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Question:

I live in a house that is in joint names with my father and that carries a mortgage. My name is also on the deed but I was ruled to be permanently disabled back in 2003. Will my house be exempt from being forced to sell it or from a lien being placed on it after my father dies?

Response:

If your father received Medicaid benefits, for instance for nursing home care, and the house remained in his name at his death, the state Medicaid agency would have a claim on it to recover its expenses. This is known as “estate recovery.” However, there are a number of ways to avoid this claim. First, depending on the state, the house might already be protected. Some states only seek estate recovery against probate property. Jointly-held property (as opposed to property owned as tenants in common) passes automatically at death to the other joint owner or owners and thus avoids probate and, in some states, estate recovery.

If you live in a state with expanded estate recovery that includes non-probate property, it might make sense for your father to transfer his interest in the house to you or into trust for your benefit. Usually there are penalties for transfers of assets, but there are exceptions for transfers directly to disabled individuals or into trust for their benefit. Whether or not to use a trust depends on your situation and whether you have an interest in preserving the house against any claim upon your death. If you are receiving Medicaid benefits, or expect to in the future, a trust can protect the house against an estate recovery claim upon your death.

Finally, even if you take no planning steps and the house is subject to claim upon your father’s death, you may qualify for a hardship waiver. But the rules for such waivers differ from state to state and are often very restrictive.

A local elder law attorney can advise about whether your state has expanded estate recovery and, if so, what steps would make sense to protect the home in your situation.

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