Protecting Your Inherited Home From Long-Term Care Costs: The Basics

"As homeowners age, the costs of long-term care can jeopardize their ability to pass down their homes to future generations. Understanding how Medicaid works in relation to homeownership is crucial for estate planning and navigating care options. Medicaid can cover long-term care costs but has implications for homeownership that must be considered."

"Long-term care costs are significant, often exceeding $100,000 per year, leading many Americans to rely on Medicaid after depleting their savings. Medicaid allows homeowners to qualify for coverage while owning their primary residence, which is typically considered an exempt asset during the initial qualification process. Despite the initial exemption, Medicaid estate recovery programs can place a lien on the home after the homeowner's death to recoup long-term care expenses. Strategies like transferring the home to an irrevocable trust or gifting it to children can protect the home from Medicaid estate recovery-but come with complex requirements and limitations."

Long-term care costs often exceed six figures annually, rapidly depleting savings and forcing many older homeowners to seek Medicaid coverage. Medicaid eligibility typically exempts a primary residence during initial qualification, allowing homeowners to retain their homes while receiving benefits. After a beneficiary's death, state Medicaid estate recovery programs can place liens or pursue the estate to recoup long-term care costs, risking the property's transfer to heirs. Protective strategies include transferring the home into an irrevocable trust or gifting it to family, but these tactics involve lookback periods, strict timing rules, and legal complexity. Early planning with financial and legal professionals is essential to balance care needs and inheritance goals.

Read at SFGATE