Medicaid Series Part 5: The Basics of Protecting a Home

The types of assets that someone can keep and still attain Medicaid eligibility were reviewed in Medicaid Series Part 4. Other articles will follow about the nuances and considerations involved in keeping a home while a loved one is receiving care in an assisted living community or nursing home. But, it is important to first make sure that the basic rules are understood before diving into further detail.

A senior that moves out of their home into an assisted living community or skilled nursing facility is able to keep their home and not have it count towards the asset limit associated with Medicaid eligibility. However, this is only true if the property is titled in their individual name rather than a trust.

A trust is a great way to avoid probate for estate planning purposes but putting a home in a trust does conflict with those who need Medicaid benefits. Therefore, before someone applies for Medicaid it is important to look at the deed and determine how title is held. If it is held in the individual’s name then Medicaid eligibility will not be a problem for that asset (as long as the home doesn’t exceed the value limits set by Medicaid policy). But one more step should be considered before applying for benefits. The person will likely want the house to avoid probate so the property will avoid Michigan’s Estate Recovery law. That is the state’s ability to make a claim against a probate estate and get reimbursed for the benefits it paid on behalf of the deceased person.

To avoid estate recovery, people create what is known as a ladybird deed to make sure the home goes to their trust or loved ones rather than through probate. Currently, this is the preferred technique for anyone looking to attain Medicaid eligibility and avoid probate and therefore estate recovery.

If the home is already in a trust then it becomes necessary to remove the home from the trust and get it titled back into the individual’s name. Once the title is back in the person’s name then they can take steps to avoid probate with a ladybird deed. Currently, taking the home out of trust and creating a ladybird deed is not problematic from a Medicaid eligibility standpoint. However, an elder law attorney can keep you apprised as to eligibility using a ladybird deed as time goes on. Also, be sure to check back for additional Medicaid Series articles on other considerations for keeping a home while on Medicaid benefits.

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