Full question:
My grandmother and I own a house that we live in together. She is on the deed as a Joint Tenant. My question is, Can medical, or the state put a lien against the house if she has to go into a full time nursing facility? If so What do I need to do so this does not happen?
- Category: Medicaid
- Date:
- State: California
Answer:
Medicaid is a federal benefit program administered by the states that provides assistance with long term care and nursing home costs for needy people. Medicaid is not insurance. It is a public assistance welfare program funded entirely by taxpayers.
You asked whether Medicaid file a claim against any of assets held as joint tenants.
Under the federal guidelines, states can expand the definition of “estate” to include any property in which an individual had any legal title or interest at the time of death, including assets passed outside probate. A state can define this property to include joint bank accounts, bank accounts with a pay-on-death beneficiary designation, living trusts, life estates in real property, and real estate held in joint tenancy.
If your state uses the expanded definition of “estate”, the state has claims against property that would normally not be available for creditor claims.
In California, the Medicaid program operates as "Medi-Cal." Joint tenancy property was once exempt from Medi-Cal estate claims, but that hasn’t been the law since October 1993. Prior to then, state Medicaid agencies could assert estate recovery claim against only probate estates. Any asset that avoided probate, such as property held in joint tenancy or within a revocable trust, was once exempt from Medi-Cal estate recovery.
That changed in October 1993, when Congress enacted the Omnibus Budget Reconciliation Act, or “OBRA ’93.” This law made significant changes in the way Medi-Cal estate recovery claims work. Under the federal government’s definition of the “expanded estate”, Medi-Cal is legally required to assert an estate claim against any assets owned by a Medi-Cal recipient upon his or her death.
If your grandmother has not yet applied for benefits through the program, there may be ways to protect the house from a claim.
One way of doing so is simply to give the property away to the children. However, this is usually a bad idea because an outright gift would result in a loss of the step-up in cost basis that happens when property is inherited. When the children sell the home, they’ll have to pay a great deal of capital gains tax that they would avoid if they were to inherit the property instead of receiving it as a gift.
It is possible for a Medi-Cal recipient to shelter his or her home while preserving the step-up in cost basis by transferring the home into an irrevocable trust. These trusts are very different from most irrevocable trusts found in estate planning, and should be prepared only by an attorney experienced in Medi-Cal planning.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
