It IS possible to protect the house from Medicaid liens and estate recovery! First of all, in some states, the deed simply needs to reflect that upon the owner's death the house passes by right of survivorship to someone else. In all states, if the house has been in an irrevocable trust for at least 5 years before the owner applies for Medicaid, then there is no transfer penalty AND there is no estate recovery possible against the house.
However, if the owner needs to apply before that five-year period is over, then they may be stuck owing the government for its Medicaid outlays on the owner's behalf. Thus, early planning is vital!
I discuss all of these techniques in my eBook "Protecting Your Home--Estate Recovery", I highly recommend this to you. Best of luck!
I congratulate you for planning ahead but I would consult an elder law attorney for this. Every state has its own laws. The sooner you have this figured out the better. Best wishes, Carol
The "hinge" is if yougo to a rest home. If you pay your own way, then the house is not an issue...If you go on Medicaid, then Medicaid will want their outlay to be repayed when you die, and that would likely include their going after your house. Having it in a trust may help you shield it from being taken by Medicaid... Your heirs have no stake in this issue as I see it..If your "trust" shields something for them, good for them..If not, look at the bright side that you will be cared for.
As an aside, my wife has been on Medicaid since June, 2009 and has been in full nursing care since...That has saved us roughly one half million dollars, more or less. Our house has a market value of about $150K...Seems like a pretty good deal for us.
I agree that you need to see a lawyer, be even then you may not be able to secure the house for you son. Even with a LTC policy. You need to be aware that even if you have a long term care policy, they may not cover the entire cost of long term care. We looked into buying one for ourselves after seeing how things went for my folks. The cost of the LTC policy was far more than we could ever afford anyway and the amount it would have covered (at that future time) would have been thousands of dollars less per month than care would cost (even now). Meaning our assets would be eaten up by the care costs anyway (although slightly slower, but not by much).. So it was a choice of: live like paupers now, and IF we live to need LTC, then use up all our assets eventually anyway; OR skip the LTC insurance, keep going on a short vacation each year, enjoy our moderate life, and be as generous to our children now as we can handle, while there is still enough time that any gifts won't fall into the "look back time."
One plan is to try to stay in your home for the rest of your life, maybe have your son come in to help take care of you. But that isn't always possible.
Another plan is if you need a higher level of care, such as Assisted Living, then one may have to sell their house and use the equity to pay for such care. My Dad sold his house, and used to self pay for his care.
Another plan is to apply for Medicaid. But later on Medicaid would like to be paid for all the money spent on your care. If you have a house, it is only fair once you have passed, that the house is sold and Medicaid takes what they need to pay your bill. Otherwise, us taxpayers would be paying for your care.
A Certified Elder Law Attorney who specializes in asset protection may be able to help you. nelf.org. You need to start planning immediately if you want to protect your house.
That, ideally, is what we all want, pass our assets to our children. My mom has a trust and the house is part of it. However, she did not have much in the way of cash assets. She thought the trust would protect them. It doesn't. Her solution was to purchase a long term care policy that would have paid for assisted living, memory care, nursing home for a set number of years. I say "would have" because she either forgot to pay the bill (she was diagnosed with dementia about eleven years ago) or she decided her good planning for old age would not be needed (also could easily be due to dementia). The long term policy lapsed, she had paid into it for about ten years. Then it was money down the drain, you do not get those premiums back and once diagnosed you cannot purchase or reinstate a LTC policy.
She has now gone through her cash assets and is spending down the assets from her house to pay for her care. When those are gone there will be a need to apply for Medicaid. Sad, isn't it?
So, my advice, purchase a LTC policy, have someone else responsible for payment of the premium in case you develop dementia. Medicaid allows the ownership of one car and one home. The home has the potential to provide income if rented making less money necessary from Medicaid each month. Any shortage would be paid by taxpayers, then upon your death there would be a lien on the home by Medicaid to recover monies spent by all of us for your care.
Ferris is correct in referring to construction or workers' liens. I believe that was the ONLY aspect of liens to which she was referring. She prefaced her comments by stating she wasn't exactly sure what the OP was referring to.
Frankly, neither was I. The OP didn't distinguish between Medicaid or any other type of nonmedical care lien.
While I understand that most folks want to be able to leave something for their children, how many of us really understand that Medicaid is to benefit those who don't have trusts, or CD's, or multiple homes, or thousands in the bank. I don't mean to be rude, but if Medicaid money is used to help a person that is able to help themselves, what will be available for those of us who follow? For those of us who don't own homes, etc. Medicaid is meant to help people who are financially unable to take care of themselves in their elder years.
However, if the owner needs to apply before that five-year period is over, then they may be stuck owing the government for its Medicaid outlays on the owner's behalf. Thus, early planning is vital!
I discuss all of these techniques in my eBook "Protecting Your Home--Estate Recovery", I highly recommend this to you. Best of luck!
Best wishes,
Carol
As an aside, my wife has been on Medicaid since June, 2009 and has been in full nursing care since...That has saved us roughly one half million dollars, more or less. Our house has a market value of about $150K...Seems like a pretty good deal for us.
Grace + Peace,
Bob
Another plan is if you need a higher level of care, such as Assisted Living, then one may have to sell their house and use the equity to pay for such care. My Dad sold his house, and used to self pay for his care.
Another plan is to apply for Medicaid. But later on Medicaid would like to be paid for all the money spent on your care. If you have a house, it is only fair once you have passed, that the house is sold and Medicaid takes what they need to pay your bill. Otherwise, us taxpayers would be paying for your care.
You need to start planning immediately if you want to protect your house.
She has now gone through her cash assets and is spending down the assets from her house to pay for her care. When those are gone there will be a need to apply for Medicaid. Sad, isn't it?
So, my advice, purchase a LTC policy, have someone else responsible for payment of the premium in case you develop dementia. Medicaid allows the ownership of one car and one home. The home has the potential to provide income if rented making less money necessary from Medicaid each month. Any shortage would be paid by taxpayers, then upon your death there would be a lien on the home by Medicaid to recover monies spent by all of us for your care.
Frankly, neither was I. The OP didn't distinguish between Medicaid or any other type of nonmedical care lien.
See All Answers