Legal Question in Real Estate Law in California
homestead or quitclaim needed?
a freind of ours was diagnosed with brain cancer upon an emergency room visit at the county hospital about a year ago. surgury was performed and he has undergone chemo and radiation. Although a veteran, he wasn't able to be treated at the VA hospital as he had no dd214 on hand but has applied for it since than. Our freind is 62, single, is a union worker but was on unemployment at the time of his illness . He was able to start collecting social security pymts recently, but its only about $750.00 a month. Heres the problem: He owns his own home free and clear. iTs a rather rundown small house in an undesirable neighborhood, but its been his home since 1973 and paid off in 1981. Now the county hospital is threatening to take his house away . His health is deterioring and is unable to work: His adult daughter lives with him yet she doesn't make much money either..According tto the county accessors office, there are no leins/encumbrances on his house (yet), and nothing filed in the courts (yet)..so the question is this: should he quitclaim the house to his daughter? Or homestead the house? gift the house to her? Will the house than be re-assessed? any ideas would help!
2 Answers from Attorneys
Re: homestead or quitclaim needed?
The house would not be re-assessed if the county recorder's and assessor's reporting procedures are properly followed, and you can obtain them in advance, on line or in person. However, transfering the property as a gift or below fair value is not a good idea, because creditors such as the County Hospital can treat the transaction as a fraudulent transfer and un-do it, with damages due from both transferor and transferee.
I would favor pressing forward with the VA option, and also maybe ask a local elder law specialist to review the specific threats and demands being made by the County Hospital for their validity (a brief review and comment shouldn't cost more than a few hundred dollars). I also recommend recording a declaration of homestead. The protection afforded is limited, but does increase at age 65.
Please also note that California law places some liability on a person's spouse, parents and adult children for support. I do not practice in that area and I'm not sure of the extent of the obligation, e.g., to long-term care costs. This is another question for the elder-law attorney or, perhaps, a second LawGuru question addressed to our elder-law specialists.
In any event, avoid the quitclaim idea. In addition to being a fraudulent transfer, there are probably unfavorable capital-gains and gift tax consequences.
Re: homestead or quitclaim needed?
The worst thing he can possibly do is quitclaim the house to his daughter. Right now, he is entitled to a $150k exemption under California law. But if he quitclaims to his daughter, the home will lose that exemption and the hospital will be entitled to it under the fraudulent conveyance laws. He also probably qualifies for a reverse mortgage, that may protect the home. There are other ways he may be able to protect his home. He should consult with an attorney.
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