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Does Moving to Nursing Home Forfeit Homestead Protection?
Does an elderly person lose homestead protection when they move out of their house and in to a nursing home? I received a phone call from a lady whose father had moved into a nursing home when there already was a judgment for unpaid alimony owed to his ex-wife. The daughter asked if the father’s home was still protected from the judgment, and if not, could the father deed the home to the daughter and her brother.
A Florida resident does not lose homestead protection when he moves out of his residence as long as he intends to return to the house. When a person moves to a nursing home or assisted living facility the move is usually permanent, but not necessarily permanent. Whether the person intends to return to his former home is an issue of fact. It is difficult to show the debtor’s intent to return when the debtor suffers from incapacity sufficient to warrant full time care. At some point soon after the move into the nursing facility the former home will in most cases lose homestead protection. Whereas younger adults often relocate for jobs or for education in locations far away from Florida on a temporary basis, moving to a full time care facility is usually irreversible.
In this type of fact situation, if the parent deeds the home to his children while it is homestead property the deed would not be a fraudulent conveyance, even if intended for creditor protection, because the homestead already is exempt property. The transfer of exempt property to a third party cannot be a fraudulent conveyance. If a person deeded the house to children shortly after moving to a nursing facility the transfer may survive if the family could show that at time of the transfer the debtor/ parent had not yet decided to remain permanently in the nursing home (assuming he is capable of explaining his intentions). Each week of residency outside the house in a full time care facility makes defense of the homestead more difficult and increases the likelihood that a deed to other family members will be reversed.
posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida
September 14, 2005 in Florida Protections | Permalink
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Comments
Generally speaking, transfers to someone other than your spouse can disqualify you for Medicaid Coverage for nursing home care. The "look-back" period is now five years. I get very nervous when a client (or more frequently, the children) call to ask about transferring assets to the kids "so the nursing home and the state won't take it". I advise the caller to meet with an attorney who specializes in Medicaid qualification before they start transferring assets.
It seems to be the position of the Department of Children and Families in Florida that a nursing home resident can keep their home. The rules also might allow a nursing home resident to rent their home and keep the home, but that would mean the loss of the homestead property tax exemption and the Save Our Homes Cap.
There are also loss of control issues, loss of stepped-up basis and many other issues.
Transferring assets in contemplation of nursing home care is not a do-it-yourself project. Above all else DO NOT PREPARE A QUITCLAIM DEED IF YOU ARE NOT AN ATTORNEY. Even attorneys aren't perfect, but it is too easy to mess up a deed for a non-professional to attempt.
I am not a Medicaid expert, but know enough to tell a client to stop and seek qualified legal help. The risks are too great and the cost of qualified advice will almost always pay for itself by avoiding bigger problems.
Posted by: Jeffrey S. Goethe | May 8, 2007 10:21:32 PM
I am not going to a nursing home yet, but I have a life-threatening illness and want to quit-claim my share of the Florida house my daughter and I own together so when the inevitable happens she won't have to go through probate. She would like to sell it and buy a house in another Florida city with a better setup to take care of me, but because I had 3 judgments recorded after I could no longer work, would quit-claiming the house to her be a fraudulent conveyance?
Posted by: Naomi | Jul 13, 2006 6:41:12 AM
Is it legal for a (florida) elderly person to leave his/her home and car to a sibling via/power of attourney and enter a Michigan nursing home with Medicaid coverage? And the sibling/power of attourney keeps the sale of the home and car for himself?
Posted by: CB | May 8, 2006 8:25:06 PM
