If I could be going into resthome in near future, can I sell my property to my kids now to protect it?

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If I could be going into resthome in near future, can I sell my property to my kids now to protect it?

I have a will but my property is not deeded to them.

Asked on July 4, 2019 under Real Estate Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

If you sell to them for fair market value, or a price that comparable homes sell for, your home will be protected. This does not have to be the best price you can get, but must be a reasonable one. Example: when we sold our home, 5 homes on our street, also similar sized, were on the market at the same time. They went for between $480k and $530k; therefore the fair market value would be in that range, and sale for that lowest price ($480k) would still be fair market value. You could even knock a bit more off the price for it being a private "as is" sale with no realtor and no contingencies: to build on the example above, that might make a fair price around $450k. But lower than that, in my example, would not be fair market value.
If you sell the house to your chidren for less than fair market value, then Medicaid or the state agency administering it could seek to "void" or undo the sale so that it could force the sale of the house to pay for (or repay) your care. The law does not let you hide or protect assets from Medicaid by selling it to family for less than fair market value while forcing the taxpayers to pay for your care. So to protect the house, it must be sold for fair maket value, even if it's for the low-end of fair market value and includes some reasonable and defensible discount for a sale by owner and no contingencies.


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