Should I Give My Home to My Kids?

Buying and owning a home is one of the most impor¬tant decisions you make in your lifetime. It’s a financial decision — the equity in your home can be one of your biggest investments, and it’s an emotional decision — this is where you live and raise your family.

On a regular basis I have clients ask me about giving their home to the children. They want to protect the home in the event they should some day need long term care, but they are confused about the issues and how to ac¬complish their goals.

In this article I will address a number of questions that are frequently asked by clients seeking to protect their home from long term care.

If I go into a nursing home will I have to sell my house?

No, the nursing home does not make you sell your home. How¬ever, it may be expensive and im¬practical to pay nursing home bills and the taxes and maintenance on your home at the same time.

If I apply for Medicaid benefits to pay for my long term care can I still keep my house?

Yes, as a general rule you can keep your home and qualify for Medicaid. Your home is an exempt asset as long as it is your residence, you intend to return to your residence and you have less than $500,000 equity in the home.

But won’t my home be subject to Medicaid claims?

The Department of Public Welfare is required to recover against your “probate estate” for Medicaid benefits paid on your behalf. Without proper planning, your home could be the biggest
“probate asset” you own and could be sold in your estate to reimburse the Medicaid program.
 
How do I protect my home?
There are a number of ways to protect the family home. Any good protection plan will accom-plish the following goals.

Probate Avoidance
The main goal is to create a form of ownership that will keep the home out of your probate estate. Remember that you can keep your home if you need long term care, but if it is in your probate estate it will be subject to estate recovery.

Medicaid Gift Rules
A transfer of your home could make you ineligible for Medic¬aid if you need nursing home care within the following 5 years. Good legal planning looks for exceptions to the gift rules, or seeks to minimize the value of the gift to trigger a shorter ineligibility period.

Control and Use
You will want to have a plan where you maintain the use and control of the property as much as possible.

Taxes
When you create a new form of ownership you will be creating a tax situation for your family. You can often choose between a long term capital gains tax situa¬tion or a Pennsylvania Inheritance Tax situation.

Where do we find answers to these questions?
We have been helping families like you with these and other Elder Law issues since 1990.  The Malee Law Firm has devoted its practice to helping you under¬stand your long term care options and protect what’s yours now. The earlier you act, the more options are available to you, but it’s never too late to plan

Resources: 

Womens Journal Jan-Feb 2009