Should I give my home to my child to qualify for Medicaid?

Sep 29, 2021 | Medicaid Planning

Medicaid planning involves making sure you qualify for Medicaid benefits by reducing your assets to a certain level. However, you may run into a dilemma when it comes to your home. You do not want to lose it, but you might not be able to keep it and receive Medicaid. One possible option is to give your home to your child. Still, you might not be sure if this option will work out.

Kiplinger explains that some people planning for Medicaid will transfer ownership of their homes to their children through a deed. This way, you could arrange for your child to let you live in your home even if you do not own it any longer. Still, there are some possible downsides you should account for.

Bankruptcy or divorce

There are a variety of circumstances that could cause your child to lose the home. If your child experiences severe debt, creditors may lay claim to the house. Your child might also lose the home because of a lawsuit or bankruptcy. Divorce is another possibility. If your child marries and then divorces, your child may have to sell off the home as part of the divorce settlement.

No matter how your son or daughter loses the home, you will probably lose your right to stay there. So you should feel confident that your child will not experience financial problems that could cause another party to take the house away.

Family disagreements

If you give your home to multiple family members, disagreements could break out over how to manage the residence. One or more relatives may not want you to stay there. Even if you secure a right to live there through a life estate provision in the deed, you might still have a conflict with your child over issues regarding how to keep up the home and other responsibilities.

Problems with the look-back period

When you transfer your home title is another important matter. If you do it within the 60 month look-back period before you file for Medicaid, the government may turn down your application. So if you give your home away, you have to do it five years before you actually need benefits.

If you believe giving your home away will be problematic, an alternative is to set up a Medicaid asset protection trust and title your home to the trust. This may allow you to keep control of the home and allow you to live there. You may also plan for future owners and how they will manage the residence.