Some parents consider transferring their home to their children as a way to protect the property from nursing home costs or estate recovery.

However, this strategy can create serious risks.

Medicaid Transfer Penalties

Transferring a home to children may trigger Medicaid’s five-year lookback rule.

If the transfer occurs within five years of applying for Medicaid, a penalty period may apply.

Loss of Control

Once the property is transferred, the parent no longer owns the home. This means the child could potentially sell the property or face financial problems that affect ownership.

Tax Consequences

Transferring property during life may also eliminate valuable tax benefits that would otherwise apply if the property were inherited.

Exploring Safer Options

Because of these risks, families should carefully evaluate their options before transferring real estate.

Proper planning can help protect the home while minimizing legal and financial complications.