Working Caregiver- Long-Term Care with Medicaid

It is a simple process to transfer ownership of the home from your aging parents to someone else or adult child. The steps include: create, sign, notarize and record a Deed at the county court house (county records). Here are the approximate costs to have a lawyer draft a Deed ($60) and record the deed ($40).

There are, however, other issues you should consider:

1. TAX Issues - If your mom sells the home herself, she can shield up to $250k of gain from taxation, for example, if she paid $50k for the home 20 years ago and now sells it for $300k, the $250k gain would not be taxable. If she "gifts" the home to someone else, the recipient assumes her original basis (what she paid for the home plus improvements) and upon selling the property would owe short or long term capital gains tax on the profit (sale price less basis). If she gifts the home you will also want to file Form 709 with the IRS to exclude paying a gift tax on the transfer. I can show you how to fill out this form.

2. MEDICAID Issues - Most folks that need long term care eventually spend down assets and apply for Medicaid to help pay for care. Your mom's home is an "exempt" asset while she is alive, i.e, you do not have to sell it to qualify for Medicaid benefits. The home may also be exempt after she dies if you or another family member meets certain criteria. If you "gift" the home today you will create a period of ineligibility from Medicaid benefits, which depending on the home's value, could be up to 5 years. Spending down assets to zero is not a good Medicaid strategy. There aresteps you can take to preserve assets from long termcare costs and qualify for Medicaid. Call me at (512) 694-4838 if you'd like additional information. As I mentioned above, the Medicaid portion of my practice is offered on a volunteer basis, i.e., I do not charge for this counseling.

William Witt

4th Quarter CoachTM

Senior Resource Center

4408 Spicewood Springs Road

Austin, TX 78759

(512) 694-4838