By Monet Binder, Esq.

Is it possible to protect the family home if a loved one needs long term care in a nursing home facility? 

If you are like most of us, you want to preserve your assets, which you have worked a lifetime to acquire, and keep your home in the family either by passing it along or selling it and distributing the proceeds to your own children and/or grandchildren.

Here in New York City, the average cost of long-term care in a nursing home is over $140,000 per year.  According to Healthday.com, a new study shows, “More than half of Americans will find themselves in a nursing home at some point in their lives”.

If you haven’t taken steps to protect your assets, you may find yourself in a position of having to spend all of your money for the cost of care, or spend your money to reach the point to qualify for Medicaid – to cover the cost of your long-term care.

But it doesn’t necessarily end there. In order to recover the expenses paid on your behalf for nursing home care, you may be forced to sell your home or lose it through Medicaid estate recovery, whereby Medicaid places a lien on the home upon your death, to recover the amount expended for your care.

Planning Options To Protect Your Home

The good news is that by planning early and making good choices, you can keep your home in the family. 

Transferring Ownership.

Some people believe that if they transfer title of their home to their children, or if they add their children’s name to their deed, they can automatically pass on the ownership of the property to their children after they pass away.  This may or may not be true.  

Considering the statistical likelihood of a healthcare crisis happening is very great and the odds increase the older you get, if one or both parents require nursing home care for many people, Medicaid will most likely be the method of payment. Transferring ownership or adding names to the deed will be considered a gift.  Because Medicaid has a five-year review period in which it considers all gifts, ie. uncompensated transfers, deed transfers to children, or anyone else, can prevent applicants from qualifying.

Removing Parents from the deed.  

A better option would be to remove the parents’ names entirely from the deed, if the parents are young and healthy enough where the need for nursing home care for five years into the future would be highly unlikely.

As with any valuable asset, transferring the property to a child or another individual is risky.  You need to be confident that the person receiving the asset won’t take over and use the asset solely for their own purposes, which may be contrary to your wishes.  Also, if anything happens to the recipient, any creditor or claimant will not care that the asset or family home was placed in the recipient’s name for someone else’s safekeeping.

Consider a situation where Harold gifted his home to his son Sam after his wife passed away.  If Sam was in a car accident and the cost of care for injuries sustained from the collision exceeded what the insurance company provided, the home any other valuable assets could be used as assets to pay for the cost that insurance did not cover.

Sheltering Your Home.

Often, the safest way to protect your home is to create a trust specifically designed to shelter your home so you can set it aside for your children or grandchildren.  When the home is placed into the trust, the trust becomes the owner of the property.  Transferring property to this special lifetime protection trust is also considered a gift, so it is important when planning to be confident that the transfer is made five years prior to the possibility of needing nursing home care.  Choosing someone you trust to act as a trustee to manage the assets in your trust and to distribute them according to your wishes when you are no longer here, is an essential part of planning.

Can the family home be protected if a married couple owns the property jointly? 

When a couple owns a home together and one is admitted to a nursing home, the spouse of the nursing home resident should not have to sell the house to pay for the nursing home care.  If the ultimate goal is to preserve the home, generally it is not advisable for the nursing home resident to remain as a joint tenant on the deed. Rather, deeding the home to the well spouse is preferable and provides for more planning options.

Also, if the home is jointly owned and the nursing home spouse outlives the spouse remaining home, the situation could become complicated.  In this instance, when the nursing home resident eventually passes away, the home will become a probate asset.  At that time, Medicaid will place a lien against the home in order to recover the funds which were paid for the nursing home resident’s care, the amount of which can exceed the entire value of the home.  A similar situation exists for a single individual who retains sole ownership of a home, moves to a nursing home and is eligible to receive Medicaid benefits.

By planning in advance, you can have more choices and can protect what is important to you.  Various strategies and powerful planning tools can be used to preserve the family home and other valuable personal or real property you may have, help your family manage various assets, and cover the costs of long term care should the need arise.  Individual goals and circumstances will influence the types of strategies which can be utilized.  Due to the extent and variety of regulations which govern these strategies, the advice and assistance of a counseling-based elder law attorney is recommended in order for a family to receive the maximum benefit of a plan and avoid potential costly mistakes.

If you, a loved one or someone you know needs help figuring out their options or to learn more about how to protect your family and other assets, it would be a privilege to assist you. You can send me an email at [email protected] or call 718.514.7575.

MONET BINDER, ESQ., has a practice in Queens, New York, dedicated to protecting families, their legacies and values. All halachic documents are approved by the BAIS HAVAAD HALACHA CENTER in Lakewood, under the direction of Rabbi Dovid Grossman and the guidance of Harav Shmuel Kaminetsky, shlita, as well as other leading halachic authorities. You can send her an email at [email protected] or call 718.514.7575

The information in this article is intended solely for your information. It does not constitute legal advice, and it should not be relied on without a discussion of your specific situation with an attorney.