A parent’s home holds more than financial value. It carries memories, security, and a lasting legacy. Without planning, nursing care costs can put that home at risk, and many families face this reality too late.
Adult children often juggle concern for a parent’s well-being with the need to protect assets. Florida law offers tools to safeguard property from long-term care expenses. Using the right legal and financial strategies can reduce stress and prevent disputes. These steps also help preserve the home for future generations while ensuring a parent receives the care they deserve.
Why Nursing Care Costs Put Homes at Risk
Nursing care in Florida can cost more than $100,000 per year. Many families rely on Medicaid, but it comes with strict eligibility rules and asset limits.
Even if you are eligible for Medicaid, you may still lose the family home later. Through Medicaid estate recovery, the state can claim assets after a recipient dies to recoup the costs of care. Without careful planning, the state could take the home.
Essential Steps to Protect Your Parents’ Florida Home
Understand Medicaid and Asset Rules
Medicaid reviews an applicant’s financial history over a mandatory five-year look-back period. Transfers of assets below market value, such as deeding a home to a child, can trigger a penalty period. That means your parent wouldn’t be eligible until the end of the penalty period.
That’s why early planning is essential to protecting assets. Starting before a parent needs care offers more flexibility and helps you avoid issues with the look-back period. Understanding these rules lays the foundation for effective long-term care planning.
Choose the Right Legal Ownership Strategy
Many families make the mistake of thinking that a parent can just give away the house to ensure Medicaid eligibility. If the transaction is within the five-year look-back period, it can be a costly mistake.
Instead, explore ownership options that comply with Florida law. The following are some options families might consider:
- Gifting or Outright Transfer: Risky due to the look-back period and the loss of control for the parent.
- Creating a Life Estate: Parents remain in the home for their lifetime, and the remainder of the property transfers to the heirs.
Careful execution of ownership changes is essential. Legal guidance ensures the parent does not lose Medicaid eligibility and the plan works as intended.
Use a Florida Lady Bird Deed
A Lady Bird deed, or enhanced life estate deed, is a common way to protect assets in Florida. It lets the parent retain complete control of the home, including the ability to sell, mortgage, or transfer the deed. Upon death, the property goes directly to the heirs, bypassing probate and Medicaid estate recovery.
Consider a Trust for Asset Protection
An irrevocable trust is a powerful tool for protecting assets. Placing the home in a trust and satisfying the five-year look-back removes it from Medicaid consideration. The trust can let the homeowner remain in the home for life while shielding the property from future care costs. Proper setup is essential to comply with Medicaid rules and ensure the trust delivers the intended protection.
Update All Beneficiary Designations
Outdated paperwork can weaken an overall protection plan. Check all bank accounts and investment portfolios. Also review retirement plans (IRAs, 401(k)s) and insurance policies to confirm transfer-on-death (TOD) and payable-on-death (POD) designations are correct. The goal is for these assets to pass directly to heirs and avoid probate or Medicaid recovery.
Review Insurance and Financial Tools
Legal planning is most effective when combined with a solid financial strategy. A long-term care insurance policy can cover the first few years of care. This coverage offers flexibility and could give your family time to clear the five-year look-back period. Review all existing insurance policies with a financial advisor to determine how they align with the overall protection plan.
Work with a Certified Florida Elder Law Attorney
Specialized legal guidance is essential. Florida elder law is complex, and the rules governing Medicaid eligibility and estate recovery are subject to frequent changes.
An elder law attorney is familiar with these state-specific requirements. They can prepare a custom Lady Bird deed or trust and ensure that all documents align with the homeowner’s financial situation.
Questions About Preserving Assets
How soon should I start planning for nursing care costs?
Start planning early to create more options and reduce the risk of losing assets to Medicaid recovery.
Will Medicaid cover nursing care if the home is in a trust or a Lady Bird Deed?
Yes. Properly structured trusts and Lady Bird deeds can protect the home while maintaining Medicaid eligibility.
Is a Lady Bird deed better than a trust?
Both are effective. The best choice depends on the individual’s financial situation and long-term goals.
Can I protect other assets besides the home?
Yes. Trusts, beneficiary designations, and insurance can safeguard additional property.
Secure Your Family’s Legacy
Protect your parents’ home from nursing care costs and preserve the family legacy. Starting early gives peace of mind and reduces the risk of losing the home, ensuring it passes to the next generation.
Contact Scott Law Offices for expert guidance and advice. Our team can help you develop a plan to protect the family home and other assets.
