Can POA Transfer Dad's Home to Disabled Sister?

That’s a very critical question that many families face when a parent needs long-term care, especially with existing living arrangements. As power of attorney (POA), you are right to be cautious.

The short answer is yes, you might be able to transfer the home to your sister without your father facing a penalty for Medicaid long-term care, but it depends entirely on whether your sister meets the “caregiver child exemption” requirements.

The Medicaid “Lookback” Problem

When your father applies for Medicaid (the government program that often pays for long-term nursing home care), the state will look back at his financial transactions for the past five years (the “lookback period”).

• The rule: If your father gives away assets, like transferring the home to your sister for less than its fair market value, Medicaid considers it a disqualifying transfer.
• The penalty: A disqualifying transfer triggers a penalty period (a period of time during which Medicaid will refuse to pay for his care). The length of this penalty is calculated by dividing the value of the home by the average monthly cost of care in your state. Since your father’s stroke was only a few months ago, any immediate transfer will fall squarely within this penalty period.

The Crucial “Caregiver Child Exemption”

There is a major exception that could allow this transfer to happen penalty-free: the caregiver child exemption (or “caretaker child exemption”).

For your sister to qualify, all the following conditions must be met:

1. Residency requirement. Your sister, the adult child, must have lived in your father’s home for at least two years immediately before he moved to a nursing home or other “institutional” setting.

2. Caregiver requirement (delayed care)

• Your sister must have provided care that delayed your father’s need for a nursing home or other institutional care.
• The care she provided must have been substantial enough to keep him safe and at home. Given that your father had a stroke a few months ago, the two-year period would have to cover the time before his current need for long-term care arose.
• Her care for her own stroke recovery does not count. The focus is on the care she provided to your father that allowed him to avoid institutional care.

3. Proof and documentation. Medicaid will heavily scrutinize this exemption. You will need strong documentation, such as:

• Proof residency: Documentation showing your sister’s permanent address at the home for the full two years. This may include utility bills, tax returns, voter registration, and driver’s license.
• Proof of care: A doctor’s letter stating that your father required the level of care your sister provided and that her care delayed his need for a nursing home. You may also need affidavits from family or neighbors and a log of the daily care activities she provided.

What About Your Sister’s Condition?

Your sister’s physical limitations (difficulty driving, one-sided weakness, speech difficulty) are also relevant because of a separate, but related, exemption.

There is a different exemption for transfers to a permanently disabled or blind child of any age.

• If your sister meets the Social Security Administration’s definition of permanently disabled or blind, your father could transfer the home to her without penalty.
• This exemption is easier to use because it does not require the two years of caregiving or residency. The home can be transferred penalty-free if she meets the disability definition.

You should consult an attorney to see if her stroke and resulting limitations meet the necessary legal definition of permanent disability. Additionally, you need to be aware of the potential tax consequences of such a transfer if your sister intends to sell the home after receiving it.

Your Next Steps as POA: Hire an Elder Law Attorney

Do not transfer the house until you get legal advice. As power of attorney, you have a fiduciary duty to act in your father’s best financial interest. Improperly transferring the home could cause the penalty period, leaving your father to pay for care out of pocket, which would be a breach of your duty.

1. Stop: Do not sign a deed or transfer the house yet.
2. Consult an elder law attorney: Find an attorney who specializes in Medicaid planning in your state. They will analyze the specifics of your situation and determine if your sister qualifies under the caregiver child exemption or the disabled child exemption.
3. Gather documents: Start pulling together documents to prove your sister’s two-year residency and the care she provided your father.