My father is in a NH and in order for him to qualify for his Medicaid, he sold mineral rights to my mother. She now is sole owner of these minerals and in 2019 she received approximately $14,000.00 in dividends. Now, the checks have dropped back down to around $125.00 monthly.
Will my mother have to file single, head of household or how should she file?? I can't allow anything to disqualify my dad from medicaid. HELP!!! ANY SUGGESTIONS??
Just did some quick checking. Sale of mineral rights could be considered sale of business property, raising the issue of whether it's a gain or loss and whether it's an operating and income producing business venture.
I have no idea whatsoever how Medicaid would treat an operating, income producing, or losing, commercial venture in mineral rights.
I have vague recollections about the issue of mineral rights values during real estate transactions, including whether or not the rights actually passed to a new owner if a property subject to mineral rights was sold. That was quite a while ago though.
And I also have vague recollections of prohibitions on sales of mineral rights in some states. And while I don't claim to have any insight or expertise on this issue, I believe there may be considerations of whether or not the wells are still viable and producing, affecting their value, and perhaps linking to the issue of a business sale consideration.
This is a highly complex area; you need an accountant familiar with mineral rights to guide you and probably an elder law attorney after that to address the issue of business income, producing well, gain or loss. Otherwise costly mistakes could be made.
https://www.irs.gov/irm/part4/irm_04-041-001
See this site, toward the end of the article:
https://www.caddominerals.com/resource-center/resources-for-owners/tax-forms-all-mineral-rights-owners-should-know-about/
I know nothing about it, just that this concept does exist.
I searched for "Community spouse assets".
Taken from that article:
"An important feature of the Medicaid laws is that transfers between spouses are permitted, are not subject to the look-back period and thus do not result in any penalty. In the case of a married couple, one basic Medicaid-planning strategy is to transfer any assets that are in the name of the spouse who needs care to the name of the well spouse. (In cases where the ill spouse is in an institutionalized setting like a nursing home and the well spouse remains in their home in the community, the well spouse may be referred to as the “community spouse”).
See a tax CPA specializing in "community spouse".