Proceed With Caution Before Downsizing Your Home Too Early!

For Sale 2The family home is typically one of the larger assets owned by older married couples or single people who consult with our firm for elder law and estate planning. Many of these clients have utilized their retirement assets and other savings and have questions about what to do with an over sized family home.

Quite frequently – after consulting with well-intentioned realtors – our seniors have either “downsized” or have made up their minds to downsize from larger family homes to smaller, maintenance friendly condominiums, apartments and the like.

A word to the wise is to “proceed with caution” before downsizing! This is especially true if it is likely that they will ultimately need to apply for New Hampshire Medical Assistance (usually referred to as “NH Medicaid”, a joint federal/state health insurance program for long term nursing home care).

If NH Medicaid is a possibility due to dementia or other significant health concerns for one of the spouses, a chunk of the sales proceeds will have to be “spent down” by the spouse going into the nursing home (referred to as the “institutionalized spouse”) at extremely high private pay rates (I’ve heard that $10,000 – $11,000 per month is not uncommon in the more expensive parts of Southern, New Hampshire and the Seacoast) before that institutionalized spouse is eligible for NH Medicaid.

This is all the more important in a down real estate market where it might not make economic sense to sell a home quickly further compounding an economic hardship.

Fortunately, there are some planning opportunities. For example, the State of New Hampshire will not count when determining NH Medicaid eligibility, among other categories, the following:

Real property, regardless of value, if:

  • Occupied by the NH Medicaid Applicant as his/her principal residence;
  • Not occupied by the applicant but producing income sufficient to meet the expenses of ownership;
  • Not occupied by the applicant but necessary as a residence for the applicant’s spouse or blind, disabled, or minor child;
  • A residence temporarily unoccupied due to NH Medicaid Applicant’s illness or hospitalization; or
  • Jointly owned real estate when the co-owner refuses to sell.

To evaluate these options it is important to have a qualified elder law/estate planning attorney examine possible asset retitling issues and NH Medicaid eligibility requirements before making the difficult decision to downsize from a larger family home.

Attorney John S. Polgrean practices in the areas of estate planning and business law, and can be reached at jpolgrean@lawyersnh.com or (603) 883-0797

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