When you apply for county or state healthcare assistance, the county or state can lay claim to a percentage of your estate proceeds.

Q: Fifteen years ago, my parents put my two siblings and myself on the title/deed to their house with the stipulation that they could continue to live in the house for as long as they lived.

They are still living but both have been diagnosed with dementia, my mother is advanced and my father is fairly newly diagnosed. However, for safety reasons (my mother kept falling and my father would forget he could not leave her alone are among a couple of the safety issues) they have now been living in an assisted living memory care facility for the past 11 months.

They are running out of funds for their healthcare so we are looking at applying for county or state assistance, but an elder advocate has warned us that it is possible the county or state can lay claim to 40 percent of the proceeds of the sale of their/our house after they both die.

Is this true? If this is the true, is there anything we can do to prevent that from occurring?

A: We’re sorry that both of your parents are so ill. If you and your siblings have owned the property for the past fifteen years, and your parents are no longer on title, then it might be hard to imagine how the state could lay claim to the property. The state could lay claim to any property owned by your parents – perhaps even their right to live in the property while they are living. Although, it would be hard to see how they could benefit from that right.

Of course, it’s possible that instead of completely transferring title they instead simply added you to the title of the property. In that case, your parents would own 2/5 of the property and you and your two siblings would own 3/5 of the property.

If you sold the property for $100,000, the state may be entitled to claim 40 percent, or $40,000 of the proceeds to help repay the cost of providing care to your parents.

The issue is how the title reads. You will need to get a copy of the deed for the home and see what it says. You want the document to say that the entire title to the home was transferred to the kids with a reservation of a life estate in the parents. If you can’t find the document, you can probably go down to the recorder’s office or local office where documents are filed and get a copy.

Based on how you wrote the letter, we’re assuming that your parents didn’t hire an attorney or anyone with any sort of elder legal knowledge to help plan this out. A life estate (which is where a designated individual or couple is legally allowed to live somewhere that they don’t own until they die) would have had to be written down with specific language. If that did not happen, your parents may still have an ownership interest in the home beyond the right to live there.

That’s bad news for you and your siblings, because if your parents go on Medicaid, the state is entitled to be reimbursed from the proceeds of their estate, once they pass or when assets become available.

I would just remind you that your parents assets (and that includes the house) is supposed to be there to help pay for their care in their advanced years. If you are bankrupting your future to pay for their care, and they wind up on Medicaid anyway, you won’t be reimbursed.

While this may drain 40 percent of their assets, you should considering selling the house they no longer need, and using the cash to pay for their medical expenses. When that runs out, you will be able to tap into Medicaid without worrying about further reimbursement.

You should consult with an elder law specialist or estate lawyer in your area as soon as possible, and make sure that you or a trusted sibling holds both a power of attorney for health care and financial matters for both of your parents.

Good luck.