How can my mother protect her home investment if she needs nursing care?

Full question:

My mother is considering buying a home in Spooner, WI. She would be using money from an annuity. She's is in fairly good health and barring anything unexpected, would live there several years. Our question is: If something were to happen and she suddenly had to go to a nursing home or other care facility, how could her home investment be protected? That would really be her only asset. We're not familiar with Wisconsin law regarding this and wouldn't want her to lose that investment. She would need to apply for help with that kind of expense because her SS check of around $1300.00 would not cover the cost.

• Category: Debts and Credit
• Date: 04/07/2025
• State: Wisconsin

Answer:

In Wisconsin, a homestead can be protected from creditor claims up to $40,000. When determining Medicaid eligibility, certain assets are exempt. A home is exempt if a spouse, minor children, or dependent relative lives in it, or if the individual entering the nursing home intends to return home. However, the home equity exemption is limited to $750,000, unless a community spouse, minor child, or a blind or disabled adult child resides in the home.

To avoid Medicaid ineligibility, a trust can be created. Keep in mind that having too many assets can prevent qualifying for Medicaid. Medicaid has a five-year lookback period for asset transfers, meaning any transferred assets may affect eligibility if the individual enters a nursing home during that time.

There are various estate planning options available, such as trusts, life interests, annuities, and long-term care insurance. Due to the complexities involved, it is advisable to consult with a local attorney who can review the specific facts and documents. For reference, Wisconsin statute 815.20 defines the homestead exemption and its protections.