How Should I Protect My Home Against Nursing Home Costs?

Posted on: May 15th, 2011 by Lawrence A. Friedman

  Unless you have long term care insurance, you or your family must fund your long term care privately until you qualify for Medicaid.  As further explained at FriedmanLaw’s elder law page, to qualify for Medicaid, your Medicaid countable income and resources must be reduced to modest program limits although our Medicaid plans usually can help families preserve substantial amounts. 

 Titling your home to your children may protect against long term care costs but can be fraught with danger.  Once you give your home to your children, they own it and can sell the home out from under you or simply force you to leave.  Even if your children would never voluntarily do such a thing, your children may have no choice if they get into financial difficulties.  Similarly, a child’s spouse or other beneficiaries could evict you if your child passes away after taking title to your home.

 Gift your home and you give up equity you may want for purchases or to move to an adult community, warmer climate, or more accessible home.  Due to complexities in the Internal Revenue Code, gifting your home can lead to taxes on its eventual sale that otherwise might not arise.  Finally, most gifts temporarily disqualify the donor for Medicaid if made during the look back period (currently 60 months) although there are exceptions as further explained at FriedmanLaw’s elder law page

 A life estate deed can preserve your home even if you later require long term care but protect you against being thrown out of your own home.  A life estate deed gives you the right to live in your home or rent it, but transfers to the grantees (typically your children) all ownership rights once you pass away.  Like all Medicaid planning techniques, life estate deeds have both advantages and disadvantages and are effective only if properly designed and executed.  If you wish to discuss your Medicaid planning options, contact FriedmanLaw at 908-704-1900.

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As this website provides general information and isn’t tailored to your particular situation, it doesn’t constitute legal advice and may not take into account rules and exceptions that affect you. Although updated from time to time, this website may not take account of recent legal developments or differences in laws from state to state. For safety sake, obtain individual legal advice before you act! You assume all risk of acting on information contained in this website. This website doesn’t constitute legal advice, and no attorney-client relationship exists unless FriedmanLaw and you execute a written engagement agreement. Please contact us at 908-704-1900 to discuss engaging FriedmanLaw to help resolve your legal concerns.
Homepage photo: Cows grazing at Meadowbrook Farm, Bernardsville, NJ by Siddharth Mallya. October 23, 2012.
Interior photo: Somerset hills pastoral scene by Lawrence Friedman.