What to do regarding signing/selling deed to my grandmother’s house if she is in nursing home?

My grandmother has owned her house for over 40 years now; the deed is in her name and my deceased grandfather’s name. My grandmother has been in a nursing home for 6 years now, my aunt signs over her check to the state for the nursing home. My father has always lived in this house and his mailing address has always been there. My father wants to give me the house, he’s not sure if the state will get involved though since my grandmother is in a nursing home. If she signs the deed over to me and gifts me the property for a dollar, will it go through? FYI this is her grandson asking.

Asked on February 28, 2019 under Real Estate Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

1) If she is still mentally compentent, then except if 2) below applies, she has the right to transfer the property to you for free, for $1 or fair market value, or for anything in between. There may be tax consequences for one or both of you, depending on what it is transferred for, so it is recommended that you speak to an accountant to better understand any potential issues, but a mentally compentent person could transfer property (e.g. a home) to you for $1 if she wanted.
2) But if she is now or within the next five years will be having Medicaid pay for her nursing home, then this could be an issue. You have to use your assets for your medical care before having Medicaid pay for it; if you don't, then the state can come after your assets to seek reimbursement of what Medicaid spent for you. To prevent people from hiding assets from Medicaid by transferring them for free or for less than market value, if there is a below market value transfer within five years (the "lookback" period) of the person needing Medicaid, the state can void or "set aside" the transfer: that is, undo it, then go after the property to reimburse Medicaid. A $1 transfer would clearly be a below-market value transfer, so if your mother is now on Medicaid or will be within the next five years, the house can be taken from you, returned to her or her estate (if she passes away), and then be taken by the state or a sale forced to repay Medicaid. 
(A market value transfer--buying the house for what it is worth--is not a problem since 1) it is not considered fradulent, because the asset is sold for what it is worth; and 2) the person gets the money for the house, so the state can look to that money to pay for the medical or nursing home care.)
So unless someone is paying for your grandmother's nursing home and she does not need Medicaid, either now or in the next five years, if you acquire the home for $1, it is possible the state could take it from you.


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