Mother and daughter covered by Child Caregiver Exception in HowellAs a Michigan elder law attorney, I hear it all the time: “If I go into the nursing home, can they take my home? Or do I have to sell it?” There are many exceptions – this blog only discusses one exception under Federal and Michigan Medicaid law called the “Child Caregiver Exception”, which allows a home to be transferred to a child who has been providing caregiver services to a parent.

Let’s take a typical example. You are the daughter or son of Sally Jones, an 86-year-old widow. She is either in the nursing home or will be in the near future. She is in bad physical shape, has mild dementia, but still has the capacity to make decisions and sign legal documents. She has been living with you for over two years and you have been providing care so she would not need to move into a nursing home. Here are three examples of how the same circumstances can result in totally different results:

Example 1: Your mother deeds her home to you and you do nothing else. She then moves into the nursing home and you apply for Medicaid. This is what Medicaid considers a “divestment”. In short, it is a transfer for less than fair market value during Medicaid’s five-year look-back period.

Result 1: If the home is worth $150,000, she would incur a 19-month Medicaid penalty (that is, Medicaid won’t pay, so she must pay out-of-pocket for 19 months).

Example 2: Same facts, but you and your mother recognize that Michigan Medicaid law provides a “Child Caregiver Exception” to transferring her home. You take a letter to your mother’s doctor that says you have been residing with your mother for two years or more and have been providing care for her. The letter also says that, if you had not provided care, your mother would have needed nursing home care.

Result 2: Your actions fall within Michigan’s “Child Caregiver Exception”. Transferring your mother’s home to you is not a divestment. She qualifies for Medicaid, there is no penalty. Life is good.

Example 3: Same facts as above, but this time assume your mother is incapacitated, which is very common for seniors going into a nursing home. How does your mother make decisions when she can’t speak for herself? The best way is a Michigan general durable power of attorney. Many clients come in and tell me they have one, but after reviewing the power of attorney, we determine that it doesn’t work What is the result? See Result #1 above. Your mother’s durable power of attorney MUST have a good “gifting provision”. This gifting provision allows us to provide the child caregiver exception letter and sign the deed when your mother can’t.

Result 3: You can take action to fall within the “Child Caregiver Exception” when your mother is incapacitated, but only if you have the proper durable power of attorney in place. It’s not just a “standard form”, the details matter.

When you are walking along the Michigan Elder Law path, there are many land mines and traps. Stepping on one can cost you thousands (or even hundreds of thousands) of dollars. Our mission is to walk that path with you so that you can be secure that you are doing all that is possible to get the best care for your loved one, while at the same time protecting a lifetime of savings. The good news: This is only one of many ways to protect the family home. There are others – don’t be shy to ask us for more information if you need help.

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