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Dimitry Esquire
Dimitry Esquire, Attorney
Category: Estate Law
Satisfied Customers: 41221
Experience:  JA Mentor. I run my own practice that specializes in Estate Preparation and Administration
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Can I buy my parents home from them so its not an asset the

Customer Question

Can I buy my parents home from them so it's not an asset the govt can take if one parent dies while having received medicade or medicare?
Can it be bought for a token amount of $1.00?
Submitted: 6 years ago.
Category: Estate Law
Expert:  Dimitry Esquire replied 6 years ago.
Thank you for your question.

Under the current Medicaid provisions, any property transferred out within 6 years of passing is automatically able to be returned back to the estate and therefore be used to be sold off with the proceeds paying off the debts. So even if you do transfer the home, it can theoretically be brought back and is still vulenrable to creditors. Whle you can also purchase it for $1.00, your parents would still have to pay tax on the true value of the property, as a nominal transfer would still be required to be taxed at the value that the proeprty ends up being formally assessed for (something that occurs auotmatically whenever a transfer of any kind takes place in real property transactions). If you end up "buying" the home for $1.00, it would be deemed a suspicious transaction by the IRS, who would request that the transaction be reversed.

Good luck.

Edited by Dimitry Alexander Kaplun on 11/28/2010 at 9:42 AM EST
Dimitry Esquire and 3 other Estate Law Specialists are ready to help you
Customer: replied 6 years ago.
would medicare or medicade take the house if one parent is using them to pay for nursing home cost?
Expert:  Dimitry Esquire replied 6 years ago.
Thank you for your follow-up.

Generally no, they would not--they would simply place a lien on the property and wait until both parties either pass away or abandoned the premises before selling it off for collections.

Edited by Dimitry Alexander Kaplun on 11/28/2010 at 9:57 AM EST
Dimitry Esquire and 3 other Estate Law Specialists are ready to help you
Customer: replied 6 years ago.
would medicare or medicade take the house if one parent is using them to pay for nursing home cost? How can I prevent medicare or medicaide from taking the house if both parents pass away?
Customer: replied 6 years ago.
see above question
Expert:  Dimitry Esquire replied 6 years ago.
Thank you for you patience.

My apologies on the delay, I logged off for the morning.

There are two ways that you may consider in how you can possibly protect the property. The first, and probably best, XXXXX XXXXX to create an irrevocable trust as that would permit you to move the assets (the home) into it, and keep them away from the creditors. I would very strongly urge you to speak with a local attorney who can help you write up such a trust and ensure that it will be sufficient for your needs. An "irrevocable" trust is one where once you place assets into it, those assets cannot be removed again unless the trustee of the trust so agrees. Since the original owner is no longer able to remove the assets, the creditors such as Medicaid are also unable to remove it as creditors under law are deemed to "stand in the shoes" of the owner and have identical rights. In other words, if the original owner cannot get the property back, neither can the creditor.

The second option may be to file for a reverse mortgage. Such a mortgage will provide payments to your parents and since a lien would be placed on the property by the lender, the medical creditor may not have anything to collect on. The problem with this option is that there is a risk that the property will be lost and sold off by the lender.

Good luck.

Edited by Dimitry Alexander Kaplun on 11/28/2010 at 8:52 PM EST