Legal Question in Real Estate Law in New Jersey

Re: Living Rights Trust on a Deed

Your reference to "living trust rights" makes things unclear but I happen to know Miriam Jacobsen personally as a wise and experienced attoorney (although that says nothing about her age because she graduated Law School at age 12)and would go with her Judgment that it is a Life Estate.

Medicaid qualification is a legitimate concern but it's also an area of the law that is very difficult to generalize about because it is a cooperatively administered program by the federal government and the states. In areas the feds choose not to regulate, decisions are left to the states and sometimes they overstep their authority and enact regulations that contradict federal policy. For instance, NJ tried to force the sale of homes if the sole owner went into a care facility but the Feds put their foot down and stopped that one.

In any case, Medicaid regs nationally recently changed and it is a 5 year look back for all transfers, not just trusts as it used to be. You are beyond that time limit and Medicaid does not consider a life estate to have any value so you seem to be in the clear. Logically it would seem immaterial if your Mom quitclaimed and then you gave her a Deed back for the same life estate she gave up. It should not have any effect in making the property subject to a Medicaid lien on account of care your mother may eventually receive. But our logic and the government's are sometimes at odds so you can do one of two things:(1) go to your bank officer's superior who should understand there's no reason to quitclaim the property; as Ms. Jacobsen said, Mom can just sign the mortgage unless the bank is an "in portfolio" lender meaning they keep the loan rather than sell it and don't want to have to foreclose on a Sr. citizen. Not good local public relations iif that hit the papers. If this is so, consider another lender OR (2) regulations allow you to seek an opinion from Medicaid authorities that is binding and which you can rely upon. If you put the "Quitclaim out and then back to Mom again" question to them they very well may give you an opinion that it has no effect but make sure it's in a letter or signed document from the County Director or his/her designee to be binding.Still the cost of preparing the Deeds and recording them is going to be $300.00 or more and it's not necessary. I'd go to another lender before I did that.

P. S. I'm required to tell you that my saying Ms. Jacobsen graduated Law School at 12 was a joke but she's still a very youthful, experienced lawyer. *grin*

Re: Living Rights Trust on a Deed

I assume that you mean that your mother has a life estate in the property she gave to you, meaning that she has the right to live in and use the property for the rest of her life.

Try asking the lender if your mother can just sign the mortgage with you [she should not sign the note if it is only your obligation]. This would give the lender the security it needs in the property, but would not require her to go out of title.

I am not an Elder Lawyer, so am not sure how this would affect her eligibility should she need nursing home or similar care.

Re: Living Rights Trust on a Deed

While I generally agree with Miriam, the problem may not be your mother's life estate, but the fact that the house is owned by a trust. Many lenders are fearful of financing property owned by trusts, as it makes foreclosure very complicated in the event of a loan default. This is especially true if the trust is irrevocable. Additionally, home fire and liability insurance is sometimes also difficult to procure. Since Medicaid coverage for your Mom appears to no longer be an issue, is there any reason to continue the trust? If this is no longer a concern, and you have sole rights to the house, should you find financing to be difficult, merely have the trust Deed the house to you, so you own it individually, but keep the life estate language in the new Deed. You have obligations to your mother that cannot be thwarted and she needs this protection.