You may have heard you don’t need to do estate planning in New York if your child has been living with you. You can just transfer all your assets to them, right? Not so fast!
In New York State, in order to apply for Chronic Medicaid (nursing home care) or Home and Community Based Services (such as a home health aide), the applicant must either live in the home or have an intent to return, and as of 2023, their home equity interest must be under $1,033,000. Otherwise, their home will count against them for Medicaid’s asset limit.
In New York State, in order to qualify for Medicaid, a non-married individual may not possess more than $28,133 in assets. Medicaid rules normally prevent someone who has more than this amount from qualifying until they “spend-down” these assets. Transfers of cash or property made within sixty months (five years) before applying to Chronic Medicaid are subject to a “look back” and may cause a penalty. period in which the applicant will not receive benefits. There are exemptions for certain types of transfers, one of which is the Caretaker Child exemption.
Currently, there is no “look back” period for Home and Community Based Services, though New York State has proposed a period of thirty months (two and a half years), which is expected to begin in March of 2024.
Regardless, even if the home is an exempt asset for Medicaid qualification purposes, it will not be exempt from the Medicaid Estate Recovery Program later on.
In an effort to protect their home from nursing homes and the Medicaid Estate Recovery Program, some have tried transferring their assets to the child who lives with them. While New York State law does permit a primary residence to be transferred to a “caretaker child”, the exemption is more complicated than it seems.
What is a Caretaker Child?
A Caretaker Child (sometimes called a Child Caregiver) is an adult child who must live with the parent in the parent’s home for two years or more. The adult child must provide care to the parent. It must be more than housekeeping and should be documented by a signed Caregiver agreement.
The care must make the difference between being able to remain home rather than going to a nursing home facility or assisted living facility. Documentation indicating that this is the case is generally required. This care generally includes assistance with activities of daily living, such as toileting, bathing, dressing, personal hygiene, mobility, etc.
The Caretaker Child should also keep a daily log documenting the type of care provided and to the extent it was provided. The log should include any medications and/or treatments that were given, transportation to doctors appointments, and specific events that occurred that would have resulted in nursing home or assisted living placement if the adult child were not providing care should also be recorded.
In addition, Medicaid may require that the primary care physician for the parent complete a form documenting the level of care provided by the child.
Transferring a Home to a Caretaker Child
Medicaid will scrutinize the transfer and ask for supporting documentation to prove residency of the Caretaker Child and care for the person applying.
The transfer to a care taker child is typically only used in crisis planning and is not a planning technique. First, there may be adverse tax consequences when you transfer the real property to the Caretaker Child.
Second, if it is your intention that all of your child share equally at the time of your death, a transfer to one child is considered a completed gift. The Caretaker Child is under no obligation to share with their siblings.
Third, transferring your home to the child while you are still alive and living there will leave it at risk for any issues they face – bankruptcy, creditors, lawsuits, car accidents, etc.
We Can Help
Unfortunately, getting to the bottom of Medicaid eligibility is a complex issue that comes with lots of confusing rules and regulations, and the Caretaker Child exemption is no exception. In order to consider all of your options, you should always consult with an experienced estate planning and elder law expert in your area. Contact us at The Palermo Firm for guidance for New York Medicaid planning as well as general estate planning advice and guidance.
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