Don't Hide Money For Medicaid Purposes

Martha wants to know if a "Lady Bird" deed is a good idea. Martha says it would be used in order to access a Medicaid nursing home if needed. Dave suggests getting long-term care insurance instead.

QUESTION: Martha in Dallas wants to know if a “Lady Bird” deed is a good idea. It’s an enhanced life estate deed, and Martha says it would be used in order to access a Medicaid nursing home if needed. Dave suggests getting long-term care insurance instead.

ANSWER: I’m guessing that’s named after Lady Bird Johnson, but I do not know what that means. I’m ignorant. I do know what a life estate is, but I don’t know what a Lady Bird life estate is.

When you turn 60, you need to buy long-term care insurance. You do not need to transfer your house into your children’s names to avoid going to a nursing home and paying for a nursing home. Medicaid is welfare. It is for broke people, and when you go to a Medicaid nursing home, you’re going to notice it’s operated like it’s operated on welfare with rare exceptions in rural areas. But in a metro area like Dallas, there’s a substantial difference in the quality of care in a Medicaid nursing home versus the type you would go to if you were to pay for it. So you don’t need to act like you’re broke in order to qualify for welfare. And if that’s the whole underlying motivation here, I’m going to tell you just don’t do it.

There’s a portion of elder law that is accurate and should be done, and there’s a portion that’s all about setting you up to go to Medicaid. I’m not going to do that because the feds can look back, according to Medicaid fraud law, up to five years and undo anything you did to hide money from them—Lady Bird or otherwise. No, I’m not giving someone a warranty deed to my house in order to participate in them doing this. There may be some things that she needs to do in order to prepare for this and do it properly, but some of this she probably shouldn’t do. So we need to think a little less about putting Mom in a welfare nursing home and a little more about how we can structure the estate to take proper care of her.