How to Not Lose Your House to Nursing Home: Step-by-Step Strategies to Preserve Your House and Assets
If you are afraid that a nursing home will take your house, then you are not alone. Many people fear losing their homes and their assets if they have to stay in a nursing home for a long time. But then comes the good news it can be prevented from getting seized or lost by a nursing home or others through certain steps, safeguarding the property and the individual wealth of the person concerned.
Why So Concerned About a Nursing Home Taking Your House?
So, let’s dig a little deeper and give some thought about how to prevent nursing homes from taking your house, shall we? These establishments are very expensive, and usually, Medicaid (the government plan to assist with the expenses associated with long-term care) requires that the person go to financial resources before qualifying. Those persons of much liquid resource, such as a homestead, will have that assessed and recovered by the Medicaid system at the time of death, which is estate recovery That’s why most people ask: How to prevent a nursing home from taking your house?
How Does Medicaid Affect Your House?
Medicaid has an estate recovery program that requires them to collect funds paid for long-term care services. If you are in a nursing home and receiving Medicaid, Medicaid will do everything to recover money from your estate. And that includes your house if you have one. This has grown to be a significant concern among homeowners who want their property to remain for their heirs. However, learning how Medicaid works and what strategies exist to make sure that a nursing home takes your house can help you know how to plan for later.
How to Avoid Nursing Home Taking Your House: 7 Effective Strategies
If you ask yourself how to keep a nursing home from taking your house, there are many legal maneuvers and financial planning strategies available to you before entering a nursing home. Here are seven strategies you can use to protect your home and assets.
1. Plan Ahead: Start Early
The best defense against a nursing home taking your house is starting early. The sooner you begin planning, the more flexibility you have to protect your property. This may include transferring assets or creating trusts that would make Medicaid unlikely to take your house. Medicaid only looks back five years, meaning any assets you transfer that fall within this time frame can result in penalties or delays with Medicaid eligibility. It is critical to plan early.
2. Transfer Your Home to a Family Member or Trust
One of the common ways not to lose your house in a nursing home is by transferring the ownership of your home to an eligible family member or trust. There exist different types of trusts for this purpose, but the most commonly used ones are irrevocable trusts. This puts your home in an irrevocable trust, and you cannot own it outright; therefore, Medicaid is not going to count it as an asset when determining eligibility for benefits. However, in this transaction, there will be a five-year look-back during which you cannot transfer assets without having to pay an innings of a penalty.
3. Medicaid Exemption for Primary Residences
Medicaid does not count primary residences as assets, so in some cases, your home will not be counted as an asset when you apply for Medicaid. To protect your house from being taken by a nursing home, you must ensure that your home qualifies as your primary residence and is not sold or transferred. Moreover, Medicaid has income and equity limits too. In that regard, you ought to consult an attorney to make sure your house is exempted in that situation.
4. Life Estate Deed
Another way how one can prevent a nursing home from taking his house is with the help of a life estate deed. A life estate deed is a type of trust wherein you grant the title deed of your house to any member of your family with the right, however, of continuing your life in the house forever. The title of such property automatically reverts to such family member as soon as one dies without requiring the probate procedure. This will also help the home be out of range of Medicaid recovery after a person’s death. Yet this too would have some tax implications, and possibly Medicaid rules to apply.
5. Buy Long-Term Care Insurance
If you ever want to make sure that your house isn’t taken out of your hands by having care without needing to go broke to pay for it, there are several effective ways to avoid this problem and one of these is through buying long-term care insurance. Long-term care insurance can pay for nursing home and in-home care so you may never need Medicaid to afford care. By not taking Medicaid, you avoid estate recovery and preserve the property. It is best that you start researching policies well in advance and choose a policy that will serve your needs.
6. Spousal Impoverishment Protections Plan
If you are married, certain protections on Medicaid will prevent a spouse from becoming impoverished in case one of you becomes nursing home-bound. Such spousal impoverishment rules enable the healthy spouse to take with him part of the assets, including the family home, in exchange for the other spouse’s eligibility for Medicaid-funded long-term care. From here you can then make sure a nursing home would never get your house and much more to ensure your spouse achieves financial security.
7. Consult an Elder Law Attorney
Consult with an elder law attorney- Consultation with an elder law attorney is a crucial part of the process when considering the many rules Medicaid has created that pertain to protecting your assets. An experienced elder law attorney will guide you through discussions about strategies for not allowing a nursing home to take your house and ensure that you do nothing illegal or unethical to that end. You and your attorney can work out putting the kinds of things we were just discussing- trusts, life estate deeds, and other provisions designed to save property for heirs in advance of going to a nursing home.
What if you’ve Already Entered a Nursing Home
If you are currently residing in a nursing home, even then, it is still not too late to protect your home from nursing home asset seizure. You can take advantage of some of the transfer options above, such as transferring the house to a family member, establishing a trust, or consulting with your lawyer. However, please do take note that Medicaid is covered under the five-year look-back rule and may be too late in making some transfers. In this case, an elder law attorney can help you explore your options and advise on how to protect your home.
Conclusion: How Not to Lose Your House to Nursing Home
For most people, the fear of losing a house to a nursing home during preparation for long-term care is always a very valid concern. In fact, some steps can be taken to avoid losing your house to a nursing home and protect your property for your loved ones if proper strategies are taken and one has planned. One way to start planning early involves considering options such as asset transfers, trusts, Medicaid exemptions, and long-term care insurance.