Elder Law Answers
Can My Mother Transfer Her Life Insurance Policy to My Disabled Sister?
My mother's life insurance policy was purchased to benefit my disabled sister, who receives Social Security disability ben...
Read moreHow Do I Ensure My House Goes to My Sister Without Transferring It to Her While I Still Live in It?
- March 10th, 2016
Q
I'm 53, disabled, and own a home. My sister, who is my heir, is worried that if I need to go into a nursing home, the state will take the house from her. I still owe her money, which she and her husband loaned me to purchase and rehabilitate the house. The plan was that either I would refinance the home and cash out enough to pay her back or she would sell the house after I passed to recoup the loan from my estate. What do I need to do to guarantee that she will be able to keep the house if I need to go into a nursing home? My health is stable right now, and I don't think that will be anytime soon. She says we have to change ownership of the house at least five years in advance to keep it from being taken. My home is my security. I don't want anyone else to own it while I live there. What can I do?
A
You have a few choices, including transferring your home into joint names with your sister, creating a life estate with you holding the life interest and the house passing to your sister at death, or putting it into an irrevocable trust. Each approach has its pros and cons and each can cause a five-year waiting period for Medicaid eligibility. Another avenue, which might be the best in your situation, would be for you to execute a promissory note and mortgage to your sister. This would give your sister a right to repayment if money was left after the bank mortgage is paid off and it should not cause a five-year waiting period for Medicaid. Each of these four options has its strengths and weaknesses. We strongly recommend that you consult with an elder law attorney, who you would have to retain anyway to put in place the strategy you choose. To find an attorney near you, go here: https://www.elderlawanswers.com/elder-law-attorneys.