Dear Quentin,
I am 62 and one of three children. My parents divorced when I was seven. The last home that we all resided in as a family had remained in my father’s possession since the divorce. It was used by my cousin while attending law school and served as the first home my wife and I lived in after college, until we were able to purchase a home of our own. The home is in Washington, D.C., and my father lived there with his longtime girlfriend.
Three years ago, my father and stepmother purchased another home in Florida, eventually establishing legal residency there. Shortly thereafter, his health began to decline. During the process of admitting him to a care facility, my stepmother took action so my father “could qualify for Medicaid benefits.” This involved, among other things, taking my father’s name off the deed of our childhood home and replacing it with hers.
My stepmother sold the home he had purchased for them in Florida and purchased another home nearby. She also sold the condo she had owned, as well as my father’s residential investment property. Upon our father’s death, my stepmother chose to split the funds among other beneficiaries, including herself and her adoptive daughter, instead of dividing the proceeds from the sale of the childhood home as our father had indicated.
What can we do?
The Son
Related: ‘She is rather peeved’: My daughter’s male colleague got a bigger pay raise. They both started on the same day. Should she approach her boss?
Her actions had, I’m afraid, very little to do with helping him qualify for Medicaid, and unfortunately there’s likely very little you can do about it.
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Dear Son,
Your stepmother took action that was designed to transfer ownership of your father’s primary home to her name. It had, I’m afraid, very little to do with helping him qualify for Medicaid, and unfortunately there’s likely very little you can do about it. She had your father sign a quit-claim deed and, presumably with his cooperation; removing his name from the deed of his primary home was unnecessary under Florida law. She presumably sold separate property in an effort to reduce his assets to qualify for Medicaid.
“This is a sad but very common scenario that comes up in many families, particularly ones where there is a second marriage,” says Elizabeth Forspan, an attorney with Forspan Klear LLP. “It underscores why people must plan early for the eventuality that they will need care.” Had he planned in advance, “he could have created a trust for the ultimate benefit of his daughter or natural children, transferred the house therein and made sure that his family, not his new wife’s, would inherit the family home.”
Divesting his assets after he moved to a care facility is an 11th-hour move: There is typically a five-year Medicaid look-back to review whether the individual divested themselves of assets in order to qualify for benefits. There are exceptions to the five-year look-back rule: Those include paying off debts, buying medical devices and making home renovations to improve accessibility. A person’s income and other assets may also disqualify them from Medicaid eligibility, with rules that vary by state.
Some states, including Florida, New York and California, have rules that exempt a primary residence from assets calculated by Medicaid under certain circumstances. In New York, you need to live in the home while receiving care or plan to return to the home afterwards. California eliminated its asset limit this year, making a person’s home automatically safe from Medicaid while they are living. However, that does not mean it’s safe from Medicaid’s Estate Recovery Program.
In Florida, however, Medicaid can only recover debt from the deceased recipient’s probate estate. “With a married couple and one spouse applying for Medicaid, Medicaid does not look at the value for the home,” according to the law firm DeLoach, Hofstra + Cavonis PA, which has offices in Florida. “The at-home spouse (the “community spouse”) can live in the home, no matter the value, and it will not affect the Medicaid applicant spouse.”
Homestead protection in Florida
The law firm adds: “Further, the cost of the home may help the community spouse keep more income. We may be concerned if the spouse at home — the community spouse — were to predecease the Medicaid recipient, but that is another issue. Upon the applicant’s death, the homestead is protected from creditors, including the state of Florida, if it descends to your heirs at law (that is, your family).” This makes your stepmother’s decision to take his name of the deed of that house all the more curious.
If a person makes a will or signs their assets over to a trust, or signs over their home, you could possibly look into making a case for undue influence, duress, overpersuasion, coercion or establishing whether your father was of sound mind when he made these decisions. You would need to hire a lawyer and present a body of evidence that includes medical records and financial statements. If a will was signed under undue influence, it would be deemed invalid.
The same is true for a so-called deathbed marriage. “If successful in establishing that the marriage was procured by fraud, duress, or undue influence, Florida law specifically prohibits recovery of all rights and benefits under the Probate code, including non-probate exempt property and homestead,” according to Zoecklein PA, a law firm with offices in Florida. “Further, this provision of Florida law can invalidate rights to a Trust and/or Life Insurance benefits.”
To succeed, you would need to demonstrate, among other things, that your father had an established and longstanding estate plan that was contradicted by the ultimate outcome, Forspan adds. Undue influence also has an “incredibly high burden of proof when it comes to a spouse. Moreover, the fact that the wife (and perhaps also dad) was advised, presumably by an attorney, to make the transfer in order to qualify for Medicaid — a transfer that worked and achieved their goals — will make it even more difficult to prove that something nefarious and wrong happened here.”
Ultimately, the burden of proof would lie with you. Each state also has a statute of limitations for such cases. When challenging a trust in Florida, for instance, there is typically a four-year statute of limitations. You have several challenges: the race against time, gathering enough evidence to make your case, the expense of hiring a lawyer and, yes, the stress that such a contest would bring. Even if your father was not of sound mind, this may not be easy case to prove.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
The Moneyist regrets he cannot reply to questions individually.
Previous columns by Quentin Fottrell:
‘I’m very sad’: My brother refinanced our mother’s house and sold the contents. Can we claim a share of the proceeds?
‘I gave up a job that I loved passionately’: My husband secretly set up a trust that includes our home and his investments. What should I do?
My daughter’s father died in a horrible accident, but he was not on the birth certificate. How can I prove paternity to claim her inheritance?
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