People often worry about what will happen to their house if they have to go into a nursing home. The family home is often the greatest asset and it is also a source of security, history, and connection. The prospect of having the government or a nursing home take away your house is disturbing, but with the enormous cost of nursing home care, it can seem like a very real possibility.
The good news first: neither the nursing home or MassHealth can forcibly take your house if you have moved to a nursing home. Unfortunately, there is also bad news: unless you have taken the right steps to protect your home, MassHealth could place a lien on your house if you have used their funds to pay for nursing home care. A nursing home could also come after your estate or ask your children to pay for any unpaid bills. The claims against your house would increase for every month that you remain in the nursing home. After your death, MassHealth can use the estate recovery to try to get money equal to what the program paid for your care, and usually the only source of funds comes from the sale of your house.
The best way to protect your home is to transfer ownership before you need nursing home care. An estate planning attorney can develop strategies to conserve resources for your family while establishing eligibility for MassHealth long-term care benefits. However, to make the most of these opportunities, it is best to start at least five years before you expect to need nursing home care. If it is too late, and you already require nursing home care, there are still some options available for protecting the home.
First, you can transfer the home to a spouse or to your child if you child is either under the age of 21, blind, or disabled. If a sibling lives in the home and already holds an interest in the ownership of the house, you may be able to transfer the interest to your sibling. Or if your adult child has lived with you and provided care services for at least two years, you might be allowed to transfer the home to your child. If other family members rely on the home, it may be possible to get an undue hardship waiver to protect the home. If you don’t meet a specific exemption, then a transfer of ownership triggers a penalty that delays eligibility to receive Medicaid benefits to pay for nursing home expenses.
You may place the home in an irrevocable trust, particularly if you have means to pay for five years of nursing home care outside of MassHealth. At the end of the lookback period, assuming you’ve complied with other requirements, your care could be paid for by MassHealth but the program could not put a claim on your house for recovery. Trusts can be customized in numerous ways and can provide substantial tax savings and protection from other creditors as well.
Everyone’s situation is different, so it is hard to determine your best strategy based on a general description of home protection strategies in posts like this. At Jordan & White, LLC, we have decades of experience helping families protect assets, and we can help find the best options to protect your house in your specific situation. To learn more about your options, just give us a call or contact us online.