As you face the reality that either you, your spouse, or both of you might need long-term care, finances are likely to be one of your major concerns. Skilled nursing facilities are extremely expensive, and even assisted living facilities are far out of some individuals’ reach. Fortunately, Michigan’s Medicaid program does offer coverage for expenses related to long-term care. However, there are strict eligibility requirements for Medicaid, both in terms of your income and your assets. Therefore, if you own a home, you are likely to have many questions about whether you can keep it, give it to your children or another close relative, or be forced to sell it and spend the proceeds before qualifying for Medicaid coverage.
As part of your eligibility assessment, the state Medicaid agency will look at all transfers of assets that you have made over the previous five years. If you transferred any of your assets through gifts or sold them for less than fair market value during the five-year “look-back” period, then your Medicaid benefits may be delayed significantly or denied altogether. However, there are exceptions to the Medicaid eligibility rules for some types of asset transfers, so you may be able to get your name off your home without jeopardizing your Medicaid coverage. For example, in some situations, you may be able to transfer any equity in your home to your spouse, young child, disabled child, sibling, or caretaker child who has resided in the home with you for the last two years. There are strict rules about the circumstances in which these transfers must take place in order to fall within an exception to the Medicaid rules; you cannot simply transfer assets to another person for the purposes of qualifying for Medicaid. Therefore, before you transfer your equity in your home to anyone, you should consult with an experienced Medicaid planning attorney, particularly if you are anticipating a need for long-term care within the next five years.
Aside from issues with Medicaid eligibility, there also are tax consequences for your children if you transfer your home to your children prior to your death. While there are tax benefits for your children if they inherit your home after your death, this is not the case if you complete a transfer prior to death.
You also should keep in mind that if you still own equity in your home at the time of your death, the state Medicaid agency can make a claim against your estate to recover funds that it spent on your long-term care. This is referred to as the estate recovery process. Therefore, finding a way to fit a transfer of your assets into an exception to the Medicaid rules can be essential to avoiding the estate recovery process.
Medicaid planning can be extremely complex, and you will need a trusted guide as you navigate through the maze of Medicaid eligibility. When you aren’t sure where to turn for help, Legacy Law Center is a valuable resource that you can access as needed. If you or a loved one needs help planning for your financial future, you should definitely contact an experienced Michigan elder law attorney at Legacy Law Center right away. Call Terrence Bertram at Legacy Law Center today and see what we can offer you and your family.
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