Question:

My wife has been living in her mother’s home for the past 4 years as her mother’s caregiver to enable her to live at home rather than at a nursing facility. She has all the necessary documents to qualify for the caretaker child exception (doctor’s letter, VA aid & attendance approval, proof of residency, etc.). Her mother is on Medicaid, but has not yet applied for long-term care coverage. This, however, may be happening soon. My question is: Is it okay to transfer her mom’s home before applying for long-term care, or should she wait until after her mom has entered a nursing facility?

Response:

Under the law, it should be fine for the transfer to be made now. Doing so may have the advantage that your mother-in-law may well be competent to sign a deed now and may not be in the future. However, Medicaid agencies can sometimes throw curve balls. So our practice is to wait until Medicaid nursing home coverage has been approved and then make the transfer. Then, it will be evaluated by the Medicaid agency’s ongoing unit as opposed to its eligibility department—the former being somewhat more lenient in these matters.

That said, another factor in your mother-in-law’s situation that would argue for a transfer now rather than later is that mother-in-law is already receiving Medicaid coverage, making her house subject to estate recovery should it be in her probate estate at her death. There’s a risk to waiting—she could die before the transfer is made. A transfer today would avoid probate and estate recovery.

Depending on the amount of capital gain built up in the house, it may make sense to use a life estate rather than an outright transfer to your wife.

Related Articles:

Does Caretaker Child Exception Apply to Estate Recovery?

If My Father Moves to a Nursing Home, will Medicaid Take his House Where I also Live?

Should You Move In With Your Parents? Or Let Them Move In With You?

Medicaid Estate Recovery and Liens

Transfers of Assets that Medicaid Does Not Penalize