Thursday, June 3, 2010
In Wolf v. N.Y. State Dep't of Health, the New York Supreme Court found that the state doesn't have to deduct reverse mortgage expenses when determining the value of a Medicaid applicant's life estate.
Faith Wolf reserved a life estate for herself when she transferred her house to her son and his wife. The Wolfs took out a reverse mortgage on the house and eventually sold the house for $575,000. After costs and deductions for the reverse mortgage, the net proceeds were $198,212.29. Mrs. Wolf later applied for Medicaid and New York imposed a penalty period because they found that the sale of the life estate was an uncompensated transfer.
The Wolfs appealed, arguing that the state should value the life estate at $41,624.58 rather than $120,750 due to all the costs and fees associated with the reverse mortgage. The New York Supreme Court affirmed, holding that the state did not have to consider the reverse mortgage when determining the value of Faith’s life estate.
See State Need Not Deduct Reverse Mortgage When Determining Value of Medicaid Applicant's Life Estate, ElderLawAnswers, May 28, 2010.