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