Third, your family situation may differ from your neighbor's in ways he may not be aware of, and even if he were aware of, he may not realize the importance of such a situation: there may be safe-harbors and exclusions that apply to your particular family situation that your neighbor may not have heard of. For example, you may have a sibling who is "disabled" as defined by the Social Security Administration: one exception to the general rule that making a gift causes a period of disqualification from Medicaid benefits, is making that gift to a trust for the benefit of a disabled child (of any age).
Fourth, most people don't realize the major differences from state to state in many of the Medicaid rules. Although the basic framework for the entire Medicaid program is set by the federal government, with many of the rules required to be the same in every state, there are also many sections of the Medicaid law that allow each state to set its own rules, within certain limits. So what may have worked for your neighbor's mother in Florida won't fly in Colorado.
Fifth, the "imaginative" asset shifting technique your neighbor's mother utilized may indeed have "worked"---that one time, with that one caseworker. That is certainly no guarantee that your parent will be so lucky with the same technique. You may not want to risk the consequences of such a technique failing; your attorney can help you assess the risks and together you can make an informed decision.
As you can see, this is an area fraught with complications. Asking your neighbor's advice about the best computer or car to buy is one thing, but you proceed at your own peril if you rely on the neighbor for Medicaid planning! Indeed, even if you moved directly from your home to a nursing home (and for these purposes a short transitional stay in a hospital does not count), your home may not be exempt unless you continue to have the "intent to return" to your former home. Under federal law, if you cannot express this intent yourself, your spouse or dependent relative may express it for you. That being said, it is always a better idea to write down your intent to return home as soon as possible after you enter a nursing home, so that should it become necessary to document your intent, there will be written proof.
So the moral of the story is, if you move from your home to an apartment, independent living or assisted living facility, you probably should consider selling your former principal residence and dealing with the proceeds in a manner that will best provide for your care long into the future. Part of your plan may be to prepare for the eventuality of moving into a nursing home. If so, it is important to contact an experienced elder law attorney as soon as possible, so that there will be ample time to put a good plan into place, make gifts if advisable, etc. The sooner you plan, the more of your assets you will be able to keep.
K. Gabriel Heiser is an elder law attorney and author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets."
Read his full biography