Medicaid Planning and Transferring Property Through Gifts – How You Can End Up in Hot Water If Not Done Properly

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Law Attorney

Nursing homes are expensive.  If you pay for them on your own, they can cost your family hundreds of thousands of dollars.  Many people simply cannot afford a nursing home, and turn to Medicaid and their county boards of social services for help.  Unfortunately, many are denied eligibility because they simply have too many countable resources.  To obtain Medicaid for the cost of a nursing home, the value of the applicant’s resources may not exceed $2,000.  This is a very low number $$$.  A natural reaction for a family is to get assets out of the elder’s name to make them eligible for Medicaid.  The thought process of many families is to transfer the assets from Grandpa’s name to Grandma’s name, or give the property to the kids and grandkids so they can qualify.  You are allowed to do this, but if you make transfers at less than “fair market value” within 60 months (5 years) of your Medicaid application, Medicaid will deny eligibility.  This is often times the case with many Medicaid applicants.

So what does “less than fair market value” mean?  The common way of transferring something in this fashion is by giving it away as a gift.  So if Grandpa’s interest in his house is transferred to Grandma, and Grandma pays nothing for it, the interest is considered a transfer for less than fair market value.  If Grandpa’s interest in the house is worth $250,000, and he gives it to his son for $100, that is a transfer for less than fair market value.  It is not just limited to houses.  Transfers of pension funds, IRAs, savings account, even valuable antiques that are given away or are sold at ridiculously low prices can be seen by the board of social services as transfers for less than fair market value.  If the local board does make this determination, the applicant is subject to a period of Medicaid ineligibility before the applicant is eligible for Medicaid benefits.

Now with everything, there are exceptions.  In a future blog, I will discuss a commonly used exception called- the caregiver child exception.  Stay tuned for that blog.  For further questions and discussions on how you can begin planning to avoid the 5 year lookback, and whether there are exceptions you can use to get your Medicaid benefits right away, give me a call.  You don’t want to receive a denial of benefits because you gave away all your assets just to make you qualify for Medicaid.

To discuss your NJ Medicaid Eligibility matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.