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There’s a difficult problem faced by a lot of older Americans. They may genuinely need nursing home care for a period of time — either after an illness, a surgery or toward the end of their lives. However, they’re afraid that if they enter a nursing home that the biggest thing they have of value to pass to their children — their home — will end up going to the state as a result.

When a nursing home patient receives Medicaid — and most become eligible upon admittance — the state wants its money back after the patient’s death. To get it, the state files its claim once the deceased patient’s estate goes into probate, forcing the estate to sell the house if there isn’t any other money.

To avoid having the house go into probate, you can choose from a number of methods in Colorado.

One simple way to do this is to leave your home to your heirs through a transfer-on-death deed. This allows the house to bypass the probate process. Since it is never part of the estate, it can’t be claimed.

Another way to handle the issue is to transfer ownership well before you go into the nursing home. Unfortunately, that could leave you in a fix if your child gets into financial trouble, as the house would no longer be yours. Creditors could take the home and force you out before you are ready.

Another method is to use what’s known as a life estate to transfer the home. As the owner, you would keep control of the home while you are alive — although you would be restricted from selling it without your children’s consent. However, its inclusion in the life estate prevents it from being counted as an asset by Medicaid.

Because of Medicaid ability to review your financial transactions for five years prior to entering the nursing home, the time to make these plans is while you are still healthy. The best way to plan is to discuss the situation and your wishes with an elder law attorney. That way, you can learn more about the pros and cons of your choices.

Source: AgingCare.com, “Protecting the Home from Medicaid with a Life Estate,” accessed March 30, 2018