Advantages and Disadvantages of Owning Joint Property with a Sibling

It has been pointed out in prior blogs that a secondary residence held jointly with a sibling is an inaccessible resource if the sibling refuses to sell. Notwithstanding the fact that such ownership would not disqualify a person from Medicaid if the sibling refused to sell, there are some negative aspects to such planning.

Firstly, if an individual qualified for Medicaid owning such property, one half the joint income would have to be used to defray the cost of the home. Medicaid would not let you use your pension or social security, so the cost of the home would have to be paid by the sibling.

Moreover, if such property were a tenancy in common, the decedent's interest would be subject to the Medicaid lien. However, if such property were a joint tenancy and the applicant died first, there would be a cogent argument that the property is not subject to the lien.

In a prior blog in which I discussed real estate planning (Post 11), I pointed out that an exempt transfer to a sibling who has an equity interest in the home and who is residing in the home for at least one year prior to the date of institutionalization is an exempt transfer. This reference is to the primary residence and presumably the spouse of the Medicaid applicant has predeceased. If the potential applicant transfers the property to a sibling who had such equity interest in the home, the transfer would be exempt and not subject to the Medicaid lien. However, if the sibling predeceased and the property passed by operation of law to the applicant, the interest would be subject to the lien.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© December 2011, Post 177