Full question:
I have a mortgage on my home - what do I have to do to ensure my home will not go to the state if I have to go into a nursing home. I have two adult children. What would be the most economical way to proceed, since I've had to file bankruptcy and I am retired.
- Category: Medicaid
- Date:
- State: Illinois
Answer:
To protect your home from being taken by the state if you need nursing home care, it's important to understand Medicaid's rules regarding asset transfers. Medicaid has a five-year look-back period to check for any asset transfers made for less than fair market value. If you transfer assets during this time, you may face a penalty period where you are ineligible for benefits based on the value of the transferred assets.
A transfer made with the intent to avoid paying for nursing home care can be seen as a fraudulent conveyance. Under the Uniform Fraudulent Transfer Act, a transfer is fraudulent if it is made to hinder, delay, or defraud creditors or if the debtor does not receive equivalent value in return.
When applying for Medicaid, the look-back period is crucial. For every $4,300 you transfer, you may be disqualified for one month of coverage. The penalty period starts either on the date of the transfer or when you are eligible for Medicaid, whichever is later.
Some transfers do not affect Medicaid eligibility, such as transferring your home to a spouse, a disabled child, or a sibling who has lived in the home for at least one year before you became institutionalized. If your home’s equity is $500,000 or less (or $750,000 in some cases) and you intend to return home, it may not be counted as a resource for Medicaid eligibility.
Creating a life estate deed can be complex. If you create a life estate without the power to sell, it may disqualify you from Medicaid. However, if you create a life estate with the power to sell, it is not considered a disposal of resources, but the home's value will still count against your resources unless exempt for other reasons.
It's advisable to consult with a legal professional who specializes in elder law to navigate these complexities and find the most economical way to protect your home.
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.