Will I Lose My Home?

Not a week goes by without a husband or wife calling for information and advice because one of them needs significant care, including the possibility of nursing home placement.  They are fearful and suffering great stress, because not only is it heart wrenching to see a spouse reduced to dependence on others, but there is a tremendous fear that they are going to lose their home.

In a husband and wife situation, this is not the case.  The home will be an exempt asset as long as the healthy spouse lives in it as his or her principle residence.  And the State of Connecticut Department of Social Services will not put a lien against it.  That bit of knowledge alone should reduce some of the fear and stress of needing a nursing home.

But like everything else, when dealing with complicated governmental regulations, there is much more to it that simply saying the home is protected.  Most husbands and wives own their homes in a joint survivorship deed.  This is sensible during most of their lives.  When one of them becomes sick, however, this is no longer wise, because if the “healthy” spouse should die before the “sick” one, ownership passes to the sick one, and then it will be subject to a lien and the full value of the house lost to the State.  For very elderly people this is a real possibility.

For that reason, when one spouse needs to apply for Medicaid (Title 19), the healthy spouse should own the house.  People always ask, “But, I thought nothing can be transferred within 5 years?”  That five year rule does not apply between spouses.  The regulations allow a sick spouse to transfer his or her half of the family home to the healthy spouse at the last minute.  The sick spouse can already be in the nursing home.

The problem that can arise is that a sick spouse may no longer be able to sign a deed.  The solution here is to have done some preplanning by signing a durable power of attorney so that each spouse can sign for the other.  Otherwise it might be necessary to have a Conservator appointed.  The Conservator process should work, but it is time consuming and entails much greater expense than having a power of attorney.  If you want to sleep better at night, do that durable power of attorney that allows transfer of real estate to the spouse while you are healthy.  After a debilitating stroke, it is too late.

The next step is to have the healthy spouse prepare a will that satisfies the Federal and State laws if the healthy spouse dies first.  There is more than one way to accomplish this, but you should seek sound advice, because Connecticut’s law will not allow someone to totally disinherit their sick spouse.  There is a minimum amount that any surviving spouse is entitled to receive.  It is called the “statutory share”.

The statutory share is the use for life of one third of the deceases spouses’ assets shown on the inventory of the estate.  In practical terms, this means that one third of the estate must be set aside, and the interest or dividends earned by that one third must be paid to the sick spouse.  Then, when the sick spouse dies, that one third can also pass to the children.

So for husbands and wives, you should have less fear of losing the home if one of you gets sick.  But being prepared with a properly drafted power of attorney is a significant help.  The standard boiler plate statutory power of attorney under the Connecticut statutes does not allow the healthy spouse to transfer the home to himself or herself.  A properly drafted power of attorney will allow that transfer.  That old Boy Scout motto of “Be Prepared” is a wise motto to follow, so that if one of you gets sick, you won’t have to worry about losing your home.