Question: I am 67 and in good health, but my husband, age 70, suffers from what has been diagnosed as lewy bodies dementia. After several years at home, his condition had worsened to the point that I was no longer able to take care of him and, much to my regret, had to place him in a nursing facility.

Unfortunately, my husband of 42-plus years never signed a power of attorney for me because he never believed he would get sick. He continued to deny his illness even after his diagnosis, and is not capable of signing one now. He doesn't even recognize me and our three children. We got by on our Social Security incomes and his pension, dipping into savings and his IRA now and again to make ends meet. But there is not enough money to pay for his care in a nursing home. We have relatively few assets, and those we do have - our home on a few acres of family land, a bank account, and a few certificates of deposit - are owned jointly by my husband and me. I have no IRA, but he does.

I went to a lawyer who suggested that the first thing to do was to put all joint accounts in my name immediately since I could do this without a power of attorney. This was not a problem because my name was on the accounts; however, because the real estate - including our home - is titled jointly, the lawyer told me that we would have to get court approval to have my husband's interest in the home and acreage transferred to me. In this way, according to the lawyer, my husband's IRA would be used to pay for his care until he could qualify for Medicaid benefits, and I should then have enough income and assets to last me if I took a reverse mortgage on the home.

We went to court and the lawyer was shocked when the judge told him that he would not approve the transfer because 1) it was a crime to do so, 2) it was not in my husband's best interest to allow any transfer, and 3) the transfer would prevent "estate recovery" against the house when my husband died and would cost the state too much money. I don’t understand why I should be made to suffer first by losing my husband and second by watching everything go up in smoke.

Answer: It is disturbing to see that either the judge was ill-informed about major issues facing older Americans today or your lawyer did not make a suitable showing of what the judge needed to get over the hurdle. One would logically assume that with an ever-growing older population, judges who deal frequently with elderly people would be more informed about and understand the unique needs of older Americans and the laws affecting them. Because of the risk of oversimplifying the complex questions you ask, we preface our response with the suggestion that matters such as this be placed in the hands of experienced attorneys who practice in this area.

That said, while the laws of each state may differ to some degree, dealing with property of incapacitated individuals in a situation like yours requires at least a basic understanding of Medicaid regulations. Under the so-called Deficit Reduction Act that was signed into law this past February, a principal residence is not considered a countable resource for Medicaid purposes so long as the equity is less than half a million dollars. Some states don’t count the residence if the Medicaid applicant intends to return home, while others require proof of the odds of returning home. However, in all states, so long as the Medicaid applicant’s spouse or a qualifying dependent relative lives there, the residence doesn’t count.

In addition, a transfer of assets by one spouse to another is exempt from penalty, and when it comes to the principal residence, the Medicaid applicant is free to transfer his/her interest in the residence to his/her spouse without transfer penalty.

Lastly, in its infinite wisdom, Congress in 1996 made it a crime to transfer assets to qualify for Medicaid, repealed this law the next year – making such transfers legal -- and simultaneously passed yet another law making it a crime to advise a person to make a legal transfer. While the last version of this law technically is still out there, we know of no enforcement. Confused? So are they. And so is the judge who heard your case and believes allowing this transfer is a crime.

Bottom Line: There is absolutely no benefit to your husband -- an institutionalized spouse -- keeping title to the house since he can neither afford to pay the taxes and upkeep nor make any use of the home. Consequently, it would appear that it is in his best interest that a transfer be permitted to assist in your support and to shift the burden of the upkeep to you. Unfortunately, the myths about Medicaid will continue to cause many problems to our elderly population.