Selling a House with a Life Estate

[jb4kats]

My question involves real estate located in the State of: North Carolina
We are in the process of selling my deceased parents home which my youngest brother was living in since my mothers death as he had a Life Estate. He lived there for almost 8 years and became disabled during the process and wasn't maintaining the property or himself, wasn't paying his bills, or the taxes and to avoid losing the house my sister has been paying them. He now lives in a state funded assisted living facility becasue he was on medicaid and had no other choice because of his health and brain injury. We weren't able to care for him as he was pretty difficult to handle at times.
We finally were able to sell the house and are waiting on closing next month but we have a few concerns that need to be addressed. When my mother died she had no debt and the house was paid for. Her death certificate and will was a matter of record at the courthouse and an ad was placed in the newpaper to make sure if she had any debtors to make claim against the property it was out there and it has been 10 years since her death so will the property have to go through probate now?
As the will stated my brother Bill could live in the house as long as he wanted but if he moved out of the house it would be sold and divided equally with the 4 siblings. When my parents drew up this Life Estate my parents had no idea the hardships it would bring because they had no idea Bill would end up with a brain injury and unable to care for himself and being on Medicaid you are not allowed to own any property but the only thing that has protected us this long is that the property is still in my parents name.
The house has sold and waiting on closing next month. The disbursement of funds is another concern as we are told his share will be more due to his life expectancy and he is only 54 so how do they calculate the percentage and won't Medicaid get his share? Social Services is now his legal guardian and he has been assigned a court appointed financial attorney to oversee any of his finances so will he get those funds olr do they go directly to Medicaid?
If anyone can help with these questions we would be most grateful.

[Mr. Knowitall]

Yes, Medicare will have a claim against his share of the proceeds.

I suggest getting a professional appraisal of the value of his life estate, something that Medicare would view as arm's length and credible. As he has a court-appointed conservator / "financial attorney", you may want to coordinate the appraisal with that person.

Also, if he's not competent to convey the real estate himself, his court-appointed conservator / "financial attorney" may be the person who has to convey his interest in the property on his behalf.

[jk]

first, the title of the property should not still be in your parents name. If it is, the life estate has not been legally created. Their should have been a deed written that conveys the property to you and siblings while reserving the life estate for brother. If this did not happen, you created a lot more work for yourselves.

then, you might have a problem with terminating his life estate without the courts intercession. Without reading the will and the deed that should have been created, I do not know if your terms are absolutely correct. Most life estates do not terminate if the tenant simply moves from the property. Even if this one does, does the fact you put the tenant in a state facility alter the dynamics of the situation? In other words, brother leaving the property was not of his own choice which might change how him moving out of the house is viewed. You did say that if Bill left the property, his tenancy would be terminated so, did Bill leave or was he removed? Beyond that, it generally requires a courts intercession to terminate a life estate. Since it appears the property was never properly deeded, the courts cannot enforce a non-existent deed.

Her death certificate and will was a matter of record at the courthouse and an ad was placed in the newpaper to make sure if she had any debtors to make claim against the property it was out there and it has been 10 years since her death so will the property have to go through probate now?

Um, are you saying your mother's estate was never probated? If so, then yes. Her will cannot be enforced without it being presented to probate which means, if you try to skip probate, you have a lot more problems facing you.

So, to start with: was probate ever opened for mom's estate? What about dad's? If not, then you have an additional layer of problems, depending on how title was held between mom and dad and if dad had a will.