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Estate Planning Considerations for Owning a Home While on MassHealth

Owning a home while on MassHealth presents unique challenges and opportunities. How can you ensure your home remains protected while complying with MassHealth requirements? In this blog, we’ll explore effective strategies for safeguarding your property and maintaining your benefits. Whether you’re considering irrevocable trusts, life estates, or other options, understanding the implications can make a significant difference. 

Understanding MassHealth and Homeownership

MassHealth, Massachusetts’ Medicaid program, provides health care benefits to eligible residents. When it comes to homeownership, it’s important to understand how MassHealth eligibility and benefits interact with owning property. While your home is generally not counted as an asset when determining MassHealth eligibility, the state may seek reimbursement from your estate after your passing, potentially putting your home at risk. Planning ahead can help protect your home from estate recovery. By exploring various estate planning options, you can ensure your home remains secure while still benefiting from MassHealth. 

The Role of Estate Recovery

Estate recovery is a process where MassHealth seeks reimbursement for the costs of care provided to individuals from their estates after they pass away. They seek this reimbursement against all assets that pass through your probate estate. Your probate estate consists of all assets that you owned individually (no joint owners and no beneficiary designations in place). For homeowners that own their home in just their name, this means that the state can place a claim on the value of your home to recoup these expenses. This can jeopardize the inheritance you intend to leave behind. Proper estate planning is essential to mitigate the impact of estate recovery. Strategies such as irrevocable trusts, life estates, and careful asset transfers can help protect your home from being subject to these claims. Understanding and planning for estate recovery is important to preserving your property for your heirs.

Strategies for Protecting Your Home

Protecting your property from estate recovery is crucial when you own a home and receive, or plan to receive, MassHealth benefits. Transfers of real estate for less than fair market value (i.e. a gift) is subject to MassHealth’s 5-year lookback period. If you were to transfer your home to an irrevocable trust, for instance, you must not apply for long-term care MassHealth benefits within the subsequent 5 years. That is why planning early is crucial.

 Implementing the right strategies can help safeguard your home and ensure it remains with your family. Here are some effective options:

  • Irrevocable Trusts: Placing your home in an irrevocable trust can shield it from MassHealth estate recovery. Once transferred to the trust, the home is no longer considered part of your estate, protecting it from claims after your death. This strategy requires careful planning and adherence to legal guidelines.
  • Life Estates: Creating a life estate allows you to retain the right to live in your home for the rest of your life while transferring the remainder interest to your heirs. This can help avoid probate and protect your home from MassHealth recovery efforts. It also provides the benefit of maintaining control over your property during your lifetime. However, if the home is sold during your lifetime, the protection of the full value of the property is undone and your remainder beneficiaries may incur unintended capital gains taxes.
  • Transferring Ownership: You might consider transferring ownership of your home to family members. While this can protect the property, it’s essential to understand the potential tax implications and the impact on MassHealth eligibility. This strategy should be carefully evaluated to avoid unintended consequences.

Each strategy has its own set of benefits and considerations. Consulting with an estate planning attorney can help determine the best approach for your situation, ensuring your home remains protected while you receive the care you need.

Planning for Long-Term Care

Planning for long-term care is a key aspect of estate planning, especially for homeowners on MassHealth. Long-term care can be expensive, and without proper planning, it may deplete your assets, including your home. By preparing in advance, you can protect your property while ensuring you receive the care you need. Consider options such as long-term care insurance, which can help cover the costs without impacting your estate. Additionally, establishing an irrevocable trust or creating a life estate can safeguard your home from being used to pay for care expenses. 

Contact Our Experienced MassHealth Attorneys Today

At Surprenant & Beneski, P.C., we provide professional legal guidance to help you protect your home while on MassHealth. Our experienced team will work with you to create a tailored estate plan that secures your assets and meets your needs. Contact us today for a consultation and safeguard your future.