If a parent is transferring to a nursing home, you may ask if her home must be sold.
It is common in a parent’s later years to have the parent and an adult child on the deed, with a line of credit on the house. As a result, there’s very little equity.
Seniors Matter’s recent article entitled “If my mom moves to a nursing home, does her home need to be sold?” says that if your mother has assets in her name, but not enough resources to pay for an extended nursing home stay, this can add another level of complexity.
If your mother has long-term care insurance or a life insurance policy with a nursing home rider, these can help cover the costs.
However, if your mom will rely on state aid, through Medicaid, she will need to qualify for coverage based on her income and assets.
Medicaid income and asset limits are low—and vary by state. Homes are usually excluded from the asset limits for qualification purposes. That is because most states’ Medicaid programs will not count a nursing home resident's home as an asset when calculating an applicant’s eligibility for Medicaid, provided the resident intends to return home.
However, a home may come into play later on because states eventually attempt to recover their costs of providing care. If a parent stays a year-and-a-half in a nursing home—the typical stay for women— when her home is sold, the state will make a claim for a share of the home’s sales proceeds.
Many seniors use an irrevocable trust to avoid this “asset recovery.”
Trusts can be expensive to create and require the help of an experienced elder law attorney. As a result, in some cases, this may not be an option. If there’s not enough equity left after the sale, some states also pursue other assets, such as bank accounts, to satisfy their nursing home expense claims.
An adult child selling the home right before the parent goes into a nursing home would also not avoid the state trying to recover its costs. This is because Medicaid has a look-back period for asset transfers occurring within five years. This means that any transaction that occurred within the last five (5) years will be disregarded for purposes of calculating eligibility for benefits.
There are some exceptions. For example, if an adult child lived with their parent in the house as her caregiver prior to her being placed in a nursing home. However, there are other requirements.
Talk to elder law attorney to find out what the asset and income exemptions are. This will help you effectively plan for the future for yourself or deal with a more emergent situation for a parent. Schedule a call this week that is convenient for you.
Reference: Seniors Matter (Feb. 25, 2022) “If my mom moves to a nursing home, does her home need to be sold?”
Legal problems are extremely stressful, especially when your family, your health, or your freedom are at stake. At this point in time, you may not even be sure what kinds of questions you need to ask a lawyer, but that’s entirely normal. Whether your situation involves family law, estate planning, elder law, a criminal charge, or a personal injury, we will start by giving you all the information you need.
The way we see it, you deserve to get this information directly from an expert. That’s why we make it easy for you to get in touch with your lawyer, and we never ask you to sit down with a paralegal or assistant instead.
As our relationship continues, we will keep you updated about the status of your case every step of the way. Your lawyer will reach out regularly to tell you about any new developments, and he will also be happy to answer any questions you have throughout the process.