Elder Law & Estate Planning: Can I Save My Home for My Daughter?

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Frank Petrich
Julian Gray

By Julian E. Gray and Frank A. Petrich

Three years ago, Mrs. Jones’ daughter, Susan, one of her three children, gave up her job in California & moved back to Pittsburgh to care for both of her parents. Mr. Jones died two years ago and Mrs. Jones’ physical condition has deteriorated to the point that she cannot leave her house by herself.

Mrs. Jones’ intent is to name Susan in her will as recipient of Mrs. Jones’ house to repay Susan for the sacrifices Susan has made in returning home to care for her parents. However, it is becoming clear that Mrs. Jones may have to go to a nursing facility because of her deteriorating physical condition. The question Mrs. Jones wants answered is what she can do to help ensure that Susan can own and live in the family home after Mrs. Jones no longer resides there, either due to her admission to a nursing facility or death.

Yes, parents can leave their home to a child by naming that child as a recipient of the house in the parents’ will. However, if Mrs. Jones were to do so, and prior to her death, needed to enter a nursing facility and have all or a portion of that nursing care paid for by Pennsylvania’s Medical Assistance program, the state would make a claim (called “Estate Recovery”) against those assets in Mrs. Jones’ estate being distributed under her will (Mrs. Jones’ probate estate).

That claim would be for those payments made by Medical Assistance on Mrs. Jones’ behalf which could total thousands of dollars each month. Depending on what remained in Mrs. Jones’ probate estate, the house might have to be sold to satisfy the Medical Assistance claim with the house not then being available to Susan as both Mr. & Mrs. Jones wanted.

Similarly, Mrs. Jones could transfer the house to Susan now. If she did transfer the house now and never entered a nursing facility, no problem. Susan gets the house as her parents wished and all live happily ever after. However, if Mrs. Jones has to enter a nursing facility, and apply for Medical Assistance, especially within the next five years, a “transfer penalty” based upon the value of the transferred house could be imposed on Mrs. Jones eligibility for Medical Assistance.

But, most importantly, in Mrs. Jones’ case, federal law recognizes the unique situation which arises because of a “caregiver child”. The law creates an exception to the

imposition of a transfer penalty on the transfer of the house known as the “caregiver child” exception.

This exception will apply if the child has lived with the parent for at least two years immediately prior to the parent entering a nursing facility and, but for that care, the parent would have had to enter a nursing facility. There has to be adequate supporting evidence to justify this exception, best prepared with the assistance of an elder law attorney, including a physician’s affidavit citing how Susan’s activities on behalf of her mother kept Mrs. Jones out of a nursing facility as long as they did.

Thus, a thorough review of all the facts, the relationship between the parents and child and the potential risks of a transfer needs to be done by the parent in order for the parent to make such a decision.

The co-authors, Julian E. Gray and Frank A. Petrich, of Julian Gray Associates, are Certified Elder Law Attorneys and VA Accredited Attorneys with over 50 years combined elder law experience. Julian Gray Associates is the only law firm in United States with 6 Certified Elder Law Attorneys. For more information, visit, www.GrayElderLaw.com