What to Know Before Adding a Child to Your Home Deed

How Deeds and Medicaid Can Intersect

When applying for nursing home Medicaid, the state reviews all financial transactions made within the five years (60 months) prior to the application. This is known as the “look-back period.” If you transferred assets for less than fair market value during that time, Medicaid treats the transfer as a gift.

Adding your son to your deed without receiving full market value in return is typically considered a partial gift of your home. If the transfer occurred within five years of applying, Medicaid may impose a penalty period during which it will not pay for your nursing home care. The length of the penalty is calculated by dividing the value of the gifted portion by the state’s average monthly nursing home cost. Importantly, the penalty period does not begin until you are otherwise eligible for Medicaid and residing in a nursing home.

There are limited exceptions to the five-year rule, which include but are not limited to transfers to a spouse, a disabled child, or a “caretaker child” who lived in the home for at least two years and provided care that delayed nursing home placement. These exceptions are narrowly defined and require documentation.

Other Potential Issues Beyond Medicaid

Beyond Medicaid concerns, adding a child to a deed may expose the home to that child’s creditors, divorce proceedings, or financial difficulties, and you may lose full control over the property. Additionally, there are certain tax implications when transferring property that can negatively affect you or your child. Lastly, the way your property is titled—whether as tenants in common or joint tenants with rights of survivorship—can lead to unintended consequences, potentially undermining your estate planning objectives or leaving some or all of the property subject to Medicaid estate recovery claims.

Speaking With an Estate Planning Lawyer Can Help You Implement the Right Strategy

While no one can predict future health needs, planning ahead is critical. Strategies such as a properly drafted Medicaid Asset Protection Trust, created at least five years before care is needed, may protect your home without exposing it to the risks associated with co-ownership. Consulting a Medicaid-conscious estate planning attorney is the best way to safeguard your assets and avoid future complications.