How do I protect my parents' home from being taken by the state if they go on public aid?

4 answers | Last updated: Nov 24, 2016
Karolyn asked...

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 Answers

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.


Community Answers

Joseph l. matthews answered...

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.


Joseph l. matthews answered...

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.


A fellow caregiver answered...

If my Mother and I co-owned a home together for 14 years and I transferred the whole thing to my name, and I write her a check every month for a partial payment of her 50% share, if I keep my canceled checks and match them up with her bank statement showing it went to her, will that be sufficient to show that I am paying her for her share of the home? Also, her checking account has my name on it also, since she can no longer write checks and that's where the money will be transferred to. My name has been on her checking for 14 years and canceled checks will show that the expenses from that account are totally hers. I'm afraid I will pay her back her 50% and then Medicaid won't recognize that she has been paid and give me credit for those payments.