Guardianship and Medicaid: A Guide to Home Transfers

How to Protect a Parent’s Home When They Need Medicaid: Guardianship, Transfers, Exemptions & the Hardship Waiver

If your aging parent requires nursing home care and Medicaid will cover the costs, you may be concerned about Medicaid estate recovery—the state’s ability to recover costs from their estate after they pass away. One of the biggest concerns families have is:

💬 “Can I protect my parent’s home from Medicaid estate recovery?”

The answer depends on timing, legal capacity, and available exemptions. If your parent is mentally competent, they may still have time to transfer the home into a Medicaid Asset Protection Trust (MAPT). But if your parent has dementia or another cognitive impairment, they cannot legally transfer assets, and you may need to seek guardianship before taking any action.

In this article, we’ll explore:
✔ How Medicaid estate recovery works
✔ What to do if your parent is already incapacitated
✔ How to use the Caregiver Exemption to transfer a home penalty-free
✔ How a court-approved guardianship can allow a home transfer
✔ How the Medicaid Hardship Waiver can help heirs keep the home

Medicaid Estate Recovery & The 5-Year Lookback Rule

When Medicaid pays for long-term care (e.g., a nursing home or in-home care), federal and state laws require Medicaid to recover those costs from the recipient’s estate after their death. This is called Medicaid Estate Recovery.

🏡 What happens to the home?

If the home is still in your parent’s name at death, Medicaid can place a lien on the home and force a sale to recover costs.
If the home is properly transferred before death, it may be protected—but only if done correctly.

🛑 The 5-Year Lookback Rule

Medicaid penalizes most transfers of assets (including a home) made within five years before applying for benefits.
If an ineligible transfer is made, Medicaid imposes a penalty period (months/years of ineligibility).

💡 Exception: Some transfers do not trigger a penalty, including the Caregiver Child Exemption and transfers to a spouse or disabled child.

What If My Parent Has Dementia? Can I Transfer Their Home?

If your parent already has dementia or lacks mental capacity, they can no longer legally sign a deed or establish a trust. In this case, you may need to become their legal guardian before transferring assets.

Step 1: Establishing Guardianship in Washington State

If your parent cannot manage their own financial affairs, you must petition the court for guardianship of the estate (financial control).

👣 Steps to Become a Guardian:

File a petition for guardianship in your local Superior Court.
Obtain a medical evaluation proving your parent is incapacitated.
Attend a court hearing—a judge will decide if you should be appointed as guardian.
If approved, manage your parent’s assets (including their home) under court supervision.

💡 Note: A guardian cannot automatically transfer assets. You must petition the court for approval to transfer the home.

Step 2: Using the Caregiver Child Exemption to Transfer the Home

The Caregiver Child Exemption is a special Medicaid rule that allows a parent’s home to be transferred to a child without penalty, even within the 5-year lookback window.

✔ Who Qualifies?

The child must have lived in the home for at least two years before the parent entered a nursing home.
The child must have provided significant care that helped delay or prevent institutionalization.
The child must provide proof of caregiving and residency, such as tax returns, medical records, and doctor’s statements.

💡 If the exemption applies, the home can be transferred to the child without Medicaid penalties!

Step 3: Petitioning the Court to Transfer the Home

If you are the legal guardian, you must get court approval to transfer the home. The court will approve the transfer if it’s in the best interest of your parent and follows Medicaid rules.

👣 How to Request Court Approval:

File a petition with the probate court explaining why the transfer is necessary.
Provide evidence that the Caregiver Exemption applies or that the transfer aligns with your parent’s best interests.
Attend a court hearing where a judge will review your request.
If approved, complete a deed transfer to yourself or a trust.

✅ If successful, the home is transferred and protected from Medicaid estate recovery!

Step 4: Applying for a Medicaid Hardship Waiver

If the home was not transferred before death, and Medicaid places a lien on the home, you may still be able to protect it by applying for a Medicaid Hardship Waiver.

✔ Who Qualifies for a Hardship Waiver?
An heir can apply for a hardship waiver if they can prove that:

They lived in the home and would face significant financial hardship if it were sold.
Their household income is at or below 200% of the Federal Poverty Level (FPL).
They have no reasonable alternative housing available.
The home is their primary residence, and selling it would leave them homeless or severely financially distressed.

📌 How to Apply for a Hardship Waiver:

The heir must submit a formal request to DSHS within 30 days of receiving notice of Medicaid’s estate recovery claim.
Documentation may include proof of residency, income statements, and evidence of financial hardship.

💡 If approved, Medicaid may waive or reduce the estate recovery claim, allowing you to keep the home!

Final Thoughts: Should You Pursue Guardianship, a Home Transfer, or a Hardship Waiver?

If your parent is already incapacitated, guardianship may be the only option to protect their home from Medicaid estate recovery. However, court approval is required before making any transfers. If the home is still in the estate after death, a hardship waiver may provide a final opportunity to keep the home.

⚡ Best Action Plan:

If your parent is still of sound mind, transfer the home to a Medicaid Asset Protection Trust (MAPT) now to start the 5-year lookback.
If your parent is already incapacitated, apply for guardianship and then petition the court for a home transfer.
If you qualify for the Caregiver Exemption, gather documentation and request a court-approved transfer.
If your parent has already passed away, apply for a Medicaid Hardship Waiver to prevent a forced sale.

💡 Need help securing your parent’s home from Medicaid estate recovery? Let’s discuss your options today!

Sadity Esq