If a child lives in their parent’s house, and provides a certain level of care for the parent, for at least two years, the parent can give the house to the child without creating a period of Medicaid ineligibility.

    This gift has to be completed during the parent’s lifetime.

    The gift can be completed by using a power of attorney that expressly provides for this possibility.

    Such a power of attorney should always be prepared in a situation where a child is caring for a parent, so that the gift can be made even if the parent becomes mentally or physically incapacitated or financially incapable.

    This power of attorney should be prepared as soon as possible, in case there is any issue of the parent potentially losing mental capacity as time goes on.

    Such a gift should be made, using a completed and recorded deed, as soon as possible after the two year caregiving period has passed.

    Not all care is of a sufficient level to qualify for this exemption from the normal rules that would ordinarily create a period of Medicaid ineligibility.  A skilled elder law lawyer should be involved to be sure that no Medicaid difficulty arises.

    If this gift is not completed before the parent dies, the opportunity to make this gift may be lost, and the home may be lost to Medicaid recapture, reimbursing the state for care that was provided through Medicaid during the parent’s lifetime.

    Even if the whole value of the house is not lost to Medicaid recapture, there will likely need to be a probate after the parent dies if the home is not transferred during life.  There might well be no need of a probate if the house had been transferred during life, however, since a Medicaid recipient likely will have few other assets that would need to be probated.

    If this gift to a caregiving child is properly done, both the cost of the care provided by Medicaid, and the cost of a probate can be avoided.  This can be the difference between a child actually getting something significant, versus the child becoming effectively homeless after the death of their parent.

    As outlined above, however, the exception for gifts of a home to a caregiving child is a very technical exception, and such a transfer should only be made (or even planned) with the assistance of a skilled elder law attorney.