Consequences of gifting home to son
Dear Mr. Feichthaler: I would like to gift my house to my son for several reasons. Most notably, at 72 years old, I don’t ever want Medicaid or any other government agency taking the value of my home to pay for long-term nursing home care. Are there are any bad consequences to this?
-Melanie R.
Dear Melanie: Like you, many of my clients are concerned about what will happen to their assets as they get older. Generally, the homestead exemption protects the value of the house against creditors. The major exception to this is a mortgage, which you have agreed will be collected against the value of the house.
Medicaid has the ability to look back 60 months from the time of a Medicaid application. When an application is made, you will be required to disclose gifts and other transfers of assets. Although Medicaid will not require your kids to give back any cash gifts made, they will not pay benefits for the period of time your gifts would have paid for. For example, if you gave $30,000 to your son over a 4-year period, and $3,000 would pay for a month of care, Medicaid will not pay for the first 10 months of care. Every situation is unique relating to Medicaid planning, and professional advice should be sought.
It should be noted that there is a major negative to your proposal. You will be transferring your house to your son, giving him full ownership. There is an unlikely chance this could have gift tax consequences, but more importantly, your son will have the ability to do whatever he wants with the property, even ejecting you or selling the property and keeping the cash. Your home may be your most valuable asset, and serious consideration should be given before any type of transfer.
Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.