Protecting Property When Moving into Long-Term Care Facility

You never expect the conversation to turn to this—what happens to your parents' home when long-term care becomes necessary? For many families, the decision to move a loved one into assisted living or a nursing home doesn’t happen in isolation. Health declines, safety concerns, or the growing reality that family members can no longer provide the level of care needed often force the issue. What comes next is one of the biggest financial and emotional questions you’ll face: what do you do with the home?

The stakes are high. According to the U.S. Department of Health and Human Services, over half of us who reach age 65 will need long-term care services at some point. At the same time, the cost of care continues to climb.

As of 2026, assisted living often exceeds $60,000 per year, not counting surcharges that add to that cost. Memory care will be even more, and nursing home care can range from $100,000 to $130,000 annually, depending on location and level of care. These costs vary widely by region, which is why tools like the LTC News Cost of Care Calculator are essential to understanding what care may cost where you live.

Because of these expenses, many families assume selling the home is the only option, especially if a loved one does not have a Long-Term Care Insurance policy. In reality, it’s just one option—and often not the best one. Selling comes with transaction costs, tax implications, and emotional stress, along with the permanent loss of a valuable asset.

If your loved one has a life insurance policy, you may be able to sell it through a life settlement and receive a lump sum of cash now to help cover the cost of extended care. A life settlement allows you to convert an existing policy into immediate funds—typically more than the policy’s cash surrender value but less than the full death benefit. The buyer takes over the premium payments and receives the death benefit later. This option can provide valuable liquidity to pay for care at home, assisted living, or a nursing facility without having to quickly sell other assets.

For individuals with serious or terminal health conditions, a related option called a viatical settlement may offer an even higher payout and faster access to funds. Learn more about how a loved one's life insurance policy can be used to pay for long-term care when no other options may be available.

There are other strategies that can help you preserve the home, generate income, and protect your financial future.

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Renting to a Family Member

Instead of selling, you can rent out your home and create a steady stream of income to help offset care costs. Renting to a family member can make this even easier and more secure. This approach offers several advantages:

• Provides ongoing income to help pay for care
• Keeps the home in the family
• Reduces the risks associated with unknown tenants
• Offers flexibility if your care needs change

You might also choose to charge below-market rent to help a child or grandchild. This can benefit both sides—supporting a loved one while still generating income.

Keep in mind that rental income may have tax implications and could affect Medicaid eligibility if not structured properly. Consulting an elder care attorney is important before moving forward.

Transferring the Home

Another option is transferring ownership of the home to a family member. This can help ensure the property remains in the family, but it must be handled carefully.

If you eventually rely on Medicaid to pay for long-term care, your home is typically protected while you are alive if certain conditions are met. If a single person is no longer living in the home, typically the home will have to be sold. However, after your death, states are required to seek repayment for Medicaid benefits through a process known as estate recovery, which may include placing a lien on the home.

Certain transfers are allowed without penalty under Medicaid rules, including transfers to:

• Your legal spouse
• A child under age 21
• A blind or disabled child (any age)
• A trust for a disabled individual under 65
• A sibling with an equity interest who lived in the home
• A “caretaker child” who lived with you and provided care for at least two years

Most other transfers fall under Medicaid’s five-year look-back rule, which can result in a penalty period where you are ineligible for benefits. The Deficit Reduction Act of 2005 established and strengthened many of these rules, making advance planning critical.

As the American Bar Association notes, improper transfers can lead to unintended financial consequences and delays in eligibility, which is why working with an elder law attorney is essential when considering this strategy.

Avoid the Crisis With Early Planning

Too often, decisions about long-term care happen during a crisis—a fall, a hospitalization, or a sudden decline that leaves little time to weigh options. In those moments, families are forced to make fast decisions under stress, often with limited choices and significant financial pressure.

Planning today changes that.

When you take steps early, before you retire, you give yourself and your family the ability to make thoughtful decisions instead of reactive ones. You maintain control over where you receive care, how it’s delivered, and how it’s paid for. Adding Long-Term Care Insurance to your retirement plan can play a key role in that strategy.

👉 Compare Long-Term Care Insurance Companies and Products

An LTC  policy can:

• Safeguard your income and assets from the high cost of extended care
• Provide access to higher-quality care options, including care at home
• Reduce the financial and emotional burden placed on your family
• Help ensure your loved ones can focus on supporting you—not managing a crisis

Partnership Long-Term Care Insurance

One of the most effective ways to avoid being forced to sell your home and losing much of your assets is to plan now with Long-Term Care Insurance—especially a qualified partnership policy. Traditional health insurance and Medicare only cover short-term skilled care and do not pay for ongoing custodial long-term care services. That gap is what often forces families to liquidate assets, including their home.

A Long-Term Care Insurance policy can:

• Pay for care at home, assisted living, or in a nursing facility
• Provide tax-free benefits to cover extended care costs
• Help protect your income and savings from being depleted
• Reduce the likelihood of needing to sell your home under pressure

Partnership Long-Term Care Insurance policies offer an additional advantage. For every dollar the policy pays out in benefits, a corresponding amount of your assets can be protected if you later need Medicaid. Most states participate in these programs, but you must medically qualify for coverage—making it important to plan before health issues arise.

Preparing Means Choices

Your home is more than just a financial asset—it’s part of your life story. Before making a decision, take time to understand your options and plan ahead. The earlier you prepare, the more choices you’ll have to protect your independence, preserve your legacy, and reduce the burden on your family.

Start by exploring care costs in your area, having an honest conversation with your family, and considering how Long-Term Care Insurance could fit into your retirement plan.

Frequently Asked Questions About Your Home and Long-Term Care

Do you have to sell your home to pay for long-term care?

No. While many families assume selling the home is necessary, it’s not always required. Options such as renting the home, using a life settlement, transferring ownership strategically, or using Long-Term Care Insurance can help cover care costs without selling.

Is your home protected if you go on Medicaid?

In many cases, your primary residence is protected while you are alive if you meet certain conditions, such as expressing intent to return home and staying within home equity limits. However, after death, states may seek repayment through estate recovery, which could involve the home.

Can a single person keep their home when going into a nursing home?

Sometimes. A single person may keep their home while alive under Medicaid rules, but if they are no longer living in it and no qualifying exemptions apply, the home may eventually need to be sold or could be subject to estate recovery after death.

What is a life settlement and how can it help pay for care?

A life settlement allows you to sell an existing life insurance policy for a lump sum of cash. This money can be used to pay for long-term care expenses, often providing more value than surrendering the policy while avoiding the immediate need to sell other assets.

Can you transfer your home to a family member to protect it?

Yes, but it must be done carefully. Medicaid has a five-year look-back rule, and improper transfers can result in penalties. Certain transfers—such as to a spouse, disabled child, or caregiver child—may be allowed without penalty.

How can Long-Term Care Insurance help protect your home?

Long-Term Care Insurance can pay for care services at home or in a facility, reducing the need to use personal savings or sell assets like your home. Partnership policies may also protect a portion of your assets if you later qualify for Medicaid.

What are the average costs of assisted living and nursing home care in 2026?

As of 2026, assisted living often exceeds $60,000 per year, while nursing home care can range from $100,000 to $130,000 annually, depending on location and level of care. Costs vary significantly by region.

What happens if you don’t plan ahead for long-term care?

Without planning, families are often forced to make quick decisions during a crisis, which can lead to higher costs, fewer care options, and the potential need to sell assets like the family home. Planning ahead gives you more control and flexibility.