Sometimes we deal with seniors who want us to prepare a deed gifting the home to their children. Some believe that they could wait out the five year ineligibility period and obtain Medicaid. We always try to convey to the prospective callers that such actions can cause a detrimental effect that is unnecessary.
The home in Florida has a constitutional protection against creditors. So in Florida (unlike many states) not only can one become eligible for Medicaid even though he owns a home, a lien will not attach to the home for the nursing home expenses when a person is on Medicaid. However, transferring a home to a child or children will cause an ineligibility period. Therefore, the home posed no problem for Medicaid prior to the proposed transfer but by transferring the family created a Medicaid problem.
One particular caller said he had other assets which would pose eligibility problems. He told me that his spouse suffers from a debilitating illness and he is her sole caregiver. He is a Veteran of World War II. Neither he nor his spouse had done estate planning that would allow one of their children or another trusted individual the ability to take care of their finances and health care in the event that they were unable to make their own decisions.
A person in this caller’s position needs to be mindful of what would happen to his spouse if he were to die first. It is possible to leverage their assets in order to provide a higher level of care for the spouse in the event that he died first. He also needs to be aware that he may be able to obtain funds from the Veterans’ Administration in order to assist him in her care in the home or in assisted living. If his and his spouse’s assets exceed the parameters of the VA program, planning can be done to meet the legal requirements of the program.
The implications of any gifting need to be carefully considered. In the prospective client’s situation, the gifting may have thwarted the very benefit that was desired. Further, other unintended consequences can follow from gifting including tax issues, creditor problems and control issues.