with a repayment plan of at least a couple dollars a month and charge interest.

Register a lien on the property for the amount of the loan, then the government will be forced to settle with you.

Why not a reverse mortgage if you know the house will eventually be taken by the government anyway?

See a lawyer who specializes in estates & trusts they should be able to make sure all is recorded properly and protected.

Answer 2

Once the nursing home gets involved it becomes a big mess. I am going to say NO, I do not think they will have to repay you. Saying this as the reason they take the home under the recovery act is to cover no one but themselves. BUT I do understand that once their expenses are paid the remainder (if any) is returned to the family. So there may be a slight chance. BUT why would you be against a reverse mortgage? Either way you don't get to keep the house. And under reverse mortgage You get the option to buy the house back once the owner passes.

Answer 3

It sounds like you are dealing with challenges that many caregivers of older parents face.

While the rules regarding estate recovery
vary somewhat in each state, folks that will know about the details about Medicare, Medicaid and estate recovery --and other questions you may have as a caregiver --are as close as your local Area Agency on Aging. These groups are one of the best kept secrets around for older Americans and their families. There is one serving every community of the United States. The folks there specialize in listening to the concerns of seniors and their families and truly know about benefits and programs available. If they don't know something, they will know the best place to go for the answer. .

The other thing to know is that Area Agencies on Aging often have services and connections to programs that can help family caregivers. Legal assistance on public benefit issues may be available if you or your parent meet income eligibility guidelines.

You can call toll-free 1-800-677-1116 to find how to contact the Area Agency on Aging serving where you live.

After you get the phone number for your local Area Agency on Aging and make the call, ask for the staff that handles "Information and Assistance" or the "Family Caregiver" program.

If you do contact your local Area Agency on Aging and like the help that they give you, let your local county officials and your folks in Congress know. Or consider making a contribution to support their work. Area Agencies on Aging don't have big budgets-- and appropriations for the Older Americans Act, the legislation that makes this help possible-- have not increased significantly for about 25 years!

Hope this helps! Best wishes and Good luck!

Answer 4

I would suggest having a mortgage recorded. That way when the property sells you get repaid. There are limits and timings, however, which may prevent this from being successful.
If you anticipate this, and the amount is material, I would suggest consulting an attorney who specializes in Elder Law.

Answer 5

As I understand it this is true. Loans were paid to my in-laws when their mother's house was sold after she used all other resources and went on medicaid. They had the loan documented.