Can my mother sell her house with a living estate?

Does your mother have the capacity to sign a deed transferring ownership of her house? You mentioned a decline in mental capacity. Now is the time to talk with an elder law attorney in your state who can advise you on this, and other important issues you raise in your question.

Selling a house and retaining a Life Estate allows the seller to continue owning the property for the rest of the owner's life.

The Remainder is the interest in the property that remains after the death of the person who had retained the life estate. Ownership of the property passes to the Remainder people upon death of the Life Tenant, without the need for Probate Proceedings.

Life Estate arrangements are usually made with family members. You are wondering whether your mother can sell the property to unrelated persons. If she sells the property, your mother can't change her mind and revoke the transfer of the property. The remainder people would have to sign a deed giving the house back to her.  Other potential problems include disputes over how much the Life Tenant must pay for maintenance and repair.

Medicaid is another issue to consider. The transfer would be reported on a Medicaid application If your mother needs Medicaid within 5 years of the transfer. How your mother spends the money she receives from the sale of the property, and her continuing ownership of the Life Estate would also affect her eligibility.

It may be possible to make a plan that would use the value of home equity to keep your mother at home for as long as possible. Perhaps a reverse mortgage would be a simpler, safer way to achieve the goals you have in mind.

You can get a more complete understanding of all the options if you talk with an elder law attorney in your state.

I think it is legal, and it might be a good solution for her. But you need to have a lawyer involved and you need to make sure she's not taking too big a cut in the purchase price to pay for her life estate, based on how long she can be expected to live there. Also if she plans on getting Medicaid, they will want the money from the home sale, to the extent it hasn't already been used for her care. There's a better chance of keeping the home out of the Medicaid estate (at least in some states) than the cash purchase price. I would not consider a transaction like this on an informal basis; I think you have to have professionals involved to steer you through it.

Wow, this is complicated. I would speak to an attorney and a realtor. Find out what the market value of the home is; is it comparable to what the neighbor offered. How have home sales been in the area? Does the realtor feel they can get a better price for you mom's home. Get their professional opinion.

Not everyone with dementia end up in a nursing home. My mom is in a memory care facility and it is not cheap. She is 93, has Alzheimer's and cancer and is considered "high functioning". Your mom may need the money from the sale of the home to pay for her care. Unless you have home health care come in (which my mother would never accept).

A lot to consider, don't jump the gun. I know its almost too good to be true when someone puts on offer on a house, but you have to make sure your mother's needs are met. If you decide to go this route, have an attorney write the agreement with your mother's best interest at heart. How old is your mom, how is her health, would she consider assisted living. Lots to think about.

We had 2 neighbors make an offer on my mothers house. The realtor talked me out of it and she sold mom's house in less than a week for double of what the neighbors offered. Do your homework.

Yes, no problem. As long as 1) the sale price was fair market value, and 2) all the proceeds go to her care.

As our expert lawyer says, "Selling a house and retaining a Life Estate allows the seller to continue owning the property for the rest of the owner's life." So what will happen to the house while mother is still alive, but not living in it? I agree with the advice to consult an elder law attorney where the house is.

had she been determined by a psychiatrist with it ..1st off 2nd off no one will do the same thing all the time get her treated early is a good start ..3rd age ?? i will tell you my mom has it ..so we was told that in 2011 .so hse is kinda doing good make sure she goes to the psychiatrist every time ..what is real importnt to get a power of attorney .my mom had to go to a nursing home for 13 days not related to her mental state ...& they would not tell me a thing what kind of meds she was on ..i will tell you that they do there own way of treating her & they do not care if she is on the right medicine ..so at all cost get a P.O. & TRY NOT TO SEND HER THERE .. also you can have the house in your name i think would be better i never heard of what your doing but i do not think it would be trusting to do they could kick you out maybe anytime.. so my mom is on namzaric & she does pretty good when she is on it ...do not jump to fast ..it will take years before she has problems but everyone is different so dont go by that much but namzaric is good stuff ..she still knows a lot & when she dont know anything & i cannot handle her anymore that is when she might have to go to a nursing home ..but i have not come to that yet ..i think you better just get the house into who would get it when she goes than to trust this person ..remember this you cannot trust anyone ...so good luck later

Are you asking this question because it's a possibility she may not be competent? This is just a question that went through my mind from your description.

I have questions similar to @jeannegibbs:

What does happen to the house if a Life Tenant moves out but has not yet died? Can the Life Tenant (or her POA) rent out the house and use the income to pay for more supportive housing?

I'm trying to figure out why & to what advantage a non-family member would ever buy a property via a Life Estate with the LE owner being elderly w/dementia...

Answer: neighbor buys it for super cheap & lady dies soon.

To me, it doesn't make sense to do. Just too much risk.

What family & neighbor need to realize is what will happen if lady needs to ever apply for medicaid between a LE done now and April, 2022. If house is not "sold" at Fair Market Value, then lady will have a transfer penalty placed against her which makes her ineligible for Medicaid. So 200k tax assessor value sold for 50k, is 150k penalty. For TX that's about 880 day penalty, or 2 1/2 years.

If that happened, if I were her family I'd go to APS and the police to have charges placed on neighbor for taking advantage of an elderly person. I'm gonna need police report to get around the Medicaid penalty. If not then either family private pays for NH care or moms moves in with Simpete.

Penalties when it's real property are hard to get around. All the value and documents are there and recorded. Can't change the #'s.

Then add in that as the lady still owns the property (as John Roberts expertly posted), Medicaid is require to attempt reinbusement for all care paid by medicaid from her estate. She still owns the property. It used to be that LE passed outside of probate so outside of estate recovery (MERP). But some states are now going after LE &/or an LE needs 5 years before its outside of MERP. The Medicaid lien or claim would have to be removed before true ownership could happen. At NH running 7k -15k a mo, it could be a huge amount due to MERP by the neighbor to finally own the property.

Too involved, too much risk.

Simpete - my suggestion is to speak with a couple of Realtors to get a comps book done. Then carefully look at the comps to see of they are really what moms house is like. If they are all renovated or redone before they sold & moms house is vintage & needs work, then get it appraised. Appraisal is legal so if it sells under FMV but at appraised price, no medicaid worries. Then meet with a elder law atty to discuss medicaid compliant options for the house sale $ when it sells on open market via Realtor or to the neighbor. Mom & you as her dpoa needs sound legal advice.

As an aside, there is a "en viager" "for life" story on a guy who bought house from elderly neighbor..... she outlived him! Andre-Francois Raffay (47) bought en viager from Jeanne Calment (90) in Arles, FR. He died in 1995. She died at 122 in 1997 and outlived him. The 12/28/1995 NYT article on this is pretty wonderful..... "on her 121 birthday she dined on foie gras, duck thighs, cheese and chocolate cake at her NH near her apartment..... Which were several large rooms in a classic grand old Provençal building in the center of town" . The only thing missing to make this story even more perfect would be if the building was in a Van Gogh. Calments Wiki page is pretty awesome too.