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TOP TEN T IPS – AUGUST 2016:
Protecting Your Home
1. Your home will go through probate if no planning is done.
Once all of the owners on a deed pass away (i.e. dad or mom and dad), the
house will go through probate for the lack of a surviving owner or beneficiary.
2. Estate recovery will allow the State of Michigan to recoup money from the sale
of a Medicaid recipient’s home.
When assets go through probate, the government is able to make a claim for
the cost of care received.
This reduces money that’s available to the Medicaid recipient’s heirs.
3. Avoid the State of Michigan’s estate recovery right by avoiding probate.
Michigan’s estate recovery program only applies to assets that go through
probate.
4. Your Home is a countable asset if it’s in a trust.
A home counts against the asset eligibility limit if it’s in a trust.
Medicaid has low countable asset limits (i.e. $2,000 for a single person and
$119,220 for a married couple) that very few people would be eligible for if the
value of their home counted against their eligibility limit.
5. A ladybird deed is the best planning option.
This deed avoids probate and also Michigan’s estate recovery right.
This deed achieves Medicaid eligibility because the home is not in a trust.
A trust, children, or anyone else can be named as beneficiary.
6. The tax implications of gifting home before the Medicaid lookback period.
Gifting a home even in advance of the Medicaid five year lookback period will
cause the new owner to pay capital gains on a sale on the difference between
the value at the time when the original owner purchased the home and the sale
price.
If the home was inherited, the new owner would get a step up in basis serving to
reduce capital gains. As a result, there is a benefit to it passing to the heirs at the
owner’s death.
7. How will a single Medicaid recipient pay for home expenses.
It may be appropriate to rent the home.
8. How a family member/trusted friend can live in the home.
A trusted person could take care of the home and cover the expenses without
generating rental income.
9. How renting a home will impact Medicaid benefits.
When applying for Medicaid, the income and expenses associated with the rental
will have to be disclosed.
The Medicaid recipient may have to pay a portion of the income to the care
facility.
10. What happens with the home at the owner’s death.
If a ladybird deed was done, it passes to the named beneficiary. If planning was not done, the home will go through probate, and the State of
Michigan will have the right to recover the cost of care against the house.
Haans Mulder Jessica Arends [email protected] [email protected]
321 Settlers Road, Holland, Michigan 49423
Phone: (616) 392-1821 Website: www.holland-law.com
