Selling home in Revocable Trusts

In most states, a home titled in the name of one’s revocable living trust loses its exemption and becomes a countable asset. So the first thing to do is to check the rules for your state to see if this is true for you. If so, you may want to retitle the house back into your father’s name so that he can qualify for Medicaid someday.

It is not a gift to transfer one’s home into a revocable trust or out of the trust back to oneself. It would only be a gift if the trustee transferred the house to someone other than the person who established the trust (your father, in your case).

If you decide it’s for the best to sell the home, there would be no capital gains tax, since it is still considered your father’s house under the IRS rules. However, whether you should do that or not is a different question; before you sell the house and spend all his money on nursing home bills, you may wish to consider other options for protecting his assets while qualifying him for Medicaid. That’s really what my book is all about! You may wish to read it before