The "Multi-Home Homestead" Dilemma

Thursday, April 18, 2013

Michigan Medicaid eligibility has been fairly consistent over the years in not counting (or treating as "exempt") the value of an applicant's homestead. The homestead has been defined by Medicaid as the residence the applicant lives in or intends to return to if nursing home services are no longer necessary. The homestead definition includes all contiguous land - that is land not separated by another's land. Historically, the homestead was also defined to include any structures, including other residences, on the homestead property.

The classic application of this traditional rule was exempting a main farm house, while also exempting other homes built on the family farm for children of the owner. In Michigan, we also see many lake homes that have multiple residences on an open piece of lakefront property, each used and enjoyed by multiple family members.

Recently, the Department of Human Services re-defined the "homestead" as all contiguous property "but not including any other residences." With this change, homesteads like those described above will be exempt for the value of a residences other than the applicant's residence.

An Example

Mr and. Mrs. Brown own a home on a lake with 400 feet of lake frontage. They build a second home on the property for family to stay in when visiting, or to rent out to vacationers if empty.

Under the the previous rule, the entire tract of land, including the second residence, would be exempt as one contiguous homestead. Under the new definition of "homestead," the second residence is considered a countable asset. This second structure would need to be valued and reported to Medicaid, and may prevent eligibility. This same scenario will occur will multiple homes on a family farm.

If you face the "multiple home homestead" dilemma, special care and planning by an Elder law attorney familiar with Medicaid and long term care is needed. There are ways to protect all residences on the homestead for your spouse or other family members.

Please contact my office if you'd like to hear more.