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Medicaid & The Homestead

How Do I Protect My Home?

This is probably one the most commonly asked questions elder law attorneys are asked. When applying for Medicaid benefits, the homestead is considered exempt and protected if:

1. A spouse or dependent relative continues to reside in the home; or

2. The individual (or, on his or her behalf, a designated representative) states an "intent to return" home.

The homestead will remain exempt during the lifetime of the applicant if the above criteria is met, and will NOT be subject to Medicaid claims at death if there is a surviving spouse, or dependent who is at home, or "heir."

However, what if there is no well spouse, dependent or "heir" and what if the well spouse predeceases the nursing home spouse? In this often overlooked scenario, the homestead may very well become subject to Medicaid claims at the nursing home spouse's death.

Another common scenario is where Mom is about to enter a Nursing Home, is a widow, owns a home and has one or more children. Often times Mom will gift (quitclaim deed) the property to the children in the hopes of preserving and protecting it from Medicaid. However, what happens is that Mom has made an uncompensated transfer and a penalty period will result. For example, if Mom transfers a $99,000 Condo to son, a 60 month penalty period will result whereby Mom will be ineligible for Medicaid benefits. This is a very common mistake made. Not only is Mom now disqualified for a period of time, but she has lost the valuable Property Tax and Constitutional Homestead protections.

The Solution

Many attorneys strongly suggest investigating the proper titling of the homestead and the possible use of an Enhanced Life Estate Deed in order to protect this valuable asset.

An Enhanced Life Estate Deed is a variation of a quitclaim deed that currently enables an individual to retain their homestead creditor and tax exemption, have the home be exempt from Medicaid claims during their lifetime, while at the same time enable named persons to receive the home upon death, free of Medicaid claims and liens.

There may be other exemptions involving the homestead that you should investigate with your attorney.