Solving a Thorny Property Ownership Problem

1:10 pm Medicaid, Probate

Mom is in a nursing home. As part of an asset preservation plan, Mom’s house will be transferred to her children and she will apply for Medicaid benefits.

In digging into the matter, however, the family discovered that “Mom’s house” actually is titled in Dad’s sole name (Dad died in 1989) and Dad’s former wife, as co-owners. Mom and Dad have resided in that house since they were married and everyone assumed that when Dad died, Mom owned the house (as is typical when a husband and wife live in a property that they own together). However, Mom never was on the deed.

To make matters worse, Dad died without a will and nobody bothered to open a probate estate in 1989 to deal with the real property. Even more complicated is the question as to whether Dad’s former wife survived him, which would mean that the house belonged to someone else, and not to Mom.

So Mom’s children, with the assistance of legal counsel, had to undertake a “treasure hunt” to figure out who owned the property.

Dad, who, again, had died in 1989, had been married to another woman at the time he bought the house in 1939.

What needed to be done in this case, to resolve the property ownership issue, was to open a probate estate for Dad long after his date of death. That estate needed to be administered under the probate rules that were in effect in 1989, and not the current rules. Moreover, the family had to show that Dad was the owner of the house. In other words, they had to show that Dad’s first wife had died before he did.

While the family understood that Dad’s first wife had died long ago, nobody knew her Social Security number, so it was not possible to easily obtain a copy of her death certificate.

How could the family show that Dad’s first wife had predeceased Dad without a death certificate? What the family did, with my assistance, is to submit to the Register of Wills the following documents, among others, as evidence that Dad’s first wife had died before he did:

1. A copy of the deed under which Dad and his first wife acquired the property in 1937.

2. A photograph of the headstone for Dad’s first wife which listed her date of birth and her date of death in 1948.

3. A copy of a newspaper article published in 2011 and available online identifying Dad’s first wife as having been the first person to have died in 1948 from a particular communicable disease at a prominent health care facility, which article provided her date of death.

All of this evidence showed that Dad’s first wife predeceased Mom’s husband, thereby vesting title in the real property to husband as the sole owner. This evidence was accepted as conclusive proof of that fact by the Register of Wills and the Orphan’s Court.

Once ownership was established, for purposes of the probate, we had to establish the value of the property as of that date of husband’s death in 1989. Because Maryland allows assessed value to be used to value real property in a probate proceeding, we obtained a record from the Maryland State Archives in Annapolis showing the assessed value for the home property as of husband’s date of death.

Having established that the property was owned by Mom’s husband, and determining the value of the property as of husband’s date of death, because husband died without a Will, the property needed to be distributed according to the law of intestacy (i.e. the rules governing who inherits property in the absence of a Will) in effect in 1989, the year in which Dad died. Under those rules, Mom was entitled to receive only one-half of the house, and the children received the other half, divided equally among them.

Hence, through the probate process, half the house was transferred to Mom’s children automatically without adverse consequences to Mom’s eligibility for Medicaid benefits to cover her long term care costs. Moreover, as Mom was only a half owner of the house, the whole house could be protected using a number of different asset preservation strategies in the context of a Medicaid asset preservation plan.

This story gives but one example of the complexities that might arise when dealing with Medicaid planning and probate issues. William M. Gatesman has assisted numerous clients in navigating the these complex arenas.