Many people believe that if they need to go into a nursing home they will “lose” their personal residence, or will have to sell it in order to qualify for Medicaid assistance. That’s not true in Tennessee.

First of all, a nursing home can’t take your home. That’s against the law. Second, even if you are in a nursing home and run out of money you won’t have to sell your home before you can qualify for Medicaid assistance in the nursing home. Your residence is what is called “exempt” property for Medicaid qualifying purposes.

What’s the worst thing you can do if a nursing home is in your near future? Transfer your home to someone else. Do not do it without checking with an Elder Law attorney first.

Why? Because if you transfer your home to someone else, or even just add another person’s name to your deed, you have rendered yourself ineligible for Medicaid for up to five (5) years from the date of the transfer. Also, Tennessee is a gift tax state. So, if you give away an interest in your home you will probably have to pay some gift taxes to the State of Tennessee by the next April 15. Finally, when you give your home to someone else you are also giving them your original “cost basis” in the property. When they go to sell it someday they will likely have capital gains which will result in an increase in their income taxes.

The Lesson? Do not transfer any ownership interest in your home without knowing the consequences of what you are doing.