Can a Nursing Home Take Money From an Estate? Understanding Your Rights

With annual nursing home costs often exceeding six figures, many families worry about asset depletion [1, 4]. The question of 'Can a nursing home take money from an estate?' is critical, and the answer hinges on who paid the bills—and how [1].

Quick Summary

Yes, under specific circumstances, money can be taken from an estate to pay for nursing home care, primarily through the federally mandated Medicaid Estate Recovery Program (MERP) [1, 2, 3].

Key Points

• Medicaid Estate Recovery: If Medicaid paid for long-term care for someone 55 or older, the state must try to recover those costs from the deceased's estate [1, 2, 3, 7].

• Estate Definition Varies: At a minimum, recovery targets assets passing through probate, but some states have a broader definition including trusts and jointly owned property [1].

• Key Exemptions Exist: Recovery is blocked if there is a surviving spouse, a child under 21, or a disabled child. The home may also be protected under specific circumstances [1, 6].

• Family Is Not Personally Liable: Federal law prohibits nursing homes from requiring a family member to co-sign or personally guarantee a resident's bill [1, 5].

• Planning is Crucial: Strategies like irrevocable trusts and long-term care insurance can protect assets, but must be implemented well in advance due to the 5-year look-back period [1, 4].

• Probate vs. Non-Probate: Assets that bypass probate (like those with named beneficiaries or in certain trusts) are often safer from recovery, depending on state law [1].

The Reality of Nursing Home Bills After Death

It's a common fear: after a loved one passes away, will the nursing home they lived in seize their remaining assets, leaving nothing for their heirs? While nursing homes themselves do not directly 'take' assets, the deceased person's estate is generally responsible for settling any outstanding debts, including nursing home bills [1]. The most significant factor in this process is whether the resident's care was paid for by Medicaid [1].

Understanding Medicaid Estate Recovery

Since 1993, federal law has required all states to implement a Medicaid Estate Recovery Program (MERP) [1, 2, 3]. If a person aged 55 or older received Medicaid benefits for long-term care (like nursing home services), the state's Medicaid agency is required to seek reimbursement from the deceased individual's estate [1, 3, 7]. This means the state, not the nursing home directly, initiates a claim to recoup the money it spent on the resident's care [1].

What Is Considered the 'Estate'?

The definition of an 'estate' varies by state law [1]. At a minimum, it includes all assets that go through probate [1]. Probate is the legal process of distributing a deceased person's property as outlined in their will or by state law if there is no will [1].

Some states use a broader definition of 'estate' that includes assets that typically bypass probate, such as joint tenancy, living trusts, and life estates [1]. This expanded definition allows the state to recover from a wider range of assets [1], making proactive estate planning even more crucial.

What Assets Are Vulnerable and What Are Exempt?

Generally, the state can seek recovery from assets within the recoverable estate, often including the family home [1]. However, there are important federal protections and exemptions [1, 6].

Recovery is PROHIBITED if the deceased Medicaid recipient is survived by a spouse, a child under 21, or a child of any age who is blind or permanently disabled [1, 6]. Recovery can be deferred until the surviving spouse's death [1].

The home may also be protected under certain circumstances, such as if a sibling with an equity interest or an adult child providing care lived in the home for a specified period before institutionalization and continues to reside there [1]. Many states also have provisions for 'undue hardship' waivers [1].

Proactive Steps to Protect Assets

Medicaid has a five-year look-back period for asset transfers, making early planning essential [1, 4]. Waiting until a crisis significantly limits options [1].

Asset Protection Strategies Comparison

Strategy	How It Works	Key Considerations
Irrevocable Trust	Assets transferred out of your control for beneficiaries.	Must be done 5+ years before Medicaid application. Protects from creditors and Medicaid recovery [1, 4].
Life Estate	Transfer home ownership to heir while retaining the right to live there.	Home bypasses probate but may still be subject to recovery in states with a broad estate definition [1].
Long-Term Care Insurance	Policy covers future care costs, reducing reliance on Medicaid.	Premiums can be high, but offers control and preserves assets [1, 4].
Medicaid-Compliant Annuity	Converts countable assets into a non-countable income stream.	Complex rules; often used for a healthy spouse [1, 4].
Gifting	Giving away assets to reduce estate size.	Subject to the 5-year look-back; can result in penalty period [1, 4].

The Role of Family and Admission Agreements

Under the federal Nursing Home Reform Act, facilities cannot require a third party to personally guarantee payment as a condition of admission [1, 5]. Be cautious about signing documents naming you a 'responsible party' [5]. While you can use the resident's funds (as a power of attorney), you should not be personally liable [1, 5]. Consult an attorney if a nursing home sues a family member for unpaid bills [1, 5].

Conclusion: Plan Ahead to Secure Your Legacy

So, can a nursing home take money from an estate? Indirectly, yes, via the state's Medicaid Estate Recovery Program (MERP) [1, 2, 3, 7]. The estate is liable for debts, and the state will seek reimbursement if Medicaid paid for care [1]. However, federal and state laws offer protections for surviving spouses, minor or disabled children, and in cases of undue hardship [1, 6]. Early and strategic legal and financial planning is the most effective way to protect assets [1, 4]. Consulting with an elder law attorney can help navigate complex rules and preserve your legacy [1, 4]. For more information, you can visit the official Medicaid.gov page on Estate Recovery [3].

Frequently Asked Questions

Does a trust protect assets from a nursing home?

Yes, an irrevocable trust can protect assets. Assets must be transferred at least five years before applying for Medicaid to avoid the look-back period penalties [1, 4].

Can a nursing home take my house after I die?

A nursing home cannot directly take your house. However, if Medicaid paid for care, the state may pursue recovery from the estate, potentially involving the house, unless specific exemptions apply [1, 6].

What is the Medicaid 5-year look-back period?

This is a five-year period before applying for Medicaid where transactions are reviewed. Gifts or transfers for less than market value can cause a penalty period of ineligibility [1, 4].

Are my children responsible for my nursing home debt?

Generally, no. Federal law prohibits facilities from requiring a child to be personally responsible. A few states have rarely enforced 'filial responsibility' laws [1, 5].

What happens if a nursing home resident dies with no money?

If there are no assets in the estate, there is nothing for the nursing home or Medicaid to recover. Debt is typically written off, and family members are not personally responsible [1].

Are life insurance policies subject to Medicaid estate recovery?

If a life insurance policy has a named beneficiary other than the estate, the proceeds go directly to that person and are generally not subject to recovery [1].

How can a surviving spouse be protected from estate recovery?

Federal law prohibits recovery while a surviving spouse is alive; the claim may be deferred. Spousal impoverishment rules also protect certain assets and income for the community spouse [1].