Medicaid has what is called the "lookback" period. At this point in time, the lookback period is 5 years prior to the month that you are applying for coverage for nursing home care. This means that a penalty period may be imposed for the transfer of non-exempt assets for less than the fair market value, so signing it over to the children if he goes into the nursing home within 5 years will not work although there are some exceptions. The penalty results in a period of ineligibility for Medicaid coverage for nursing facility services. The penalty period doesn't apply to the transfer of your home to the following individuals: 1) your spouse, 2) a child under the age of 21, 3) a sibling who has an equity interest in the home and who has lived in the home for at least a year prior to you entering into a nursing home, 4) an adult child who lived in the home for at least two years prior to you entering into the nursing home and who cared for you, which allowed you to remain home instead of entering into a nursing home, 5) your child who is blind or permanently disabled, and 6) into a trust for the sole benefit of anyone who is under 65 and permanently disabled.
The homestead is exempt property. After his death the house can be sold and Medicaid reimbursed unless there is a surviving spouse such as you are still living but there would be a lien against it from his care and they could take it after you pass. Being age 78 takes away many options and it might be difficult if he needs to go into a home immediately. One way to protect his estate from Medicaid estate recovery after he passes is an irrevocable trust. An irrevocable trust cannot be changed once it's been created. He cannot use the principle to your benefit or his benefit. The funds will be protected and when he passes, the principle will be automatically passed on to his heirs. While he is still alive, the income from the home is protected. As far as Medicaid is concerned, the principle in the trust is not counted as a resource because the trustee can't pay it to him for benefits.
Another way to protect his assets is to set up a life estate. For many, a life estate is the simplest and most cost-effective answer but I don't prefer it as it can cause many problems. A life estate is a type of joint ownership between two or more people. While the two people each have an interest in the property, it is for different periods of time. For example, the person possessing the property possesses it in present time and for the rest of his or her life. Once they pass away, the other owner can take possession of the property. Like a transfer to a trust, the deed can also trigger the Medicaid ineligibility period for up to five years.
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