Can I make a property transfer as POA?

4 answers | Last updated: Nov 06, 2016
A fellow caregiver asked...

I have power of attorney (POA) for my widowed mother-in-law who is in the advanced stages of dementia. She does not qualify for Medicaid but does not have the money for nursing home, 24 hour care, etc. The home in which she lives is in my husband's name. It was once in her name. We want to get a reverse mortgage on the house to pay for her medical bills and care. Being her POA can I transfer the house back into her name without her being present? She is incompetent.

Expert Answers

Barbara Repa, a senior editor, is an attorney, a journalist specializing in aging issues, and the author of Your Rights in the Workplace (Nolo), now in its 10th edition.

Reverse mortgages are rarely a good option if a homeowner is likely to enter a nursing home in the near future—or anytime within three years or so, so that may not be your best route.

If the borrower moves into a nursing facility permanently, the loan from a reverse mortgage must be repaid within a short time — usually a year or so. And if the home is sold, as is often the case when a homeowner makes such a move, the loan must be repaid out of the proceeds.

There are some additional potential drawbacks. Reverse mortgages are expensive to secure, usually involving high costs for processing, insurance, interest, and ongoing services that are added to the overall loan costs. Also, if the borrower leaves the home to family members or other beneficiaries, it will be encumbered with the reverse mortgage debt if it’s not paid off before death. Finally, equity borrowed as a lump sum or line of credit may be counted as an asset that affects eligibility for Medicaid.

For more information on reverse mortgages, contact Housing and Urban Development's Homeownership Center .

For basic information about other options for paying for long-term care, see Consumer Information About Long-Term Care .

Community Answers

Dwight gordon answered...

I agree 99% with Barbara Kate Repa's answer.

As far as I am aware, a Line of Credit which is in essence an ability to borrow money cannot be considered an Asset for Medicaid purposes. A Lump Sum payment AND a monthly payment not consumed which remains in the Senior's bank account CAN INDEED affect Medicaid eligibility.

The use of POAs with Reverse Mortgages is a very complex issue. HUD/FHA wants to be certain that a POA is used in a manner which is entirely in the Senior Citizen's best interest.

Generally, it must be reasonable to assume that the Senior was competent when the POA was issued. Furthermore, if the Senior isn't competent at this point, information must be provided that shows when that incompetence began. Usually a Physician's Letter is used for this purpose.

POAs must be durable, which means written in a way that allows their use when a Senior is no longer competent, and they must have the correct language that allows the POA holder to take out a mortgage.

The Pitfall here is that years ago, POAs were written very generally, such as "I give Person X authorization to do everything". State Laws and Rulings now require POAs to be much more detailed about what the holder can and cannot do.

Since your mother-in-law isn't competent at this point, should your POA be found to be not clear enough, there is nothing that you could do.

You would face another challenge because generally HUD/FHA does not allow Reverse Mortgages to be done if a home is suddenly put into a Senior's name. In this case, you might be able to get an exception, but there aren't any guarantees.

Putting the home INTO her name would not be an issue, as the "Grantee" or receiving party isn't an issue in this type of DEED. The question would be whether doing so would actually do any good.

You have a very difficult situation here. You did not indicate why your mother-in-law doesn't qualify for Medicaid at this point. It is certainly the case that were she to be moved to a facility in the future where Medicaid funds would be used to pay for her care, that Assets from the house would be used to pay for that care.

A key question would be if proper in-home care could be arranged, what funds would be forthcoming were a Reverse Mortgage to be put into place, and how long would such funds pay for the level of care she needs to stay at home.

A fellow caregiver answered...

Current HUD guidelines are quite clear, there must be a "seasoning" period of 6 months before a person can take out a reverse mortgage when just being added to a deed and another taken off. If your husband remains on the deed in a life estate, then you may be able to take a reverse mortgage, however, if your state is one with a state mortgage tax- that would have to be paid if your husband is under 62 years of age. If your Mother in law is in a nursing home, if that is what I am reading, that is considered her primary residence and she can not get a reverse mortgage. Since she is in advanced stages of demntia, a sale of the property may be the course of action if in fact she is in a nursing home. Unfortunately, some people are focused too much on what the heirs will be left with upon the persons passing and do not realize- it is about providing the best possible care and life for the person in question or whose home it is. Another possibility would be to have her move in with you and have nursing care in home. Selling her home to have the funds to pay for it. The statement that a reverse mortgage is costly is comparative. How costly is it to maintain the home for a year, do you have the financial where with all to do so, or is the situation a financial burden on you- these are things that the original answer did not take into consideration

While reverse mortgages are a fantastic way for Seniors to get additional income, and is also a wonderful tool to be used as part of estate planning, this is not a situation where one would be helpful.

Rainmand answered...

Being her POA can I transfer the house back into her name without her being present?

Yes. And there isn't any seasoning requirement, as another person indicated. You'll need to write a Letter of Explanation about her situation, and provide the Underwriter with confirmation shes been living in the property as her primary residence. Usually, the Underwriter will request 90 days of bank statements, utility bills, and will want to see her annual Social Security award letter. And her Drives License or State ID card must contain the property address. Additionally, two Doctors letters are required, stating the day she became incompetent. The POA will need to have been created while she was competent.