If your Mom or Dad, or perhaps yourself, are taking the first steps toward moving into a long-term care facility, you may be wondering what to do with your house. The national median cost of a room in an assisted living facility is almost $50,000 per year, while nursing homes run closer to $100,000 annually. Many retirees moving into long-term care feel obligated to sell their family home, but this isn’t always the best course of action. There are costs involved in selling a home, as well as time, effort, and stress. Here, we go over alternative options to selling that will allow you to protect your property and keep your home in the family.
You can find the current cost of long-term care services by finding your state on the LTC News Map by clicking here.
Let to a Family Member
Instead of gaining a lump sum by selling your house, you can earn a passive income through rental fees by letting your home to a family member. Not only will you get to keep your house and earn some cash, but you also don’t have to worry about searching for a tenant. You can rent your space out to a trusted loved one who is easy to contact, and with whom you don’t have to worry about getting into costly or stressful legal situations. If you want, you can even let your home to a younger family member at a fair price to benefit you both. You’ll earn a small rental income while helping your loved one to get up on their feet.
Transfer Your Home
If you want to keep your home in the family but don’t want to bother with the hassle of acting as a landlord, you can transfer your property to a family member. If you use Medicaid to pay for nursing care, it’s possible that the state may seize your home in the event of your death. The state may also try to recoup money from your property to cover the cost of your care in a process known as estate recovery by putting a lien on your house.
Transferring your home to a family member is a good way to protect your property from seizure and ensure that it goes to your loved ones instead of to the state. In many states, however, it’s important to remember that transferring your home to certain parties can result in a Medicaid penalty period, where you’d be unable to claim financial benefits for a given stretch of time. While you can’t transfer freely to your adult children, in general, you can transfer your home without incurring a penalty to:
- Your legal spouse
- A child under 21
- A blind or disabled family member
- A trust fund for a disabled individual under the age of 65
- A sibling who holds an equity interest in the property
- A family caretaker
The Federal Deficit Reduction Act of 2005, which became law in 2006, puts many restrictions on the transfer of funds and property done in order to qualify you for Medicaid. However, it allows states to set up partnership programs to help families protect savings from the high costs associated with long-term care.
Partnership Long-Term Care Insurance
If you have a qualified Long-Term Care policy you can protect assets from this spend-down and still qualify for Medicaid in the event you ever exhaust your savings. Most states have qualified policies available for purchase and are very affordable ways to ensure asset protection. However, you must health qualify in order to purchase these policies so you need to act when you are younger. Partnership Long-Term Care Insurance can give you that extra peace-of-mind giving you the knowledge you will have access to your choice of care without wiping out your savings or losing your home.
When entering a long-term care facility, many people are under the impression that they have to sell their house to cover care costs. If you want to keep your property in the family, however, there are alternative options that are far cheaper and cause less of a headache. You can earn a passive income by letting your home to a family member, or you can transfer the deed to a loved one to avoid selling your lifelong house or purchase an affordable Long-Term Care Insurance policy.
About the Author
Sally Phillips is a freelance writer with many years’ experience across many different areas. She enjoys reading, hiking, spending time with her family, and traveling as much as possible.
Contributor since November 4th, 2017
Crisis management is often what happens with many American families when a loved one requires long-term care services and supports. The decisions made by your children may not be the best available options for your care or finances. However, since there is little time to make decisions, there is little time to think things out.
This is why affordable Long-Term Care Insurance is so important as you plan your future retirement. These policies give you access to your choice of care in the setting you desire. Plus, you will have the tax-free resources to obtain both quality care and protect your legacy and preserve your lifestyle.
In addition, most plans provide case management. These are licensed nurses or social workers who are specially trained to develop a plan of care based on your preferences and specific needs. This gives your family the time to just be family.
It is always best to start your research and get these policies in force prior to your retirement. The best time is in your 40s or 50s. Keep in mind, you need to health qualify and every insurance company has its own criteria. An experienced Long-Term Care Insurance Specialist can help you find the most affordable plan based on your age and health.
Find a qualified Long-Term Care Insurance specialist by clicking here.
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