How do I protect my parents' home from being taken by the state if they go on public aid?
My parents are retired and 63 years old. I pay their mortgage for them as they have no money and their house is in their names. How do I prevent the state from taking the house if the case arrises that they need to ever go on public aid?
Expert Answer
Every time you pay your parents’ mortgage, you are making a gift to them. To protect yourself, you should be receiving an increasing percentage ownership interest in their house with every such payment. Otherwise, should your parents eventually need nursing home care and qualify for Medicaid, there’s a good likelihood that the home may have to be sold following their deaths, under the law that requires the state to be reimbursed for all the Medicaid outlays it made on behalf of your parents. At that point, if you claim that part of the house is really yours, and therefore not subject to the Medicaid debt of your parents, you may have a tough time proving your case. After all, the state will say that your monthly payments were a gift to your parents, since there is no paperwork indicating otherwise.
Accordingly, you should contact an attorney to prepare a document granting you an increasing interest in your parents’ house, based on the value of the house each year and the total amount of the mortgage debt you have paid each year. This will cause some income tax complications, so you need to consult with an accountant, as well. However, these costs will be well worth it, since you will be protecting the many thousands of dollars you are currently paying on behalf of your parents.