Don't Transfer the Home! (Part Two)

First of all, assume the same facts as before, but focus on the following facts: (1) that the home has an assessed value of $160,000, and (2) that the home is still in my name (rather than my father's ) as a result of his early transfer of the home to me.

The Second Reason Not to Transfer the Home: Such a Transfer Could Create Ineligibility for Medi-Cal Coverage if the Elder Adult Should Actually Need Nursing Home Medi-Cal Benefits Anytime Soon.

If it is conceivable that my father will have to enter a skilled nursing facility in the near future, the transfer of his home will, after a Medi-Cal "look-back" analysis of that transfer, create a period of ineligibility - a period of time during which my father will not be entitled to receive nursing home Medi-Cal benefits but will instead have to use his own assets to pay for his nursing care.

More specifically in this case, the Medi-Cal personnel will calculate the period of ineligibility by taking the $160,000 assessed value of the home (not the fair market value of the home, thankfully - just the assessed value) and dividing that value by $5,698 (the APPR figure for 2009). The result of this analysis will be 28 months of Medi-Cal ineligibility ($160,000/$5,698 = 28.08).

Where it is true that a residence is considered an "exempt" asset in a Medi-Cal eligibility context, that "exempt" status exists only if my father has the legal right to occupy the home (and can claim on the Medi-Cal application that he intends to return home). If my father, has, however, transferred full ownership of his home to me, he no longer has a legal right to occupy the home, and therefore cannot claim the applicable exemption. As a result, the home will not be "exempt", but instead subjected to the look-back transfer and ineligibility penalties described above.

This result would force me to sell my father's home to pay for the 28 months of nursing care which Medi-Cal will not cover - and this sale would cause unhappy income tax consequneces.

See Part Three of this series which includes a discussion of the damaging income tax consequences which attend a child's ownership and sale of the elder adult's home.