In Texas, if you receive Medicaid benefits, the State is required to try to recover those costs by filing a claim against the estate and a house can be used to satisfy that claim, with some exceptions. Medicaid has a 5 year lookback period so if you give your house away or sell it for less than fair market value within 5 years of requiring Medicaid assistance, there may be a penalty imposed or a delay in getting benefits.
One of the best ways to protect a house from a Medicaid claim is through an Enhanced Life Estate Deed, sometimes called a Ladybird Deed. In the Enhanced Life Estate Deed, you keep the right to revoke the deed, to mortgage the property, to sell the property, or do anything with the property during your lifetime. Upon your passing the property will vest in someone else, perhaps your child(ren). Because you have retained ownership and control of the property, there is no gift or transfer so it is not subject to the 5 year lookback. When you pass the property immediately vests with someone else so it doesn’t pass through probate and is not subject to a Medicaid estate recovery claim.
If you are interested in protecting your house from a Medicaid estate recovery claim, you should discuss it with an experienced estate planning attorney.