With the costs of long-term care continuing to rise to astronomic levels, people are increasingly relying on Medicaid to help pay for their care. The catch is that you must meet certain resource limitations in order to qualify for Medicaid. While you probably won’t have to sell your home to meet Medicaid eligibility requirements, the Medicaid program can make a claim against your estate after your death in order to recoup the funds that it paid out for your long-term care. This estate recovery process often can result in a claim or lien against your home.
Many people think that they can simply transfer their home to their adult children to protect it from Medicaid. However, this is not always the case. In the state of Michigan, Medicaid rules provide for a five-year “look-back” period when considering an individual’s eligibility for the program. This means that if you transferred assets, including your home, to anyone for less than fair market value during the five years prior to your Medicaid application, you may not be eligible for Medicaid for a certain period of time, or at all. In other words, a transfer of your home to your children within the five years before you apply for Medicaid can result in a penalty to you, during which you will not be eligible for Medicaid benefits, including long-term care coverage. The purpose of these rules is to prevent people from transferring all their assets so that they appear to qualify for Medicaid, at least on paper.
There are some situations, however, where you will not incur a Medicaid penalty for transferring your home. For example, you can transfer ownership of your home to your spouse, even during the look-back period, without resulting in a Medicaid penalty. You also can safely transfer your home to a disabled or blind child who is under the age of 21 or a caretaker child who lived in the home for at least two years prior to you entering a nursing home in order to care for you and delay the need for full-time long-term care. You also can transfer your home to a sibling who already has an equity interest in the home and who lived in the home for at least one year prior to your admission to the nursing home, or to a trust that exclusively benefits a disabled individual who is under the age of 65.
Legacy Law Center consists of Michigan estate planning lawyers who have extensive knowledge and experience in creating all types of estate plans. We are devoted to advocating for your interests and helping you protect your family’s financial future. A comprehensive estate plan is a necessity for all individuals, and we are here to guide you through that often complex process. Contact our Ann Arbor office for an appointment with our estate planning attorneys and learn how you can best protect yourself and your family.
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