Assited living and Capital Gains

[Corry_El]

@Mama_Zappa

Several people have mentioned Medicaid nursing homes.

1. If Mom does go into such a place, they require the house to be sold and the proceeds used to reimburse Medicaid for the costs.

2. If she had a living spouse still in the house, it would not have to be sold until the spouse was no longer living there. I’m pretty sure that you could not hold onto the place on her behalf while she was in the Medicaid facility. However: people talk about transferring the house away, to preserve it from Medicaid… but a) there’s that 5 year lookback (so if she needed assistance in the next 4 years and 11 months, it wouldn’t work), and

3. b) if it were me, I’d want the proceeds to be used to keep my parent in a nicer facility than whatever Medicaid funded.

1. An owned home generally does not count as asset in determining Medicaid eligibility and the owner does not have to sell it to reimburse Medicaid while alive, even a single owner. Medicaid just has a claim on the person’s estate including the house to reimburse its cost after death. This was stated correctly earlier by myself and I think others.

2. What you’re talking about here in both cases is transferring the house to avoid Medicaid making a claim on the house after the Medicaid beneficiary dies. There is a 5 yr look back (from applying for Medicaid) on transfers of the house to others for it not to be considered part of your estate for Medicaid purposes. But that doesn’t apply to transfers to several categories of person, this page summarizes. The possibly (though not necessarily) relevant one in OP’s case could be transfer to:

“A caretaker child. A caretaker child is defined as a child of the Medicaid applicant who lived in the home for two years or more prior to the applicant’s move to a nursing home and whose care for the applicant delayed the need for nursing home care.”

Can You Protect Your House From Medicaid by Giving it to Your Kids?

3. Of course the person is still free to sell the house to fund nursing or other care. Thing is, if you sell a house for $500k (OP estimated) then have $500k in the bank, that $500k counts to not making you eligible for Medicaid. The $500k value of owned home generally does not count for eligibility, it’s only subject to cost recovery by Medicaid after you die as in point 1.

So you really want to fully understand that and consider all implications before moving $500k from house value to money in the bank. And again as OP seems to agree no way should anyone proceed to actually selling without more specific advice from an elder care lawyer, not a real estate lawyer.