Question: My parents are both in their 80s and living in Illinois. We are considering moving them into an assisted living arrangement that requires a deposit, which would be returned (on a pro-rated basis) should they move or die. Does this deposit qualify for the homestead exemption under Medicaid eligibility?
Answer: Whether or not your parents’ deposit qualifies as an exempt asset under Medicaid depends on whether the contract is a lease agreement or a contract to purchase a unit. At many assisted living residences the contract is a lease agreement, not ownership, and will not qualify. In Massachusetts, home ownership is required to qualify for the exemption for your home. The home ownership exemption, however, is not valid if he is not able to return home. As a result, many clients who own homes will protect them and their life-savings with an asset protection trust. That way the deposit at an assisted living residence can be funded with home sale proceeds or other savings and continue to be protected in the trust even if they get sick in a nursing home and are no longer able to satisfy the requirement of “intending to return home.” As a result of the asset protection trust there is more flexibility and greater protection for life savings, without the otherwise required ability to return home.
Dennis B. Sullivan, Esq., LLM, CPA
Estate Planning & Asset Protection Law Center of Dennis Sullivan & Assoc.
Wellesley, Massachusetts 02482