Elder Law is the fastest growing segment of Beck & Lenox Estate Planning & Elder Law’s practice. A question like, “Must I sell parent’s home if they move to a nursing facility,” is one heard almost on a daily basis.
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. Missouri has not actively done that in years past, but we are told that the state is intending to make those claims in order to recoup its costs.
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 because Medicaid has a look-back period for asset transfers occurring within five years.
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, the house may be saved from Medicaid recovery. Certain conditions have to be met.
Talk to elder law attorney on the best way to go, based on state law and other specific factors. You can find an elder law attorney at the National Academy for Elder Law Attorneys. Unlike Beck & Lenox, however, not every elder law attorney handles Medicaid planning.
Reference: Seniors Matter (Feb. 25, 2022) “If my mom moves to a nursing home, does her home need to be sold?”