Medicaid Recovery of Condo in Irrevocable Trust?

by BH


My parents put their condo in an irrevocable trust. The condo still
has a mortgage of $57,000 (it’s worth $115,000) in Florida. If mom
goes on Medicaid with dad still at home, when both my parents are
deceased will Medicaid pursue estate recovery when the condo is sold?


The answer is different depending on whether the condo is really in an irrevocable trust (which would be unusual). If so, the answer depends in part on the terms of the irrevocable trust as well as the state where the person applies for Medicaid.

If the Medicaid applicant retains NO right to receive back any part of the trust under any circumstances (other than trust income), and has no control over the trust, then most likely the transfer of the condo into the trust would protect it from being accessed by the state following their death, and after 5 years such transfer will not generate a gift penalty when they appliy for Medicaid.

A small minority of states may still attempt to foreclose on any interest the Medicaid recipient still had at the time of death, but not Florida, so you should be protected from estate recovery against the condo if your parents were Florida residents receiving Florida Medicaid coverage.

If the trust in question is actually the more common revocable trust, then in the vast majority of states the answer would be "Yes", Medicaid would recover, but the bank must be repaid the balance of the loan first, since it is a secured lender. However, in Florida, there are special rules for the protection of the homestead, e.g., the home is exempt from such estate recovery by the state if it transfers to the spouse or certain lineal descendants as “homestead.”

You can read lots more at or see the "Medicaid" button in our left column.

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