As the U.S. population ages, dementia is becoming a reality for millions of families. More than one in five adults over age 65 is expected to experience some form of cognitive impairment during their lifetime, and the number of Americans living with dementia is projected to rise sharply in the coming decades as baby boomers grow older. 

Beyond the emotional toll, dementia creates practical and financial challenges, particularly when it comes to managing jointly owned assets such as a home. 

One common question families face is whether a spouse with dementia should remain on the deed – and what risks arise when caregivers wait too long to act.

In a recent interview, Harry Margolis, author of “Get Your Ducks in a Row,” discussed how removing a spouse with dementia from a home deed can preserve control for the healthy spouse and why acting early, while a spouse still has capacity, can avoid court involvement later.

What follows is an edited transcript of that conversation, revised for clarity and brevity.

Removing a spouse with dementia from a home deed can preserve control for the healthy spouse.

Photo by Dobrila Vignjevic on Getty Images

When dementia raises a critical question about your home

Robert Powell: If your spouse has dementia, should they be removed from the deed to your house? Here to talk with me about that is Harry Margolis, author of “Get Your Ducks in a Row.” Harry, welcome.

Harry Margolis: It’s good to see you again.

Robert Powell: This is probably an increasing issue as people age. A spouse develops dementia, they’re listed as an owner on the house, on the deed, and people wonder whether they should remove their spouse from the deed.

Why control of homeownership matters

Harry Margolis: In most cases, they should. The questions are why and how to do it.

The main reason is control. At some point you may want to sell the house, refinance it, or take out a home equity loan. If you are the healthy, cognitively intact spouse and you have the ability to do those things, that’s important.

You really only have full ability if you’re the sole owner. That’s a bit of an exaggeration because if your spouse has given you a power of attorney, you may be able to act on their behalf. But it still makes a lot of sense to have the house in your name and maintain control.

Timing is critical

If your spouse is in the early stages of dementia and still understands what they’re doing, they can sign the deed themselves, and it’s usually easy to accomplish.

If they’re at a later stage and no longer have that cognitive ability, you may be able to act on their behalf if you have a power of attorney. But there can be restrictions, especially around whether the power of attorney allows you to make gifts to yourself. That depends on the document itself and on state law.

That’s another reason to do this earlier rather than later.

When court involvement is required

Ultimately, you may have to go to court and obtain a conservatorship or guardianship – the terms vary by state – to get the authority to make the transfer.

In some cases, it’s a two-step process. First, you get appointed. Then you go back to court to ask permission to complete the transfer.

Another option, which we sometimes use in Massachusetts, is a single-transaction conservatorship. That authorizes you to complete this one step without creating an ongoing conservatorship.

The downside of an ongoing conservatorship is the administrative burden. You typically have to account to the court every year. If you want to avoid that, a limited, single-transaction conservatorship can make sense, if your state allows it.

That’s why it’s often easier if the house is already in just one spouse’s name.

Medicaid and the five-year look-back

Robert Powell: From a Medicaid planning standpoint, do people need to worry about the five-year look-back rule?

Harry Margolis: No. There are no restrictions on transfers between spouses, so that’s not an issue.

Life estates, Lady Bird deeds, and transfer-on-death deeds

Robert Powell: What about states that allow transfer-on-death deeds or Lady Bird deeds? Does that change the analysis?

Harry Margolis: If one of those arrangements is already in place, it can add complexity.

With Lady Bird deeds and transfer-on-death deeds, the owners generally retain the power to make changes. The transfer only happens at death if no changes are made. So you can usually make the same ownership change by updating the deed.

A life estate is different. The remainder beneficiaries – often children – already have an ownership interest. But transfers between the spouses of the life estate interest don’t involve the remainder holders, so those changes can typically be made without affecting them.

Adding children to the deed

Robert Powell: If someone removes their spouse from the deed, should they consider adding their children as beneficiaries?

Harry Margolis: That raises separate issues because that’s a transfer to a third party.

In states like Massachusetts, where you don’t have transfer-on-death or Lady Bird deeds, creating a life estate gives your children an ownership interest. That is considered a transfer, and it does trigger the five-year Medicaid look-back period.

Don’t forget the rest of the estate plan

Harry Margolis: One last point. After you make this change, update your estate plan.

If you transfer the house into your own name and then die before your spouse – who may be in a nursing home – and your estate plan hasn’t been updated, the house could pass right back to them. That could force a sale and a spend-down to pay for care.

Got questions about personal finances or estate planning, email [email protected].

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