My parents are toying with the idea of going into a nursing home. They have a house that they want to save from a medicare lien. My dad found out that if a family member is living in the home with them before they go into a nursing home that the house will be free of the lien. What about us children having power of attorney or the house being placed in a trust in our names?
My understanding is that for Caregiver allowance you must have physically cared for the parent/s for at least two years in their home. You also have to show that you can pay any mortgage, taxes, bills and upkeep on the house because, Medicaid will be able to recover from it once the last surviving spouse passes. You may be able to remain in the home but a lien will be placed on it. If you pass or sell, the lien needs to be satisfied.
You cannot put the house in trust at this point. Medicaid has a 5 yr look back. Me, I would sell the house to offset the cost of my care. Your parents SS and any pensions will go towards their care if Medicaid is involved. Meaning to keep the house, someone else will need to pay the billsbon it.
I think before your parents decide anything they need to talk to an elder lawyer. Each state has their own criteria to be able to receive Medicaid. To enter LTC you must need 24/7 care.
It is way too late to use an irrevocable trust at this point. That would need to be in place at least 5 years before admission requiring Medicaid.
You should prepare yourself to understand the truth here.
You parent's assets stand to give your parents care in their old age. They are not your inheritance unless they stand free and clear and bequeathed to you upon the death of both parents.
Your parents are intending to go into care now. If they have liquid assets then those stand to pay for their care. If they do not they can make application for Medicaid. Under Medicaid rules they are allow to "keep" one home and one car. And whatever small amount the state allows them to keep. However, when they have died the home will be a part of their estate, and you are correct. Medicaid will have a lien on that home to pay back (clawback is the term sometimes used) governmental taxpayer's money used to provide care for your parents.
Feel free to visit and elder law attorney in your state to learn options. But the fact is that your parents savings, investments (of which a home is one) stand to provide THEM care.
Why subject your parents to that when they have a whole house to leverage?
Your parents can't just decide to enter a nursing home. They need to meet medical eligibility criteria and also be able to pay. Their home is an asset that should be used for their care, and their income (social security, pension, etc.) would also go for their care.
I also want to clarify your heading about the government "stepping in and taking" your parents' home. If your parents' stay at a nursing home is being paid by Medicaid, they are allowed to retain the home until the second of them passes away. Medicaid would place a lien on the home to recover money the program spent on your parents, and they would get paid back after the house is sold; the "government" does not "take" the house. But if your parents are on Medicaid, all their income needs to go toward paying for their care, less a small monthly personal needs allowance, so they would not have money to pay for taxes, insurance, maintenance, etc. and someone else would have to pay (you children?).
Trusts provide several advantages but cost more money to create and is more effort for the trustee to administer. It can cost anywhere between $1500 to $3500 or more.