Selling a car before applying for Medicaid.

First find out exactly what your State has as the max value allowed for a car to remain an exempt asset and still be ok for LTC Medicaid program. Bc if it’s above that value, it has to be sold with all the $ used in the spend down. Some Stats have this value quite low. If it’s under mom does have the choice to continue to own the car although she will have zero $ to pay any of its costs and then after death it becomes an asset of her Estate.

Now on the idea of car $ to Sissy, to me the issue will be that this does not necessarily “cure” the action that was done….. which would be the sale and changing of title on an asset…. AND then a separate action which was gifting of $ from mom to a daughter within the lookback period. Has this happened or is this still theoretical???

The caseworker will invariably have questions, so to me ya have to have to be prepared on the answers:
1. was the car sold @ Fair Market Value, which for cars is Kelley Blue Book Value? Or within 8-10% of the $ amount?
if so that’s great & let’s move on to….. if not, why not?
fwiw mom will have to provide all the paperwork on this to the caseworker who will be evaluating her overall application.
2. Was the precise sell $ amount paid deposited into mom’s bank account?
if not, what was the difference and do you have something legit to account for the discrepancy?
3. the $ from mom to her is flat out “gifting”, it is an entirely different action. & it is subject to a transfer penalty. This is a division type of math problem based on how your state pays for LTC Medicaid.
4. Sissy putting the $ back into moms bank account does NOT NECESSARILY “cure” the issue….. the caseworker may have to view it as purely new income to mom which makes mom over resourced for income and assets for her eligibility. Please please pls Do NOT do this until you know precisely how it will be evaluated to be viewed by Medicaid.

fwiw if it was that mom signed her car title over to this daughter, and the daughter realized the cock-up so transfer the title back to mom, for this scenario if it’s super recent then sometimes the caseworker can view it as “no harm, no foul” and allow the car to continue to exist as a exempt asset in the moms name. The issue with real property - land, autos, homes - is that they have paperwork filed with the State that’s irrefutable so how their transfer were done.

Transfer penalty is basically based on the $ amount the State pays a facility for room&board daily reimbursement. It’s a division problem.
So let’s say the car was $23,456K as per KBB. And your State pays the NH $300 a day; it’s a 78 day transfer penalty that starts as of the day they file the LTC Medicaid application. 78 DAYS & which mom needs to have someone in the family pay for her stay because in order to even file she has to be “at need” financially which for the vast majority of States is no more than $2,000 in non exempt assets. So mom will by & large have zero $ to pay the NH during the transfer penalty period. The caseworker may just have to have this mom do the 78 day transfer penalty as this State is a stickler on rules.

OP, how far off on the horizon is mom for need to be in a SNF?
a lot of these issues can sort themselves out over time.

You have a couple of options here. Like don't sell the car. A person can own one car and be on Medicaid. Then have the daughter insure the car in her name and drive it indefinitely.

Or

If the car is paid for and you literally have the title, put the daughter's name on the back in the spots for lien holders. Then of you have POA, you and her can go directly to the DMV and you transfer the title into her name. She will own it outright then.

Medicaid is not going to come looking for a car. They don't concern themselves with small things like that. A NH, AL, or MC does. They don't even come into the picture until a person is in a care facility and that facility has bled their assets dry.

Transfer the title of that car. Then tell the daughter it's intended for to hang on to it for a while and not sell it. When your mother has been Medicaid-approved then the car can be sold because the daughter has the title so she owns it.

Make sure her name is on it as a lien holder on the back of that title before you transfer it. Post-date it on the line next to her name for whatever date you want. It will be fine.

Why would she pass that money to her daughter when she needs it herself?

When we had a garage sale of my MILs household and van before she moved to AL, we kept all that cash out of her bank account (it wasn't that much money) and then as she needed her Resident's Trust fund to be replenished, that's where we applied it, a little at a time. Whoever is your Mom's FPoA could manage this situation and make sure the funds go to benefit her.

Or, she could use the procedes to purchase pre-paid funeral insurance and this is allowed by Medicaid (we just did this for my MIL, it cost $2,700 where we live).

I think it does matter whether the cash for the car sale is $500K or $15K... Your Mom should sell her car at FMV and use it to benefit herself and not gift it to her daughter who is still working (I assume).

Medicaid has a five year look back into an applicant’s finances. Any transaction your mother has done in the last five years will be reviewed, including selling a car. Be sure it’s sold at fair market value to avoid issue and know hiding the money will be a problem