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Definition
In a Medicaid planning context, an outright transfer of the principal residence simply means a gift of the home; you freely deed your home to your loved ones (or to the recipient of your choice). By gifting the home to someone else, you eliminate the house from your financial picture entirely, unless the transfer is made within the applicable "look-back" period.
Prerequisite
- Transferring your principal residence may help you if you want to qualify for Medicaid, you want to potentially preserve your house for your loved ones, and you anticipate the need for long-term care
Key Strengths
- You potentially preserve the house for your loved ones
- You avoid probate
- May assist in qualifying for Medicaid, if necessary
- If you give your home to certain relatives, you will not create a Medicaid ineligibility period
- You will usually not incur federal gift taxes
Key Tradeoffs
- You lose the right to live in the house
- You lose control over the asset
- Your beneficiaries don't receive a stepped-up cost basis
- A transfer of the home may trigger the ineligibility period
Variations from State to State
- None
How Is It Implemented?
- Gather information about your income, assets, and transfers of same for the previous five years
- Consult a Medicaid law attorney who will advise you and draft the deed