There are a number of potential COA's in trying to "protect" your home and still qualify for medicaid. This article discusses several options.
-- By K. Gabriel Heiser, Attorney
"Should I put the kids' names on the deed?" "Should I take my wife's name off the deed?" "Should I just sell the house now?"
These and similar questions are some of the most important that clients ask me, because they relate to the single biggest asset of most people applying for Medicaid, i.e., the family home. So, what is the best way to title the house?
If you are married, it is almost always best to title the house in the sole name of the Community Spouse (i.e., the healthy spouse). If it is currently in the joint names of both spouses, a new deed will have to be drawn up to accomplish this, which both spouses will need to sign. This is where you'll be glad if the nursing home spouse signed a power of attorney allowing someone else to sign the deed on her behalf. Without this, if the nursing home spouse is unable to understand the nature of the deed, she cannot legally sign it, and the only way to transfer the property would be to have a conservator appointed for her and to get court approval. That's both expensive and time consuming.
When a child's name is added to the deed, the parent has made a gift to the child, of a percentage interest in the house. The presumption is that adding one child to a deed gives the child a 50% interest. So if the house is worth $250,000, adding one child to the deed makes a gift of $125,000 to that child. Such gift will then cause disqualification from Medicaid eligibility for a number of months, and if either spouse applies for Medicaid within five years of the gift, the penalty won't start running until the date of Medicaid application.
The downside of adding a child's name to the parent's house deed is that if that child is divorced or sued, the ex-spouse or creditor may be able to attach the child's interest in the house. That could force a sale of the house, putting the parents out on the street! So there is some risk to doing this.
A better solution is to deed a "remainder interest" to a child (or children). This simply means that the current owner of the house signs a deed that says the child only gets title to the house upon the death of the parent. Until that time, the parent retains the absolute right to live in the house. So no divorcing child or creditor of the child can force a sale of the house. Upon the parent's death, the child automatically owns 100% interest in the house.
The gift of the remainder interest described above also causes a gift to be made: the older the parent, the higher the percentage gift (it's less than 50% until the parent reaches age 77).
Selling the house converts what would otherwise be an exempt asset into countable cash. However, sometimes this is the best solution, since it allows the family to make gifts of part of the cash and use the balance in a Medicaid-friendly annuity, or utilize other planning techniques, that would not be available if the house were not sold.
As you can see, the answer is not so simple! As usual with such things, the correct solution depends on the interaction of many factors: the total assets of the husband and wife, their living expenses outside the nursing home, expected nursing home costs, how long until they may enter the nursing home, the health and life expectancy of each spouse, whether they really want to retain the "old homestead" or are willing to sell it, and the value of the house itself.
To decide on the best solution today, while preserving flexibility should circumstances change, the entire family may need to sit down with an experienced elder law attorney, go over all the options, and come up with a plan of action.
K. Gabriel Heiser is an attorney with over 25 years experience in elder law and estate planning. Heiser is the author of “How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets,” an annually updated practical guide for the layperson. For more information about this book, visit Medicaid Secrets.
We'd love to hear your questions, comments or opinions. Submit them here and other visitors can read them and comment on them. An e-mail address is not required.
Click below to see contributions from other visitors to this page...
What can I do with Dad's house and not affect medicaid?
Question: My 84 year old dad was recently placed into a nursing home, with the medicade application pending. he owes 32,000 on his house, and The …
Mother & Father on Medicaid, Father died....
My dad had a major stroke over 2 years ago and was in a nursing home where he passed away Dec 14th, 2010. He had qualified for medicaid and the home and …
Process to place only parent in a nursing home
What is the process to place an ailing mother in a nursing home. How can she become eligible for medicaid? Please help me to understand what needs to …
Can State Force Sale of Joint Home to Pay Medicaid?
My sister and I have a deed of remainder fee simple on the home she lives in in Kentucky. We are both getting up in age. Should one of us have to …
Can Medicaid come after me if I sell my dad's house less then it is worth!? Not rated yet
I am POA and found a nice person interested in my fathers home. He just got placed in a nursing home long term. My question is will medicaid come after …
"Half-a-Loaf" Medicaid Planning Not rated yet
Question: My inlaws are in a nursing home and did not sign the house over to my husband before they went in. They are wanting to sign it over to …
Medicaid Planning: Life Estate in House | Does the $13,000 Gift Tax Exemption apply to Medicaid? | Medicaid and Community Spouse Assets | Planning For Medicaid Coverage | Effect of Life Insurance Proceeds On Medicaid Eligibility | New Medicaid Annuity Rule Explained | How Can an Irrevocable Trust Be Used in Medicaid Planning? | Selling the House and Medicaid Qualification | How To Qualify For Medicaid If My House Is Worth More Than $500,000? | What is Elder Law? | Living Trust and Medicaid | What Is An Inheritor's Trust? | Should I Take Out a Loan Against My House to Pay For A Nursing Home? | Can I Give My House to My Child and Qualify for Medicaid? | Elder Care Lawyer Fees | Choosing A Nursing Home | Do I Need a Will? | Capacity To Sign a Will, Trust or Power of Attorney | Second Marriage Will Issues | Special Needs Trust Issues | What is a Common Law Marriage? | What is a Medicaid Annuity? | How does a Medicaid Annuity Work? | Medicaid and Spousal Will Election | Do It Yourself Medicaid Planning | Medicaid Rules and Reverse Mortgages | How Does Life Insurance Policy Ownership Affect Medicaid Eligibility? | Medicaid Estate Recovery Rules | Medicaid Estate Recovery Planning | Limitations on Medicaid Estate Recovery | Do Medicaid Plans Work? | Nursing Home Costs and Payment Options | Don't Be Too Cheap! | What Happens to My Home If I Go On Medicaid? | Can Spouse Receiving Medicaid Pay Income to Community Spouse? | Will Medicaid Exempt My Home If I Leave It? | Tips for Discussing Wills and Powers of Attorney With Your Parents | Elderly Marriage Issues | Durable Power of Attorney Medicaid Considerations |
From How To Protect My Home and Still Qualify for Medicaid to Medicaid Questions | Estate Planning Blog | Basics of Estate Planning | Selecting a Financial Planner | Estate Planning and Taxes | Is This Good Time to Buy a House? | Incorporate My Business | Best Low Cost Investment | Fringe Benefit Plans | Estate Planning and Charitable Giving | Health Insurance Comparisons | Best Medicare Supplement Plan | Retirement and Estate Planning | What is a Power of Attorney? | Current Estate Planning News | Estate Planning Forum | Estate Planning Books | Choosing an Estate Planning Attorney | Find a Probate Attorney | Estate Planning Questions |
|--by Beth Heikkinen|
|I just want to thank you for this site. It answered my questions. I think many people that do research on the net take it for granted and when they find what they are looking for they forget "someone put time, money, etc into providing me with this information."|