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Medicaid Eligbility-Life Estate in Real Estate

BLOG FOR DECEMBER 9, 2015 The Story: John, age 65 years, will soon need the skilled care of a nursing home. He wants to apply for Medicaid benefits to pay for the nursing home. The problem is that the value of his assets is well above the $2,000 limit for Medicaid eligibility. Question: Can John reduce the value of his assets to $2,000 by buying a life estate in the home of his son, Robert? Answer: Yes, if John moved in with his son, Robert, and purchased a life estate in Robert’s home at the value according to the life estate table, and resided there for at least a year, there should be no penalty for the purchase of the life estate. However, if John resided in Robert’s home for less than a year after the date of purchase, and then applied for Medicaid benefits, then there would be a transfer penalty for the value of the life estate. See 42 U.S.C. Section 1396 (c)(1)(J).

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