Tenant concerned about conservator taking over ownership of aunt’s home

Q: A conservator has taken over my aunt’s house that I have lived in for almost 30 years. I had power of attorney for 20 years, but my name has never been on the deed to the home. The home has a $10,000 mortgage on it. If I pay the rest of the mortgage, would that give me any ownership rights to the home? I am in my aunt’s will to inherit the house. Would a beneficiary interest give me any rights?

A: It is unfortunate that you’ve waited so long to do anything on this issue. But, let’s start at the beginning.

The home is owned by your aunt. You’re merely a resident in the home; more like a tenant. There isn’t much you can do to become the owner of the home until she dies or unless you buy it from her. More on that in a moment.

You mentioned that the home has a mortgage. Who pays that each month? Even if you write the check, or pay off the mortgage, it wouldn’t confer ownership of the property to you. All you have done is pay off a debt owed by your aunt to the mortgage company. As an occupant or tenant, there isn’t anything that would give you an ownership stake in the home.

Think about it: If this were the case, all sorts of people (tenants, occupants, friends, etc.) we allow to use our homes could do the same and give themselves an ownership interest in our homes.

You mentioned that you will inherit the home when your aunt dies. If that’s true, and it’s written in a valid will, you will become the owner when she passes. But, not before.

You seem to suggest you should have done something when you were the power of attorney for your aunt. We wouldn’t have advised that. Using a power of attorney to transfer ownership of your aunt’s home to yourself would have been a conflict of interest and a gross violation of the trust she placed in you.

Why is your aunt in a conservatorship? We suspect that health issues mean your aunt is no longer capable of managing her affairs. What’s unclear is why you no longer have the power of attorney. Do you have a good relationship with your aunt’s family? Will anyone object to you getting her home after she dies?

Does your aunt need money to manage her health care? If so, the conservator may sell your aunt’s home. And, that’s appropriate, if she is no longer living there and needs cash. While your aunt is alive, the house is hers. It is her asset and remains part of her estate. She or the conservator can sell it or otherwise dispose of the home as she might wish.

Perhaps you suspect this is what will happen to her home. Unfortunately, there is little you can do at this time. Your aunt’s conservator and family could decide to transfer ownership of the home to you, but if your aunt’s financial situation is such that she will need to rely on Medicaid eventually, then all of her assets will need to be evaluated and perhaps sold.

Each state has specific Medically Needy Income Limits (MNIL) for Medicaid. These are financial requirements someone must meet to qualify for care. In addition, Medicaid has a five-year lookback rule. When someone applies for Medicaid, the government may look back as far as five years to see what assets were available to be used to pay for care and how they were spent or transferred to another person. If Medicaid suspects an applicant’s assets were transferred incorrectly or fraudulently, it can try to claw those assets back and use them to pay for care.

We don’t know enough about your situation to guide you. But we think you might want to consult with a real estate attorney or an estate attorney to understand some specific options that are available to you. You might also want to speak with your aunt (if you can) or her family to understand whether there is a consensus that you should receive the house now, rather than after she has passed.

But as we’ve written about many times, every action has a reaction. If you get the house before she dies, there may be federal and/or state tax consequences if you decide to sell the home within the next two years.

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(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)