Setting Value of Medicaid-compliant Promissory Note

• May 8, 2024 at 3:15 pm #33848
  Tyler Barrett

  Hello,

  I have a question concerning the valuation of a Medicaid-compliant promissory note. Client would be selling a house and stock account to her daughter. The home is encumbered by a HELOC, which the daughter was using to fund the client’s care. Can the value of the note be reduced by the amount of the HELOC?

  Tyler Barrett

  May 8, 2024 at 6:09 pm #33854
  Cynthia Letsch

  If it is the client’s house that has a HELOC, then isn’t it the client who has been using the funds to pay for her own care?
  A gift is calculated by its fair market value at the time of the gift. A gifted capital asset with a lien, mortgage, or other secured debt is calculated as the fair market value minus the security interest.

  I am not sure if that answers your question.

  May 9, 2024 at 12:12 pm #33859
  Tyler Barrett

  Cynthia,

  That does answer my question. Thanks so much!

  Tyler Barrett

  October 23, 2024 at 11:52 am #34971
  Richard Winblad

  Use caution as the promissory note may be seen as a “trust like device”

  The POMS defines trust-like devices as instruments which involve (1) a grantor (2) who transfers property (3) to a person or entity with fiduciary obligations (4) with the intention that it be held, managed, or administered by the person or entity for the benefit of the grantor or others. Id. §§ 1120.201 (B)(5) & (G)(1). A fiduciary relationship can arise where “one or each of the parties, in entering the transaction, expressly reposes a trust and confidence in the other or because of the circumstances of the case, the nature of their dealings, or their position towards each other, such a trust and confidence is necessarily implied.” United Jersey Bank v. Kensey, 704 A.2d 38, 44 (N.J. App. Div. 1997). In determining whether a fiduciary relationship exists, we must consider all the surrounding facts and circumstances relevant to the case. Clyde v. Hodge, 460 F.2d 532, 535 (3d Cir. 1972).
  Sable v. Velez, No. 10-4647 (3rd Cir. Jul 12, 2011)

  This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.