How Can My Father Protect Family Property from Nursing Home Costs?

 In Asset Protection, Long-Term Care Planning

Question:

My parents have a family acreage. My mother is going to be in need of nursing home soon. My father does not want to have the state liquidate this property; instead, had wished to pass it on to myself and my siblings. We are out of the 3 or 5 year window. What are some options to take to see this land passed down in the family?

Response:

We need to take a few steps in our analysis of this question:

First, your mother will be eligible for Medicaid coverage when your parents’ countable assets fall under approximately $120,000. Depending on the value of the family land, it may or may not present a problem. But I’ll assume it’s worth more than this limit.

The second question is whether the land will be considered countable. If it is rented out or farmed it may not be counted because it would fall under an exception for business property.

Third, assuming that your father is not earning money on the property, we must ask what, if anything can be done to prevent it from having to be liquidated and the proceeds of the sale spent on your mother’s care. Here are a few possibilities:

  1. Transfer the property to a child who is disabled. If anyone qualifies as a recipient, once they own the property they can do what they want with it. However, they cannot be required to share the property with others as part of the transfer.
  2. Sell the property to the children under a long-term mortgage. Probably the term of the mortgage would be limited to your father’s actuarial life expectancy.
  3. Start renting the property now so that it does qualify as business property.
  4. Put the property on the market with the hope that it does not sell quickly. Medicaid may well cover your mother’s cost of care while the property is on the market.

As you can see, the answer depends on the particular circumstances and your state’s Medicaid program. I strongly recommend that you consult with a local elder law attorney. This is especially important in your parents’ case because the property should also be put in your father’s name and he should sign a new will just in case he passes away before your mother.

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