Estate Planning Advice: Should My Parents Give Me Their Home?

Long-term care can be very costly and it can quickly deplete a person’s life savings. Medicaid can help cover the costs of a nursing home, but only if the person going into care has limited resources. When someone owns a home, it is thus natural to be concerned about whether the house will be lost if nursing home care becomes necessary. However, in Florida, any homestead with a fair market value of $543,000.00 or less is considered an exempt asset for Medicaid purposes.

Often, parents own a home and give it to their children before going into a nursing home with the intention of “protecting” the home. Such a transfer could create significant tax implications and could potentially cause them to be disqualified for Medicaid. Therefore, while parents may have good intentions, the transfer of the home could have negative effects while not being necessary to “protect” it.

When an asset, whether a home or otherwise, is transferred to children or to anyone else for less than fair market value, it can result in a delay in Medicaid eligibility for nursing home coverage.  The length of the delay depends upon the value of the assets that are transferred. The total value of transferred assets is divided by the average cost of a nursing home in the applicant’s area to determine the number of months for which the applicant is disqualified from Medicaid coverage. For example, if a property worth $100,000 is transferred without value given and the cost of a nursing home where the applicant lives is $7,995 per month, then the applicant is disqualified from being eligible for Medicaid coverage for long-term care for 12.5 months ($100,000/$7,995= 12.5).

Medicaid has a look-back period of five years. Any transaction that occurred during that period of time will be considered by Medicaid during the application process. If the transfer of property or assets, or the sale of property for less than fair market value has occurred, benefits can be delayed.

There are planning techniques that can be used to avoid being denied for Medicaid while still protecting the money and assets acquired over the course of your lifetime. Our elder law attorneys also provide you with estate planning advice within the Medicaid planning process.

Call the Elder Law Firm of Clements & Wallace, P.L. to schedule a consultation with an elder law attorney to learn more about how to protect your assets while still qualifying for long-term care coverage.