Most homeowners, when they realize the home needs to sell to fund care, call a real estate agent. That makes intuitive sense and it’s often the wrong first call. The home sale is a real estate question on the surface — and underneath, in any household where Medicaid is or might become part of the funding picture, it is an elder law question. This page walks through what to ask your Texas elder law attorney before the listing goes up, and what an hour of their time before you sell can save you later.
This is the most common and most expensive mistake. Families hear that Medicaid looks at assets, so they transfer the home to a child to “protect it.” What actually happens: Medicaid reviews five years of financial history. The gift triggers a penalty period — calculated based on the home’s value — during which Medicaid will not pay for care. The family now has no home AND no Medicaid coverage. The thing they were trying to avoid is exactly what they caused.
A home sale itself isn’t a Medicaid violation. But what you do with the proceeds matters. If the proceeds are spent on care, that’s generally fine. If they’re gifted, distributed, or spent on non-care expenses within the look-back window, Medicaid may treat them as uncompensated transfers. The sequence and timing matter — and an elder law attorney should review them before the sale closes, not after.
Neighbors, online forums, well-meaning friends, and even some real estate agents offer Medicaid advice that is confidently stated and frequently wrong. Medicaid rules are complex, change regularly, and vary by state. Texas has specific rules — income cap, community-property protections, homestead exemption, MERP — that don’t work the same way as other states. The right source for Medicaid planning is a Texas elder law attorney. Period.
If Medicaid is anywhere on the horizon — now, or possibly within five years — schedule an hour with a Texas elder law attorney. These are the questions worth asking:
Generally yes, as long as you, your spouse, or a qualifying relative remains in the home. But the equity cap and the conditions matter. Confirm your specific situation.
A Lady Bird Deed (enhanced life estate deed) lets you transfer the home to heirs while keeping full control during your lifetime. The home passes outside probate at death, which generally places it outside Texas MERP. It’s a routine tool — ask whether it fits your situation.
Under Texas’s current Medicaid Estate Recovery Program, the state can seek to recover Medicaid payments from assets that pass through probate after death. A home that goes through probate is recoverable. A home that transfers outside probate (via Lady Bird Deed, Transfer on Death Deed, or trust) generally is not — under current rules.
Any uncompensated transfers within five years of a Medicaid application generate penalties. If you’re more than five years from needing Medicaid, you have more options. If you’re within the window, the planning must be more careful.
Texas is an income-cap state. If your gross monthly income exceeds ~$2,900/month (adjusts annually), you’ll need a Qualified Income Trust (Miller Trust). This is routine and your attorney can set one up.
Texas is a community-property state. Spousal protections exist but they’re specific — the community spouse can retain a defined portion of assets. Your attorney will calculate the Community Spouse Resource Allowance for your situation.
How the proceeds are used matters for Medicaid. Your attorney can advise on whether to apply them to care, reinvest them in an exempt asset, or structure the transaction to avoid look-back issues.
Review the last five years with your attorney. Gifts to grandchildren, charitable donations, below-market sales to family — all of these count. Better to find out now than at the Medicaid application.
If you’re a veteran or surviving spouse, VA benefits and Medicaid planning can interact. Your attorney and a VA-accredited claims agent can coordinate both.
Deed to the home, five years of bank and investment statements, any existing trusts or estate documents, Social Security and pension information, insurance policies (LTC, homeowner’s), and a list of any gifts or transfers made in the last five years. The planning workbook helps you assemble this.
Look for attorneys who do elder law as a primary practice, not a side line:
The legal conversations that have to happen before the real estate conversation. Ten questions for your attorney, the three costliest mistakes, and how to find the right Texas elder law attorney.
Download Now — Free PDF · No email requiredIf your family is reading along.
The Senior Move Roadmap system was originally written to the adult child — the daughter, son, daughter-in-law, or family member helping you with this transition. If you’d like to read what they’re reading, or share this with them so you’re working from the same map:
Medicare vs. Medicaid in Texas — Family Edition → · Selling the Home Without Breaking Medicaid (PDF) →
This is informational guidance, not legal, medical, or financial advice. The right professional matters — and every section of this system tells you who that is.