Medicaid eligibility unaffected by transfer of home to disabled child
Question: Will Mom’s Medicaid eligibility be affected if she transfers her home to my brother? He’s 59, disabled and lives with her. She now needs a nursing home. She has a home worth $300,000, $100,000 in savings, and an insurance policy with a death benefit of $250,000 that names my brother as beneficiary. We thought her assets and insurance would be used for his care once she was gone, never thinking she’d end up in a nursing home with her monies being depleted for her own care, not his.
Answer: There is a solution to your dilemma. Although there is a fiveyear look-back for transfer of assets when someone applies for Medicaid, there are exempt transactions that do not give rise to a penalty, even if transfers have occurred during the look-back period.
One of those exemptions is a transfer either to a disabled child, or to a trust established solely for the benefit of a disabled child. Therefore, all of your mother’s assets, including her homestead, may be transferred to a trust for the benefit of your brother. Even though the transfers will take place immediately, those transfers will be exempt and not jeopardize her eligibility.
The funds that are being transferred should be transferred to a Special Needs Trust created for your brother’s benefit.
The assets in the trust will Joseph Karp
The Karp Law Firm, P.A. be unavailable to him, and thus, he can continue to receive any SSI or other needs-based benefits. The funds in the trust can be used to supplement, but not supplant, the services covered by governmental benefits.
The trust should be made both owner and beneficiary of the life insurance. Upon your brother’s passing, any funds left in the trust can pass to whatever residuary beneficiaries your mother designates. They will not be used to repay Medicaid for the funds used on her behalf or your brother’s.
Please see a Florida
Bar Certified Elder Law Attorney for more detailed guidance.
Joseph Karp, a member of the Florida and New York Bars, is a Nationally and Florida Bar Certified Elder Law Attorney and founder of The Karp Law Firm, located in Palm Beach and St. Lucie counties. The firm assists clients with wills, trusts, Medicaid and VA benefits planning, special needs planning, asset preservation, probate/trust administration and estate litigation.