My mother lives in California and is on Medicaid. She will be placed in a long term care facility soon following a stroke. She owns her home...

Question

My mother lives in California and is on Medicaid. She will be placed in a long term care facility soon following a stroke. She owns her home and will not be able to maintain/pay for it once her benefits primarily are going to the care facility. If she tries to keep the home, will the Medicaid estate recovery take the home? Should we transfer the home into mine and my husband's name, sell it and start some type of savings account in our name to assist her in the future so the money doesn't count against her? There is no Will involved and we do not have DPOA over any of her affairs currently.

Answer

If it's at all possible, your mother should transfer the home to an irrevocablhttp://www./answers/answer/free_show/373149311#e trust - she can gift the home to you if she wants to, but that means the home would lose a cost basis adjustment upon her death, which means additional capital gains tax would be due if you were to sell the property. With an irrevocable trust, you can avoid the Medi-Cal estate claim, get a new cost basis on your mother's death (the Prop 13 assessed value won't be affected) and you can also shelter the rental income from your mother's Medi-Cal share of cost if you were to rent out the property during your mother's lifetime.

You should see an attorney who does Medi-Cal planning in your community.