Is it Medicaid planning, or Something Sinister?

Every so often an issue will come up in a trust dispute that forces the parties to confront the question of whether a particular transaction was made for purposes of protecting an aging parent from the clutches of Medicaid.     The issue presents with this profile:    One of mom or dad's children convinces them to transfer their house to them.     They take mom or dad to an attorney who prepares a deed trnasferring the property.   Mom or dad dies, and after death the other sibling(s) learn of the transfer and immediately believe that the sibling who engineered the transaction has done something crooked.

Here's where it gets tricky.   Medicaid regulations DO  permit the transfer of the Medicaid recipient's principal residence to a family member in a way that exempts that property from the reach of Medicaid.  However,   the family member must reside full-time with the recipient and his or services as a caregiver must be necessary for the health and well-being of the parent.

These regulations lead to all sorts of issues when it comes to property that is transferred to a child.   These include the following:

1.  Did the parent need long-term care at the time the transfer was made?
2.  Did the parent want long-term care,   or was he/she repulsed by the idea of being in a long-term care facility?
3.  Was the child's services as caregiver/caretaker necessary?
4.  Did the child actually provide the lion's share of the care to the parent,  or were other siblings or relatives providing some or all of the care?

To the extent that the evidence raises questions about the justification for the transfer or the services that the sibling provided,   it increases the likelihood that the court will declare the transfer void and return the property to the estate.


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