Legal Question in Wills and Trusts in North Carolina

Your aunt needs to stop getting advice from well-meaning friends and do what she should have done long ago and see an experienced estate planning lawyer/elder law attorney.

Your aunt's friend is confusing several concepts. The look back period is 5 years, not 3. And it only applies for Medicaid purposes. The state, by law, is mandated to seek recovery from the estates of dead persons where that person received Medicaid money in their lifetime. Typically, this happens where the aunt would have to go into a nursing home. To qualify, she would have to spend down her assets to reach the state threshhold. Nursing home stays are not cheap - they can cost $4,000 and up per month. Once the Medicaid limit to qualify is reached, your aunt would apply. If she is eligible, she gets Medicaid and when she dies, the state would seek reimbursement from her estate.

The 5 year look-back period is calculated starting with the date that application is made for Medicaid. So if your aunt applied today, Medicaid would lookback in time over the past 5 years. If your aunt transferred away her property, then she would be prohibited from applying for Medicaid for a certain time period (it depends on when the transfer is made and how much of the 5 years has started to run).

You also ask what happens if your aunt dies within the lookback period. Nothing unless your aunt received Medicaid.

Deeding the property away has its own consequences (tax and other consequences). That is why your aunt needs to talk this over carefully with an estate planning/elder law attorney. There are other options besides just doing nothing or giving the property away.

Please have her see an attorney in her area before she either waits until its too late or does something which is going to have financial consequences for her later.