The Moneyist: My dad is moving into a condo with his ‘lady friend’ — will he have to deplete his savings to pay for her health care?
My dad is downsizing and moving into a condo before marrying his lady friend. He has told my brother and me that he wants her to live out her life in the condo should he pass away before her. That shouldn’t be a problem if neither of them requires nursing-home care, but what if either of them does require such care that exceeds their savings?
If her name isn’t on the deed to the condo or the mortgage, does Medicaid’s spousal impoverishment rule still apply given that he wants her to stay in the house, or would we have to sell it to get him Medicaid? Would the state expect him to deplete his savings that he brought into the marriage to cover her care before she would qualify for Medicaid?
A family home is not typically regarded as a countable asset if the government decides whether or not your father qualifies for Medicaid, but in Florida the home must be $585,000 or below. The same is true for your father’s partner, if she is living alone in his condo as a tenant for life.
According to Elder Needs Law, which has offices across Florida, “If the goal remains to keep the house, you still don’t have to sell the house in order to become eligible for Florida long-term care Medicaid. Instead, we will talk about taking out a small mortgage on the house.”
This home-equity rule does not apply if the Medicaid applicant’s spouse is living in the home — “in other words, the house can be worth millions of dollars, so long as one spouse is not applying for Medicaid, it will be an exempt asset,” Jason Neufeld, elder law attorney, wrote.
If one spouse dies before the other and his/her home does not go through probate but is held in an “irrevocable trust” until the other person passes away, there can be no claim made on that asset by the state for Medicaid expenses in Florida. Irrevocable trusts, however, are very inflexible.
You can read more about Medicaid income-eligibility limits here, but he should obviously consult an estate lawyer. There is a five-year or 60-month look-back window in most states (30 months in California) for those seeking Medicaid.
Spousal impoverishment rules vary from state to state. With the help of a lawyer, your father should look make sure that his partner is taken care of and, assuming they decide not to marry, that common law marriage is recognized under Florida’s spousal impoverishment rule.
Your father would obviously like his partner — assuming they are in a relationship rather than a platonic friendship — to be taken care of in the event he predeceases her, and creating a life tenancy for her seems to be both an appropriate and generous way to achieve that.
Assuming they love each other given that he wants to spend his remaining years with her, I’m sure that would give him peace of mind to know that she had practical and moral support from his family — and no doubt he would appreciate that, too.
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