Property Ownership and Medicaid: What Married Couples Need to Know

As an estate planning law firm, we often encounter questions about property ownership and its impact on Medicaid eligibility. This is particularly crucial for married couples where one spouse may need long-term care. Today, we'll explore the implications of owning a home as Tenants in Common when one spouse is on Medicaid, and how this affects asset protection and eligibility for long-term care benefits.

Understanding Tenants in Common Ownership

Tenants in Common is a form of property ownership where two or more individuals each own a distinct share of the property. Unlike joint tenancy, there's no right of survivorship, meaning when one owner dies, their share doesn't automatically pass to the other owners but instead goes to their estate or named beneficiaries.

Medicaid Eligibility and Home Ownership

For Medicaid eligibility, your primary residence is generally considered an exempt asset, but there are important caveats:

1. Home Equity Limits: As of 2025, most states have a home equity interest limit of $730,000 for Medicaid eligibility. However, this limit doesn't apply if a spouse, child under 21, or disabled child of any age lives in the home.

2. Tenants in Common Impact: When a home is owned as Tenants in Common, Medicaid considers only the applicant's share of the property. This can be both an advantage and a disadvantage.

Implications for Medicaid Planning

If one spouse needs nursing home care and applies for Medicaid, owning the home as Tenants in Common can have several implications:

1. Asset Protection: The healthy spouse's share of the property is protected from Medicaid recovery.

2. Eligibility Calculations: The value of the Medicaid applicant's share is considered an asset for eligibility purposes, potentially affecting qualification.

Trust Ownership and Property Taxes

Now, let's address the scenario where, upon the death of one spouse, a trust is established that owns the home, resulting in the surviving spouse holding a 50 percent ownership share.

1. Property Tax Reduction: The potential for property tax reduction in this scenario depends on state-specific laws. In Wyoming, for example, recent legislation (SF0102) has expanded property tax exemptions for surviving family members of veterans. While this doesn't directly address all situations, it demonstrates that state laws can provide tax benefits in certain circumstances.

2. Trust Beneficiary Status: If the trust is set up in Wyoming, and the deceased spouse created the trust while alive, the living spouse could indeed be named as a beneficiary. This arrangement can offer both asset protection and potential tax benefits.

Estate Planning Strategies

Given these complexities, consider the following strategies:

1. Medicaid Asset Protection Trust: This type of trust can protect your home while potentially allowing you to qualify for Medicaid.

2. Life Estate: Granting a life estate to the healthy spouse can provide protection against Medicaid recovery while ensuring they have a place to live.

3. Spousal Transfers: In some cases, transferring full ownership to the healthy spouse before applying for Medicaid can be beneficial.

4. Regular Review: Estate plans should be reviewed regularly, especially when considering long-term care needs.

Conclusion

Navigating property ownership, Medicaid eligibility, and estate planning can be complex, especially when considering long-term care needs. The structure of property ownership can significantly impact asset protection and Medicaid eligibility. While owning property as Tenants in Common offers some advantages, it also comes with potential drawbacks in the context of Medicaid planning.

Remember, Medicaid rules are subject to change and vary by state. What works in one situation may not be ideal in another. It's crucial to consult with an experienced estate planning attorney who can provide personalized advice based on your specific circumstances and state laws.

By understanding these concepts and planning ahead, you can better protect your assets, ensure quality care, and preserve your legacy for your loved ones.