Monthly Archives: March 2010

Check your Cook Co. 09 tax exemptions online

If you bought a home in 2009, refinanced your mortgage in 2009 or recorded a deed into your living trust in 2009 please be sure to check to make sure that the county didn’t take away your homeowner’s exemption.  This video,  Tax Exemptions , explains that the county was yanking the homeowner’s exemptions of homeowners who refinanced. If that is the case, you must apply for a certificate of error to replace the exemption for 2009.

The Cook County Assessor’s website will now tell you if your 2009 exemptions (senior, senior freeze, homeowner’s and long-term occupant) are in place. Just click this link and enter the PIN for your property.

Generally,  homeowner’s do not need to re-apply for the homeowner’s exemption every year, unless the property was sold the prior year (or one of the other activities above happened). The senior freeze must be applied for every year.

On the subject of real estate taxes, there is a seminar at 7:30 pm on March 31 at the Village of Palatine Council Chambers on “How to Appeal your Real Estate Taxes Before the Board of Review” that may be worthwhile if you feel (like everyone) that you are over taxed.

Short sales improving

In the last few weeks, short sales seem to be easing up a bit, meaning that some are actually closing.

It seems that lenders are finally understanding that with prices in a free-fall, it’s better to allow a short sale than to let a property go through foreclosure.

The new short sales rules will begin next month. The greatest promise of the new short sale rules is that the lender will order its broker price opinion (BPO) before a contract is obtained by the seller and will actually tell the seller how much it wants to net from the short sale. While this sounds minor, it is huge. In the past, lenders would play a guessing game and would refuse to disclose how much they wanted to net from the short sale.

This WSJ article suggests that clients wait to list short sales until the new rules hit. I would say go ahead and try to list it now. Don’t wait.

Last week I closed a short sale.  My client had three prior contracts fall through. Buyers signed contracts, waited 45 days, and then jumped ship quickly.  All short sale buyers  say that they will be patient, but in reality they are as nervous as alley cats. On the fourth contract, we finally closed.  It took 7 months total. The lender did not ask for a note or cash payment from my client.  It was a deficiency short sale, meaning the lender could pursue my client after closing for the shortage, but my client was willing to accept that risk.

How do I get a free nursing home?

“How do I protect my assets so that the state doesn’t get everything if I have to go into a nursing home?” This is, by far, the most common question that I answer.

I prepare many living trusts for clients, so this question comes up almost every time I meet with a client. It’s really hard to answer, and every time I hear it, I kind of cringe. The answer will not be what people want to hear. As I explain, clients stare at me with a glazed over look like, does this guy know what he’s talking about?

Here is what people are afraid of: The average cost of a nursing home is $219.00/day and rising. That’s almost $80,000.00 per year. The average nursing home stay is 2.5 years.

No one’s fondest dream is to see their assets depleted by a nursing home. But, in this Tea Party age with constant calls for limited government spending, I am always surprised that so many people think that long-term nursing home care is something that they should not have to pay for, or that they can easily qualify for by a simple legal maneuver.  I think a person’s money should be used to make them comfortable in the best environment that is affordable. In reality, medicaid is a safety net program for the truly indigent.

On the other hand, health insurance covers you when you are sick… why should long-term nursing care be any different from  having your gall bladder removed or any other illness? I don’t know the answer to these tricky questions.

But here are some of the answers to why it is now hard to qualify for medicaid:

Does my living trust “protect” my assets so that I can get medicaid if I need it?

No, a living trust will not help qualify you for medicaid.

Is there a type of trust that I can use to qualify for medicaid?

Yes, there is an irrevocable, medicaid income-only trust. You cannot be trustee. You can’t change the trust. You can only get the income from your assets. I rarely use these because they are very restrictive.

What assets can I keep and still qualify for medicaid?

You can keep $2000.00 in assets and a prepaid funeral. A house is exempt too, but only temporarily. After 6 months in a nursing home, it is presumed you will not return to the home and then a lien can be placed on the house. (There are other rules for married couples.)

Can I give away my assets and qualify for medicaid?

If  you have ESP and know when you will need medicaid and don’t mind parting with all of your assets then, yes, if you gift away all of your funds 5 years or more before you need a nursing home, you will get the free medicaid nursing care. Other than that, it is very hard to protect your assets in such a way that you will qualify for medicaid.

Does medicaid keep my pensions and social security if I qualify?

Medicaid will take all social security income, pensions and other income except for $30.00/per month.

Why is it harder now to gift assets and qualify for medicaid?

This has to do with the so called “penalty period.”  When someone applied for medicaid under the old law, your checking accounts and other bank statements were checked for the last 36 months for gifts or transfers to family members or others. This is called the “look back” period. Medicaid did not care about gifts made more than 36 months prior to the medicaid application. So if a gift of $50,000 was made more than 36 months before the medicaid application, the applicant would qualify for medicaid. If they found gifts within the 36 months then there was a “penalty period.” Under the old law, the penalty period started when the gift was made. In Illinois, the penalty amount was about $5000.00 per month, so if you gifted $50,000.00 within the 36 month look back period, you were penalized for 10 months from the date that you made the gift and after that you would qualify for medicaid. Confused yet? If not, you are a savant…It was easy under the old law to made gifts over time and still qualify for medicaid.

Now, the look-back period is 60 months. Worse yet, when a gift is made, the penalty period now starts when the client enters the nursing home. So, if a client gifts $50,000.00, the penalty period of $5000.00 per month will make the client ineligible for medicaid for 10 months from the date they enter the nursing home. This makes gifting away assets an almost unusable strategy.  The current laws encourage people to buy long-term care insurance and make it hard for those with substantial assets to gift the assets and still qualify for medicaid.

So how am I supposed to pay for a nursing home if I need it?

There are only three ways to pay for long-term nursing care:

1. Use your own funds to pay for care, or self-insure.

2. Buy long-term care insurance to cover some, or all, of the charges. Some clients buy long term care insurance to cover their expense for 3 to 5 years, which carries lower premiums than a lifetime benefit.

3. Have medicaid pay for your care.

Should I buy long-term care insurance?

If you can self-insure, then you won’t need long-term care insurance.

Anyone with assets of $1 million or more can probably safely self-insure.

Those with assets of $1 million or less, should consider some sort of long-term care insurance.

One less quirk to buying a Fannie Mae foreclosure

Last fall, I whined about how hard it was to buy a foreclosed property from Fannie Mae. It’s still true that Fannie Mae is a tough seller and a pain to buy from.  (I have a Fannie Mae purchase now.  It’s been weeks, but there is no signed contract. Unfortunately, that’s “normal”… )
Now I have one less thing to complain about: Fannie Mae (in its infamous and incomprehensible “Addendum”) now agrees to will dewinterize the property after the contract is signed so that the buyer can inspect the property with all the utilities running. This is not exactly a breakthrough at the Paris Peace Talks or anything, but it sure helps.
Previously, the poor buyer had to have a plumber on hand when the property was dewinterized and, more often than not, leaks sprang from every corner of the house. It was a major misadventure just to get the utilities turned on to do an inspection.
Fannie Mae owns more than 50% of all mortgages and there are many foreclosed Fannie Mae homes on the market. This should make it a little easier for buyers to complete Fannie Mae buys without added aggravation.
Here’s the new clause for your reading pleasure: