When To Sign Your House Over To Your Family

It is not uncommon for aging homeowners to transfer ownership title of their home or property to a younger family member - be it a son, daugter, or grandchild - before they pass on. Besides the act being an obvious gesture of a gift, there is also the benefit of protecting the estate from Medicaid claims for end-of-life medical expenses or nursing home costs.
However, many estate planners are warning that simply deeding a home to your child may cause by anguish then relief. First of, you (the parent) will lose control over the property, and secondly, your child or grandchild, may grow resentful of the potential costly nature of the "gift". They could wind up paying considerable capital gains taxes if they decide to sell the home. Also, protecting the estate from Medicaid may prove to be fairly limited.
Under the currently laws, people with insufficient funds may be eligible to have their long-term nursing home care covered by Medicaid. However, if the individual owns a home, then Medicaid can place a legal claim (liens) on it to recover some of the benefits paid. This is the reason why many aging homeowners attempt to shield their property from Medicaid liens by transferring ownership in the form of a gift, to their children or other loved ones. But many of these people do not know, and find out too late, that such transfers are subject to a three-year "look-back period."
So upon transferring your deed over, the three-year Medicaid clock begins to tick. So this means that if the transfer takes place less than three years before Medicaid benefits are sought, there is a waiting period before benefits can begin. The waiting period is calculated using a formula that takes into consideration how much the asset was worth and how recently the transfer was made.