Parent donates a property to a service providing agency for use by the family member with a disability
The parent(s) can explore the possibility of donating the property (home) to an agency that provides Medicaid Waiver Services. Any agency that provides waiver services has a contract with the county board of developmental disabilities, and the county board provides oversight of those services.
What is this?
The parent(s) can explore the possibility of donating the property (home) to an agency that provides Medicaid Waiver Services. Any agency that provides waiver services has a contract with the county board of developmental disabilities, and the county board provides oversight of those services. These agencies are sometimes referred to as service providers. Not all agencies will accept property as a donation.
Typically when the parent(s) considers this option, it is with the plan and expectation that the family member with a disability will live in the home, and the agency will provide Medicaid Waiver services such as staff support for their family member. As the parent(s) considers this option, they can keep in mind that this option is unique in that it blends the ownership of the home and the provision of services to live in that home – the provider agency is the homeowner and service provider. The pros and cons of this are outlined below.
The agency will determine if it is able to accept the property as a donation. The agency will likely complete an assessment of the state of the property, and determine physical and capital needs to improve or maintain the property. The agency may determine the property’s current status by reviewing the neighborhood, layout, parking, safety, upkeep demands, accessibility, status of any easements, mortgages, liens, etc. After that review, they can decide whether or not the property is suitable to accept as a donation. Additionally, the service provider may require a lump sum of money in addition to the property to ensure they can maintain the property in the future.
Once the agency agrees to accept the property donation, the parent(s) and agency can develop a contractual agreement that outlines how the property will be used, who will live in the property, and any other stipulations that are mutually agreeable. Parents and the agency can discuss expectations about what happens if/when the family member with a disability has needs that no longer align with living in the home (e.g. the family member has accessibility or health issues).
The parent(s) should be aware that any agency that provides Medicaid services can, for any reason, give a thirty-day notice to terminate services. So, at some point in the future, if the agency decides to terminate Medicaid services to the family member with a disability, this may make it necessary for the family member to move. (See: Information and Resources: Provider Agencies and Housing.
The agency is required to provide a written lease agreement to any tenant, even if the parent(s) have donated the property where the family member lives. The family member with a disability will pay rent. If the agency did not charge rent, this would impact family member’s public benefits (see In–kind support and maintenance).
At the point of donation, the parent(s) will no longer make day-to-day decisions about the operation of the property. All property management responsibilities and liabilities will transfer to the agency. The agency will be responsible for ensuring the condition of the housing, and will assume any injury or loss liabilities stemming from the property.
Parents considering this option will want to reach out to the agency well in advance to discuss the feasibility of this option. Donation of the property should never be a surprise to the agency. The agency can refuse the bequest if they were not involved in the planning prior to the parent(s)’ death. The parent(s) can donate the property either through estate planning or during their lifetime for the benefit of a family member with a disability.
Parents should recognize that their property may not be suited to the purpose they envision. Parents who are thinking of donating a property upon their death as part of their estate planning will need to routinely evaluate their property. They will need to have an objective review of the factors that determine the property value.
What Circumstances Make this a Possible Fit?
- The parent(s) wants to donate the family home where the family member with a disability grew up, or a home purchased specifically for the family member with a disability to live in. This home could be a single family home, a condo, an apartment building, etc.
- The parent(s) wants someone else to assume property management responsibilities.
- The parent(s) has tax considerations. The donation of property will, in some cases, likely serve as a charitable donation for tax purposes in the year of the donation. Contact a tax professional for assistance in making this determination.
- The parent(s) is not interested in inheritance of the property by other heirs.
What Does This Mean to My Family Member with a Disability?
If the parent(s) donates the family home, the family member with a disability may be able to initially remain in their existing living situation, allowing for continuity of experience. The family member will likely still experience significant change, such as having roommates.
The family member’s quality of life will be determined in part by the quality of services provided by the agency. The quality of services may change over time. Since the ownership of the home and the service provision are held by one agency, the family member may need to move if they wish to change service providers in the future.
What Does this Mean to My Estate?
If the property is transferred during the lifetime of the parent(s), it is removed from the estate. If the property is donated in the parent(s) will, parent(s) need a qualified legal representative and a detailed contractual agreement written in consultation with the service provider outlining the terms and stipulations of the donation.
Pros and Cons
Extent of Control
Effects on Public Benefits
Property Management Responsibility
Long Term Flexibility
Explore other housing options
Created by a Home Think Tank workgroup.
Information on this sheet is provided for informational purposes only. Nothing in this document should be considered legal or accounting advice. Contact a professional for information pertinent to your specific situation.
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