Does Massachusetts Homestead Protect From Nursing Home Costs?
The Question: Homstead...Protection?
Q: My 93 y/o grandfather who is in good health moved in with my family 9 months ago. My (absentee) Brother and I are the only heirs. My husband and I are 
purchasing a new home to increase space for our new family. He wants to give us 200k toward the house and to spend down a portion of his cash savings. Should we include him on the deed and homestead him or simply receive as a "gift"? My husband and I are financially independent and while we appreciate the gift, we do not need the gift to purchase new home.
The Answer: Homestead in Massachusetts
A: There is a 5 year look back period for Medicaid. Any asset transfers, including gifts, made within this 5 year look back window will trigger a penalty period of ineligibility to receive Medicaid benefits. There are ways to avoid triggering these penalties but an outright gift is not one of the ways.
As an example of the problem with making an outright gift, if your grandfather gifts to you $200,000 today and in 3 years requires skilled care, the gift of $200,000 will render him ineligible for Medicaid benefits for a significant period. During the period of ineligibility he, or you, will have to pay for any nursing home care.
In Massachusetts, the homestead protection will not keep your grandfather’s $200,000 from the reach of nursing homes, but a primary residence is often an exempt asset for Medicaid (Mass Health). In Massachusetts however, the nursing home or skilled care facility will be able to put a lien on your home if you use a portion of his $200,000 gift to purchase the home and put his name on the deed.
If your grandfather is truly seeking to protect assets from the reach of nursing homes, setting up an asset protection trust is often the recommended option. Creating an irrevocable trust starts the 5 year look back clock as soon as the trust is funded. Once the property is in the trust, your grandfather can make any type of gift or transfer he so chooses without “resetting” the 5 year look back period. In addition the irrevocable trust allows your grandfather to protect ALL of his assets while allowing access to income. As another added benefit, your grandfather’s life savings will be left to his loved ones without the need for probate.
Take the crucial steps to protect your life savings from the reach of state and federal estate taxes. Register online to attend a free educational workshop hosted by Dennis B. Sullivan, Esq, CPA, LLM or by calling 800-964-4295 (24 hours a day). You can also check out Free Elder Law Guides developed by the team of professional at Dennis Sullivan & Associates. By planning now you can save you and your family the stress of having to worry about the future.