What is a Quitclaim Deed?

A Quitclaim Deed (QCD), or Quit Claim Deed, is a legal document that allows one to transfer their ownership of a property (commonly real estate) to another person. The name, “quitclaim”, comes from the owner “quitting” their claim on their property. In other words, they give up any interest they have in it. Sometimes mistakenly called a “quick claim” deed, this is fitting, given a QCD is a quick (generally within a few weeks) way to transfer ownership of property from one person to another.

A QCD is a non-warranty deed. This means that there is no guarantee about the property title, or in other words, it is not guaranteed that the “seller” owns the property (or has any interest in it). Therefore, if the “seller” has no ownership in the property, the “buyer” receives nothing. Furthermore, the person receiving the property takes on any potential title issues (i.e., existing liens, ownership disputes, unpaid property tax). However, if there is an existing mortgage, the original borrower remains responsible for paying it unless the mortgage is legally transferred to the new owner.

Given the risk of Quitclaim Deeds, they are mainly used for transferring property between persons that have an existing relationship built on trust (i.e., family), and often, without the exchange of money. They allow a quick and legal way to add (or remove) a spouse’s name from a property title, transfer one’s property to their child or another loved one, fix a minor mistake on a current property title (i.e., misspelling of a name), and to put property into a living trust (an estate planning tool).

Note: A Gift Deed, or Deed of Gift, is another legal way via which one can transfer ownership of their property to another person. As the name suggests, the property is being transferred as a gift, or in other words, money never exchanges hands. Gift Deeds and Quitclaim Deeds are very similar, as neither type of deed offers guarantee of clear title (that the property has no outstanding debt or legal issues). A Gift Deed documents one’s intention to “gift” their property, while a Quitclaim Deed is focused solely on transferring whatever interest one has in a property. Like a Quitclaim Deed, it is possible to use a Gift Deed for Medicaid planning.

Can Quitclaim Deeds be Used for Medicaid Planning?

Yes, QCDs can be used in Medicaid planning. Specifically, they can be a useful tool in transferring a Medicaid applicant’s primary home to a loved one, given specific conditions are met.

Prior to covering the specifics, it is important to mention that there is an asset limit for Medicaid eligibility. While one’s primary home is generally exempt from this limit, it may not be safe from Medicaid estate recovery. Every state has a Medicaid Estate Recovery Program (MERP), through which the state attempts reimbursement of costs for which it paid for a long-term care Medicaid beneficiary. This happens following the Medicaid beneficiary’s death, and it is often via the sale of their home that Medicaid is reimbursed.

Transferring one’s home to a loved one can protect their home from MERP, but one must be extremely cautious when doing so. Long-term care Medicaid has a Look-Back Period, during which the Medicaid agency scrutinizes all asset transfers. This is generally 60-months immediately preceding one’s long-term care application, and if one has gifted assets during this period, including transferring their home for under fair market value, there will be a Penalty Period of Medicaid ineligibility.

There are, however, some exceptions to the rule (covered in the following section), and this is where Quitclaim Deeds can come into Medicaid planning.

When are Quitclaim Deeds Used in Medicaid Planning?

A Medicaid applicant / beneficiary can transfer their primary home to the following relatives via a QCD (with no exchange of money) without violating Medicaid’s Look-Back Rule and to also protect it from Medicaid’s Estate Recovery Program.

– Their non-applicant spouse
– Their child who is under 21 years old or their child (of any age) who is permanently disabled or blind
– Their healthy adult child via the Child Caregiver Exception. The adult child must have lived in their parent’s home for a minimum of two years prior to their parent being “institutionalized”, which in addition to nursing home admission, in some states, can include receiving Home and Community Based Services via a Medicaid Waiver. Furthermore, the adult child must have provided a level of care during these two years that prevented the parent’s need for “institutionalization”.
– Their sibling via the Sibling Exemption. The sibling must have an equity interest (even a very small percentage) in the Medicaid applicant’s / beneficiary’s home and must have lived in the home for at least one year prior to their sibling’s “institutionalization”. This can be nursing home admission, or in some states, the receipt of assistance via a Home and Community Based Services Medicaid Waiver.

