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Home > Blog > Real Estate > Smart Strategies To Protect Real Estate From Nursing Home Costs

Smart Strategies To Protect Real Estate From Nursing Home Costs


If a person owns or has recently purchased real estate, they might also wonder how best to protect that property when the nursing home costs arise in the future. This is due to the common misconception that property owners must necessarily sell off their homes when they need to enter an assisted living facility or nursing home.

Generally, a person’s residence is a “countable asset” for the New York Medicaid qualification purposes. In this case, it frequently does need to be sold to make the real estate owner eligible for Medicaid coverage of long-term care. There are, of course, exceptions in some circumstances and planning techniques that can preserve the primary residence.

  1. Outright Transfers to Spouses or Children. These aren’t always such a great idea. Many people assume – incorrectly – that simply transferring real estate to an adult child or relative will solve the problem of Medicaid eligibility, or receiving coverage for nursing home costs. New York has a 5-year “lookback period” for reviewing Medicaid eligibility, so real estate transfers can be scrutinized if done too closely to admittance to a nursing home. Also, from a legal standpoint, an outright transfer of property to a child or any other individual may be considered a gift that is not revocable. That means if you want the property back, the recipient has no legal obligation to give it back to you. If you are considering any type of property transfer, you should consult a New York Real Estate Attorney to see what the next best steps would be for you.
  1. Transfers that Fall Within Exceptions to the Medicaid Penalty Period. These can include some of the following:
  • Transfers to a spouse
  • Transfer to a child under 21 years old who meets certain disability requirements
  • Transfer into a trust for someone under 65 who is disabled
  • Transfer to a sibling that has lived in the home and holds an equity interest
  • Transfer to a “Caretaker Child” – in other words, transfer to an adult child of the homeowner who lived in the house for at least two years prior to nursing home admittance, and provided care that helped the homeowner avoid nursing home care up to that point.
  1. Life Estates. A life estate is a legal construct that allows the homeowner to continue residing in their home as long as they are able, while including a future interest in the property to some other person – usually a child, sibling, or other relative. When the homeowner (the “life tenant”) dies, the home then passes to the other person or people (“remainder owners”) in the Life Estate. Not only are there valuable probate and tax benefits to this type of arrangement, but it can allow property to remain with a person without involving a transfer or gift of property.
  1. Irrevocable Trust. By putting the home in an irrevocable trust, the homeowner can obtain protection for Medicaid planning purposes without losing their rights and interest in the home. An irrevocable trust is a legal entity that holds assets and designates beneficiaries that the property eventually passes to. The main drawback is that irrevocable trusts can’t be undone or modified unless special circumstances exist. For the same reason, however, an irrevocable trust helps for Medicaid planning because the home is no longer an asset that can be freely sold or transferred.

Our Bronx and New Rochelle Real Estate Attorneys Can Help You Review Real Estate Strategies When You Need to Plan for Nursing Home Care or Medicaid

 If you own real estate and are concerned about the implications of property ownership and nursing home costs, please contact our legal team at Cavallo & Cavallo and we will be glad to help you. Navigating what can be an incredibly complex process with a skilled Bronx and New Rochelle real estate attorney can help simplify these steps. To learn more, call our Bronx office at 718-822-2203, or our New Rochelle office at 914-235-8500, or visit our real estate attorneys online to get started today.

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