Can a nursing home resident
(my mom) on Medicaid sign a Promissory note to pay back a loan that was made in 2007-2008 plus another loan made in 2015?? Will the 5 yr look back period become an issue even tho the loan was made prior to 5 yrs??? *I have documentation of the loan: bank statements, check book registers, invoices, etc.
I loaned my mom a total of $72,000. A large part of the loan was for construction of a home we share. The rest was for a major home repair. There were only verbal agreements between mom & I about the loan & payment. The loan is to be paid in full after mom passes & the house is sold. Because of Medicaid & my siblings, I had to file a civil suit against my mom in the amount of $72,000 in an effort to secure the loan & ensure it would be paid according to our verbal agreement. The goal is to file a Promissory note in the court house which would put a mortgage on the house that must be paid before the house is sold. Over the years I’ve asked mom to put me on the title/deed of our home to secure the loan & recognize my financial contributions to construction of our home. I Just wanted mom to legally do something to show I loaned her the money with the loan to be paid after she passes & the home is sold. She wouldn’t do anything. She said it was taken care of in her Will. I’ve tried to explain what happens to Wills & homes of Medicaid recipients. She thinks I’m lying & believes my siblings. Mom’s Will has changed 3 times over the last 2 years.
Without the money from this loan, I will not be financially able to purchase my next home. I’m disabled & hoping that will be an advantage in this situation. Any advice is much appreciated
Talk to an elder attorney about the disable child exemption for Medicaid.
1. The 2007 - 2008 loan: I'm not clear how a loan could be made over a 2 year period unless you mean that the DRAWDOWN on the loan occurred over a 2 year period, or the loan was amended over a 2 year period.
2. Loans are collateralized when they're made. A Promissory Note EVIDENCES a loan and a mortgage SECURES it. It doesn't sound to me as if the loan was ever properly secured. (I capitalized these terms b/c they're so important and critical to the whole issue.)
(https://www.lawinsider.com/dictionary/evidence-of-debt)
3. I've never heard of this kind of delay in evidencing a loan. You'd need a transactional attorney to address even the validity of it. But transactional attorneys typically are involved in high end transactions, so you'd probably have a hard time finding one, just to determine whether or not your mother is legally bound by what little documentation there might have been.
4. There also may be a statute of limitations on evidencing a loan. Documentation through bank statements., etc. isn't evidence of the loan; you should have had a Promissory Note and mortgage, or Security Agreement (which is also used in loan transactions.)
5. The issue of being a resident in a nursing home raises issues of mental competency. This is something to first be addressed by a physician (as already noted).
6. As to verbal agreements for the $72K, did you check statutes in your state to determine if oral contracts were valid? They're not in all states. As to repayment, the issue of (a) a will or trust allocating funds for repayment, and (b) any other heirs to your mother's assets and estate are relevant. Again, the issue of collateralizing and securing the loan may come into play in terms of validity.
7. I'm kind of at a loss to respond to your legal action. Promissory Notes in my experience aren't filed with a court; they're private, and are held by the lender until the debt is satisfied. If they ever are filed with a court, it's been my experience that would only happen with litigation, such as foreclosure, or suing, and would be done to validate the existence of the debt.
8. A Promissory Note might indicate that a mortgage is also being executed to secure the debt. It's NOT a mortgage and does not create one, nor does it secure the debt. Even if you were to prevail in court, and the court ordered a mortgage to be executed, I've NEVER experienced any back dated mortgages, and if there are any liens filed from the time money was lent until a mortgage is filed, those liens would have superiority, i.e., they'd be paid back before the mortgage.
9. Generally, unless someone assumed a mortgage when purchasing a house after someone's death, it does have to be paid off. So that's almost a given when the house is sold.
10. Your inclusion on the deed wouldn't secure the loan; as I've written, a MORTGAGE secures the loan, not a deed, which evidences TITLE but not a loan.
11. I have no Medicaid experience and won't even try to factor that into the equation, other than to suggest that by the time your mother passes, there may be no value left in the home for either you or your siblings, so the issues may become moot. I hope that doesn't happen, but there are a lot of factors in play here.
Lsudvm, my comments are stern, intended to reflect the seriousness of the situation, but please don't take them as criticism. I struggled to find delicate ways to address your concerns, and they are valid.
Honestly, you really need a transactional attorney, or one who handles real estate financing at a level beyond purchase agreements; you need someone who has a good knowledge of collateralizing assets and the documents that support those intentions.
Louisiana has some what I consider peculiar procedures and requirements which govern real property. I wouldn't even try to determine if they would affect you and your mother's situation, or the eventual sale of the property.
Stacy has just raised another issue: factor in Medicaid and its priority lien. If your mother needs assistance long enough, the value of the house may not be available to you since a Medicaid lien would have priority.
That fact makes me think it might behoove you to get legal advice on whether or not to pursue the suit that's been filed, as I'm sure it's costing you attorney fees and funds that you could use for your own security.
Good luck, and don't be surprised if you get frustrated. This is a very complex situation.
Do you have a court judgement that she owes you this amount of money?
In all honesty I don't know who gets the proceeds of the estate of your Mom's home first, Medicaid or you. It's a good question.
I do believe whomever is the executor will have to sell the home, and that medicaid will be able to recover funds from that home upon its sale; if the house is left to all siblings in will, any one of them can force a sale. And I believe that, if you have already a lien on the home, you and the Mortgage holders, would, I assume be paid before medicaid is, but I don't KNOW that.
I would take the Court Judgement to a Trust and Estate Lawyer and find out who gets recovery on these funds first.
Dependent on the siblings feelings about this, and whether THEY are the executors or YOU are of your Mom's estate (which I assume is only her home), there will be a lot of turmoil over this after Mom's death. I sure do wish you luck. Some on Forum are quite knowledgeable in these things. I hope Mstrbill and Igloo are roaming about and can give you some ideas. But I think you are going to need either an Elder Law or Trust and Estate Attorney to look at all your paperwork.