Can I sell my house when my spouse is in a nursing home?
This edition of the Koldin Report E-Newsletter is part of a series on Frequently Asked Questions About Medicaid.
All prior newsletters are saved on our website. You can read them by clicking here.
In this newsletter we answer the following question:
Can I sell my house when my spouse is in a nursing home?
The answer to this question depends on the timing of the sale and on whether the house is owned jointly or in just the name of the at-home spouse (Community Spouse).
When one spouse is in a nursing home, the Community Spouse is entitled to keep the family home. The question is what happens to the cash after the home is sold.
Example: Tom is in a nursing home. Mary is home. They own a house jointly worth $150,000 and have $100,000 in a bank account. Under the Medicaid law for 2019, in this example, Mary would be allowed to keep the house and $74,820. Tom would be allowed to keep $15,450. This leaves them with $9,730 of excess funds that will have to be spent on exempt items (such as prepaid burial expenses) or nursing home bills before Tom will be eligible for Medicaid coverage to pay for his nursing home care.
Converting Protected Home to Unprotected Cash
If Tom and Mary sell the house for $150,000 before Tom applies for Medicaid, they would now have $250,000 of total savings. After deducting the personal allowance and spousal resource allowance, they would have to spend all of the excess funds before Tom would be eligible to receive Medicaid.
By selling the home before applying for Medicaid, Mary converted a protected exempt home into unprotected money.
Don’t Leave Home in Joint Ownership
If Tom and Mary delayed selling the house until after Tom was approved for Medicaid, Tom as a joint owner would be entitled to $75,000 and Mary as a joint owner would be entitled to $75,000.
Under the Medicaid law, Mary (the Community Spouse) can keep any assets she acquires after the Medicaid eligibility date. So, in this example, Mary can keep her $75,000 from the sale of the house.
Tom, on the other hand, now has $75,000 which is greater than the $15,450 that he is allowed to have and would no longer be eligible to receive Medicaid coverage.
Tom would now have to spend the $75,000 back down to $15,450 towards the cost of his nursing home care or exempt items and then he would have to reapply for Medicaid.
Transfer Home to Community Spouse
Under the Medicaid law, there is no transfer penalty between spouses before applying for Medicaid and within 90 days from the date of notification of Medicaid Eligibility.
If Tom transferred his half ownership of the house to Mary during this transfer penalty-free period the $150,000 cash proceeds of sale would all be payable to Mary as the sole owner.
Delay Sale of Home Until After Medicaid Eligibility
Under the Medicaid law, Mary (the Community Spouse) can keep any assets she acquires after the Medicaid eligibility date. Therefore, if Mary delays selling the house until after Tom’s Medicaid eligibility has been approved, Mary can keep the entire $150,000 proceeds from the house.
Home or Proceeds of Sale Still Unprotected if Community Spouse Later Needs Nursing Home
However, if Mary later becomes ill and enters a nursing home, the $150,000 would become unprotected towards the cost of her care.
The above example shows that to protect the proceeds of sale of the family home for the Community Spouse, (1) the home should be transferred from joint names to just the Community Spouse’s name and (2) the sale should be delayed until after Medicaid eligibility has been approved for the institutionalized spouse.
An Irrevocable Trust Provides Flexibility for Selling the Home and Protection
Had Tom and Mary planned in advance and transferred their home to an Irrevocable Trust, they could have freely sold their home at any time before or after Tom entered a nursing home. The proceeds of sale of the home would be payable to the Trust and remain protected from the cost of care for either spouse.
For more information about the Medicaid laws, please see our website by clicking here.
For a discussion about how to protect your life savings even if you are already in a nursing home, please visit our website by clicking here.
For a discussion about how to protect your life savings with an Irrevocable Trust, please visit our website by clicking here.
The Koldin Law Center, P.C. is available to help. We assist families in protecting their life savings even when someone is already in a nursing home.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. When the Koldin Law Center, P.C. handles a Medicaid case, we not only handle the entire application process, but we also review asset protection options with our clients. We review with our clients who are already in a Nursing Home options to protect some or all of their assets beyond merely establishing Medicaid eligibility. We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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