Furthermore, QCDs are sometimes used as part of a Medicaid planning strategy even when they knowingly violate the Medicaid Look-Back Rule. This is complicated and is generally done with the assistance of a Certified Medicaid Planner.

Lady Bird Deeds can also protect one’s home from Medicaid’s Estate Recovery Program. These deeds provide another way for one to legally transfer their home to a loved one. However, unlike with Quitclaim Deeds, the home remains in the possession of the Medicaid applicant / beneficiary while they are living. Upon their death, their home automatically transfers to their loved one. Unfortunately, only a few states permit Lady Bird Deeds.

How a Quitclaim Deed Works

To transfer one’s home via a QCD, the owner of the property (the grantor) must fill out a Quitclaim Deed form. One should use a state-specific form, rather than a general template, as the exact requirements of a QCD varies by state. State-specific forms can be found online or at one’s local county recorder’s office. The following information is likely to be required.
1) The full legal name of the person transferring the property (called a grantor) & the full legal name of the person receiving the property (called a grantee).
2) The legal description of the property (i.e., lot number, block number). This can generally be found on one’s property tax statements, mortgage agreement, property’s deed, or via the county recorder’s office.
3) The date of the property transfer.
4) The grantor’s signature, and in some states, also the grantee’s signature.

Notarization
In most states, the QCD must be notarized to be legally valid. This means that a notary public verifies the identity of the person(s) signing, witnesses the signing, and adds a notary seal to the QCD form. It is recommended that even if notarization is not required, that it be done. Some states may also require witnesses. For instance, Florida requires two witnesses.

Filing / Recording the QCD
The completed QCD must be filed (submitted) with the county clerk’s / county recorder’s office and recorded (made public record). In many states, this must be done in the same county in which the property is located. There is generally a minimal filing / recording fee, which varies by states, and even county. Examples of fees follow.

– Michigan charges a flat fee of $30,
– Los Angeles, California, charges $15 for the first page and $3 for each additional page. There is also a $75 Building Homes and Jobs Act fee and a $5 District Attorney Fraud fee.
– Orange County, Florida charges $10 for the first page and $8 for each additional page. The first four names are indexed free of charge and it is $1 per additional name.
– New York generally charges $125 for residential or farmland property. However, the exact amount is county-specific. For instance, in Sullivan County it is $45 for the first page and $5 for each additional page. Additionally, Sullivan county charges a $10 notice of transfer fee.

State-Specific Quitclaim Deeds Differences

As previously mentioned, there are state-specific Quitclaim Deed forms, as the rules and required information varies by state. It is vital that one check the rules in the state in which they want to utilize a Quitclaim Deed. If one does not do everything that is required, or if it is not done correctly, the property transfer may not be legally recognized. As an example, Ohio requires that the marital status of the person transferring the property be listed, and if married, their spouse’s name provided. Florida also stands apart from the other states, as two witnesses are required, in addition to a notary in order for the QCD to be valid. As mentioned above, not all states require notarization of a Quitclaim Deed, although it is always best to go ahead and have it notarized.

Is it Necessary to Have Professional Assistance for Quitclaim Deeds?

No, it is not necessary that one have professional assistance to create a Quitclaim Deed. However, it is strongly recommended that one consult an experienced Medicaid Planner prior to doing so if one will be applying for Medicaid or is a current Medicaid beneficiary. If all conditions of transferring the home (without penalty) are not met, one may be denied Medicaid eligibility or lose their Medicaid benefits. Furthermore, if the correct Quitclaim Deed form is not used (or completed properly) and all requirements in one’s state are not met, the property may not be legally transferred, defeating the purpose of a QCD. Find a Certified Medicaid Planner.

How Much Does a Quitclaim Deed Cost?

The cost to transfer property via a Quitclaim Deed is minimal. In fact, it can be done for approximately $20 – $175 if one is doing it on their own. While the cost varies by state, and even by county, notarization costs approximately $10 – $50, and filing fees can range from approximately $10 – $125. The cost of professional assistance, which is highly recommended, ranges from approximately $200 – $500.