Dec292025
Estate Planning Q&A Series

Can my relative sign over their remaining rights and can I hold the property for a while before selling without creating Medicaid look-back or penalty issues? – North Carolina

Short Answer

In North Carolina, a relative can sometimes give up (“renounce”) a property interest or transfer it, but either step can create Medicaid transfer-for-less-than-fair-market-value risk if the relative applies for certain long-term-care Medicaid benefits within the look-back window. Holding the property before selling usually does not create a new transfer penalty by itself, but the original transfer/renunciation and what happens to sale proceeds can affect eligibility. The safest approach depends on what “remaining rights” are involved (for example, a life estate, a remainder interest, or an inheritance right) and whether fair market value is paid.

Understanding the Problem

In North Carolina estate planning, a common question is whether a family member can sign away remaining rights in a home or inherited property, and whether another family member can hold the property for a period of time before selling it, without triggering Medicaid look-back or penalty problems. The decision point is whether the relative’s action is treated as giving away an asset (or an interest in an asset) for less than fair market value, which can affect eligibility for certain long-term-care Medicaid services.

Apply the Law

North Carolina follows federal Medicaid transfer rules through state law. If an individual (or the individual’s spouse) transfers an asset for less than fair market value on or after the look-back date, the State can impose a period of ineligibility for certain Medicaid long-term-care services. “Assets” can include real estate interests, and “fair market value” generally means what would have been received in a normal sale at the time of transfer, net of valid liens and encumbrances. The main agency involved is the North Carolina Department of Health and Human Services (DHHS), typically through the county Department of Social Services (DSS) that processes Medicaid applications.

Key Requirements

  • Identify the “remaining rights”: The analysis changes depending on whether the relative holds a life estate, a remainder interest, a survivorship interest, or a right to inherit that can be renounced.
  • Fair market value vs. a gift: A transfer for less than fair market value can trigger a Medicaid penalty period if the relative later seeks covered long-term-care services within the look-back window.
  • Timing and the look-back: The State reviews transfers made during the look-back period tied to federal law; transfers during that window can create ineligibility for specified services even if the person was not on Medicaid at the time of transfer.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The facts describe a relative who may “sign over” remaining rights in property, and another family member who wants to hold the property before selling. Under North Carolina’s Medicaid transfer rules, the key risk is whether the relative’s action is treated as a transfer (or renunciation) for less than fair market value during the look-back period. If the relative later applies for Medicaid coverage for certain long-term-care services, DHHS can review that transaction and may impose a penalty period depending on the uncompensated value.

Process & Timing

  1. Who files: If the relative is renouncing an inheritance-type interest, the person renouncing signs and acknowledges a written renunciation. Where: The renunciation is filed under North Carolina’s renunciation statute (typically handled through the Clerk of Superior Court record systems and land records when real property is involved). What: A written instrument that identifies the transferor/creator, describes the interest, states the extent of the renunciation, and is signed and acknowledged. When: Timing matters most if a Medicaid application is likely within the look-back window; the transfer date is what DHHS will scrutinize.
  2. Medicaid review: If the relative later applies for Medicaid long-term-care coverage, the county DSS and DHHS review financial records and transfers during the look-back period. They evaluate whether fair market value was received and calculate any uncompensated value under the statute’s definitions.
  3. Sale later by the holder: If the property is held and later sold, the sale itself is typically a conversion of one asset (real estate) into another (cash). The Medicaid risk usually turns on (a) whether the earlier sign-over/renunciation was a disqualifying transfer and (b) where the sale proceeds go and whether any proceeds are given away.

Exceptions & Pitfalls

  • Renunciation vs. transfer confusion: A renunciation under Chapter 31B is not the same as a deed transfer. Either can still create Medicaid issues if it results in the relative giving up value for less than fair market value during the look-back period.
  • “Remaining rights” may be a separate asset: A life estate, remainder interest, or survivorship interest can have value. Signing it away for little or nothing can create uncompensated value even if the property stays in the family.
  • Fair market value disputes: North Carolina’s Medicaid statute uses a fair-market-value concept and, for taxable property, generally presumes the tax value reflects fair market value (net of valid liens), subject to rebuttal. Relying on an informal family estimate can create problems if DHHS values it differently.
  • Partition and control issues: When multiple people own remainder interests, North Carolina law allows partition sale of remainder/reversionary interests even if a life estate exists, but the life tenant’s possession is protected during the life estate. This can affect practical control and timing of a sale.
  • Hardship waiver is not automatic: North Carolina law allows DHHS to waive a transfer penalty for undue hardship, but it is a separate process and should not be treated as a planning strategy.

Conclusion

In North Carolina, a relative can sometimes renounce a property interest or transfer remaining rights, but giving up value for less than fair market value during the Medicaid look-back period can trigger a penalty period for certain long-term-care Medicaid services. Holding the property before selling usually does not create a new transfer penalty by itself, but the original sign-over and any later gifts of sale proceeds can. A practical next step is to document exactly what interest is being given up and have counsel review the proposed transfer before it is signed.

Talk to a Estate Planning Attorney

If you’re dealing with a family property transfer and concerns about Medicaid look-back and penalty rules, our firm has experienced attorneys who can help explain options and timelines under North Carolina law. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Estate Planning Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.