Short Answer

In North Carolina, a primary residence can be a noncountable asset for long-term care Medicaid if certain conditions are met, but the State may seek repayment from the estate after death. Planning options include confirming home-exemption rules, using permissible spend-downs, and considering deed and trust strategies that do not trigger transfer penalties. Because improper gifts can cause a Medicaid penalty and estate recovery can reach probate assets, timing and the form of any transfer are critical.

Understanding the Problem

You want to know whether you can arrange your mother’s assets so she qualifies for North Carolina Medicaid without losing her home. You are the only child, your mother has a mortgage and modest income, and memory care costs exceed her income. You are weighing in-home care, spend-downs, and whether a Lady Bird (enhanced life estate) deed or gifting would work under North Carolina rules and the Medicaid lookback period.

Apply the Law

North Carolina Medicaid has financial eligibility rules, transfer-penalty rules (the “lookback”), and estate recovery. A primary residence may be excluded while your mother is alive if requirements are met. However, North Carolina can assert a claim against her probate estate at death for certain Medicaid payments, which can put the home at risk if it passes through probate. Deeds or trusts that keep control with your mother may avoid a disqualifying transfer but still require careful drafting and timing.

Key Requirements

• Home as an exempt resource: A principal residence can be noncountable for Medicaid while your mother owns it and meets program rules; income and other resources still must meet limits.
• Lookback and transfer penalties: Gifts or below‑market transfers within five years before applying can trigger a penalty period of ineligibility for long‑term care Medicaid.
• Estate recovery risk: After death, the State can file a claim in the estate for certain Medicaid payments; if the home is a probate asset, it can be sold to pay the claim unless a statutory exception or hardship applies.
• Deeds that reserve control: An enhanced life estate (Lady Bird) deed reserves your mother’s lifetime use and the power to sell or revoke, which can help avoid a present transfer penalty and often keeps the home out of probate.
• Authority to act: If you sign for your mother, the power of attorney must expressly allow gifting or deed changes (especially to you) or you may need a court order.
• Permissible spend‑downs: Paying legitimate expenses (mortgage, home repairs, care costs, prepaid burial, debt) is allowed; documentation is essential.

What the Statutes Say

• North Carolina Gen. Stat. § 108A-70.5 (Medicaid Estate Recovery Plan) – Authorizes estate recovery for certain Medicaid services.
• North Carolina Gen. Stat. § 28A-19-3 (Time limits for creditor claims) – Sets deadlines for creditors (including State claims) to present estate claims.
• North Carolina Gen. Stat. § 32C-2-217 (Gifts by agent under POA) – Explains when an agent may make gifts and related limits.
• North Carolina Gen. Stat. § 28A-15-1 (Property available for debts) – Identifies assets available to satisfy estate debts and claims.

Analysis

Apply the Rule to the Facts: Because your mother owns a home with a mortgage and modest income, the residence can often remain an exempt resource for eligibility while she lives there (or expresses an intent to return) even if she needs long‑term care. Gifting cash or deeding the home outright to you within five years of applying would likely trigger a penalty. An enhanced life estate deed that reserves your mother’s control can avoid a present transfer penalty and, because it typically passes the property outside probate, may reduce estate‑recovery risk. You must also confirm the power of attorney expressly allows any deed change or gifting.

Process & Timing

1. Who files: The Medicaid applicant (your mother) or her authorized representative. Where: Your county Department of Social Services (DSS) in North Carolina. What: Long‑term care Medicaid application with supporting financial and property records; POA if applying on her behalf. When: DSS generally issues decisions within 45–90 days, but timing varies.
2. If using an enhanced life estate deed: consult counsel to draft; record the deed with the Register of Deeds in the county where the property is located; confirm no lender/association restrictions and preserve your mother’s reserved powers.
3. If your mother later dies after receiving Medicaid: the State may file an estate claim through the Clerk of Superior Court process; the personal representative must give notice to creditors, and State claims must be timely presented.

Exceptions & Pitfalls

• Caregiver child exception: a home transfer to a child who lived in the home and provided care for at least two years that delayed institutionalization may be exempt if well‑documented.
• Estate recovery limits: recovery is delayed while a surviving spouse is alive and may be waived for hardship; procedures and enforcement can change.
• POA traps: an agent needs explicit written authority to make gifts or change real estate; self‑dealing without authority risks breach of fiduciary duty.
• Deed details: the deed must reserve your mother’s lifetime rights and powers; a simple life estate deed without reserved powers can be treated as a gift.
• Mortgage/association issues: review due‑on‑sale clauses and HOA rules before recording a deed change.
• Documentation: keep receipts for spend‑downs (repairs, care, debts) to show they were for your mother’s benefit.

Talk to an Estate Planning Attorney

If you’re weighing Medicaid eligibility, home protection, and deed options for a parent with memory care needs, our firm has experienced attorneys who can help you understand your options and timelines. Call us today.

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.