Protecting the House from the Nursing Home

Many clients ask, ” Do we have to sell their loved one’s house when she enters a nursing home?”  Our response is usually, “Not necessarily”.

One of the ways to avoid a sale, is to use the Five Year Plan when doing Medicaid Planning.  This strategy entails the transfer of the house at least 5 years before the loved one files for Medicaid. The transfer does not need to be disclosed since it was transferred before the Medicaid look back period of 5 years begins.  For example, if the parent’s house is transferred to the kids or other transferee on September 1, 2017 and that parent does not file a Medicaid application until October 1, 2022, then the house is clear of any Medicaid forced sale.

Another strategy is to transfer the house to a person with a disability or that person’s Special Needs Trust.  This can be done at any time-even within the 5 year look back period.  The person with a disability is usually someone who has been declared disabled under the Social Security regulations.

Still another way is to declare  on the Medicaid application that the person intends to return to the house.  We try to insert in the estate planning documents of the person going into the nursing home a paragraph that states that she intends to return home when she goes into hospice or upon some other contingency.  This strategy is not full proof and probably will meander through the many Medicaid stages of appeal if it is to work at all.

What if I was the caregiver for my mom? The house can also be transferred without penalty to a child caregiver  if that caregiver has provided caregiving for that person for at least 2 years prior to entry into the nursing home and has lived in the house during those last 2 years.  Medicaid does scrutinize this type of transfer, thus documentation on caregiving, such as a written contract, and the living arrangements must be in place.

Finally, even if the circumstances dictate the selling of the home, there are  ways  to save a considerable amount of the proceeds from the sale from being spent on nursing home care.

 

 

William S. Wilson of Wilson and Wilson Estate Planning and Elder Law, LLC. concentrates his practice in the areas of Medicaid Planning and Special Needs Planning.  To reach Mr. Wilson email him at wwilson@wilsonwilsonllc.com or at 708-482 -7090.

 

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