Medicaid sale of land with usufruct

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  • #3710

    panther685
    Participant

    Here is my situation. My grandfather is in a nursing home and has run out of money to pay for his stay there. We now have to sell his assets which are left. These assets (land) were donated to his kids (My father and his siblings) but a usufruct was setup for him.

    A lawyer has told us that our only options are to purchase the land at the cost of the usufruct which he is 86 years of age so it would be 0.33764% or our other option is to allow Medicaid to sell the land for us.

    My question is if Medicaid sells the land, do they keep 100% of the proceeds or do they only keep the 33% of the usufruct and the rest split between my father’s estate (my father passed away so this is me and my siblings).

    My grandfather is no longer in a state to decide on anything (Alzheimer’s) so getting him to agree to cancel the usufruct is not an option.

    I am open to any suggestions or info that you can provide.

    Help me OBI WAN You’re my only hope!!!

  • #3711

    Lex
    Keymaster

    First things first. Was the donation done outside the look-back period? Is that why the usufruct he reserved is being counted -and I assume the usufruct value is being counted as income to him.

    Is this correct so far?

  • #3712

    panther685
    Participant

    Yes, this land was donated well over 10 years ago but no one realized he had usufruct over the land until this point.

    Thank you for your reply.

  • #3715

    panther685
    Participant

    Any further input that any of you can provide would be appreciated. Thanks in advance.

  • #3716

    Lex
    Keymaster

    Medicaid kind of operates in a world of it’s own. We have had to get almost to the courthouse steps over disagreements about things that should be obvious.

    Anyway, for starters I don’t know where .33% or so is coming from for someone 86 years old. It should be more like .133 as a usufruct value.

    Medicaid, I don’t think, is ever going to be in the position of selling someone’s house for them -they just don’t do that.

    Typically they count some arbitrary amount as the “value” of a usufruct as being like rental value. If you have the usufruct of something in Louisiana, that gives you the power to rent and receive the income from that property. Medicaid therefore would say that if you have the usufruct of something that could rent for $1,200 a month, then we are going to count $1,200 against the annual income you are allowed to have. It doesn’t matter whether you are actually getting that much or even trying to rent -or whether it the real world the particular property could even be rented.

    We have had arguments with Medicaid on this very issue when, believe it or not, they took the position that a usufruct of a condemned house had rental value. In actual fact, it would be illegal to try and rent a condemned house, so by any reasonable line of thinking the usufruct value would be zero. We eventually prevailed, but it took months.

  • #3718

    panther685
    Participant

    href=”http://dhh.louisiana.gov/assets/medicaid/MedicaidEligibilityPolicy/Z-1300.pdf”>usufruct chart

    The chart above is what we were given as the usufruct guide on how much we would owe.

    I consulted a local lawyer (Lafayette) and they agreed that we must have all of the land appraised and then take that value to figure out what his usufruct value currently is. That value must be collected and used before he can qualify for Medicaid.

    If you have a different way to figure out how we can get out of this situation I am all ears.

  • #3719

    Lex
    Keymaster

    The usufruct value chart I was referring to is the way Louisiana calculated the value of the usufruct for inheritance tax purposes (back when we had an inheritance tax). It was, and still is, the way lawyers in Louisiana figure out what usufruct and naked values are worth. Someone 86 would have about a .133 value for their usufruct. Since the average life expectancy is about 82, even .133 was generous.

    Going by the Medicaid chart link you provided, it gives the equivalent .133 value from the LA inheritance value chart for someone 86 and says no, that is the value for someone 107 years old. It gets absurd if you try to picture all the 107 year-olds running around who would still have any usufruct value, much less over 10 percent.

    So, it is what it is: an extremely unfair and unrealistic value that Medicaid uses to come up with a value for an asset. I guess I’m not surprised.

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