Can my mother-in-law gift her property to avoid nursing home costs?

Full question:

My Mother in law is 89 years old with diabetes and the first stages of alzheimers. Can she give me her property with a gift deed and save it from being confiscated when she enters a nursing home. Her only assets are 50 acres of land which she has owned for over 60 years.

• Category: Medicaid
• Date: 04/07/2025
• State: Texas

Answer:

If a property transfer is made with the knowledge of an impending claim, it could be challenged as a fraudulent conveyance. According to the Uniform Fraudulent Transfer Act, a transfer is fraudulent if it is made with the intent to hinder, delay, or defraud creditors, or if the debtor does not receive a reasonably equivalent value in return. Additionally, if the debtor is engaged in a business or transaction with unreasonably small remaining assets or intends to incur debts beyond their ability to pay, the transfer may be scrutinized.

When applying for government nursing home assistance, there is a 60-month look-back period to assess any asset transfers made for less than fair market value. This period applies to transfers made on or after February 8, 2006, due to the Deficit Reduction Act of 2005. For every $4,300 transferred, there may be a one-month disqualification from Medical Assistance coverage for nursing home care. The penalty period begins on the first day of the month after the transfer or when the individual becomes eligible for assistance.

Certain transfers do not affect Medicaid eligibility, such as transferring property to a spouse, a child under twenty-one, a blind or disabled child, a sibling with an equity interest who lived in the home for at least one year, or a caretaker child who provided care for at least two years prior to institutionalization. If the equity interest in the home is $500,000 or less (or $750,000 in some cases) and the person intends to return home, it may not be counted as a resource for Medicaid eligibility.

Creating a life estate without the power to sell the property may be considered a disposal of resources, potentially disqualifying the individual from Medical Assistance. However, if the life estate was established long enough ago to avoid penalties, it may still be a countable resource, but with a market value of $0. If the life estate includes the power to sell, it is not considered a disposal, but the property would be counted as an available resource. If other conditions apply, such as a spouse or dependent relative living in the home, it may still be exempt.