The Out-of-State Cabin and a Florida Medicaid Application

Marie's Cabin: Why Location Doesn't Change the Rule

Marie is 83 and lives in Port Orange now, though for years she split her time between Florida winters and a lake cabin in northern Michigan. She's a composite I use to illustrate a pattern I see often in my practice, not an actual client, but her situation is a common one: an aging parent owns a home in Florida and also still holds title to a family property up north that the grandchildren use every summer.

Here is the point I want Marie's family, and every family in this situation, to understand clearly: Florida Medicaid does not care what state a piece of real estate sits in. The only real estate that gets special exempt treatment is the applicant's actual homestead, the primary residence. A vacation cabin, however beloved, is not a homestead just because someone has owned it for decades. It is treated the same as any other non-homestead real estate Marie might own, whether that property were in Deland or in Michigan. Its fair market value gets added to her countable assets, and a single Medicaid applicant in Florida generally must bring countable assets down to a very low limit before the state will pay for nursing home care.

How the Cabin Gets Valued, and Why That Number Matters

Once a property is a countable asset, the caseworker needs a number. For an out-of-state property, the Department of Children and Families (which administers Florida Medicaid eligibility) will typically want current fair market value evidence, not the tax-assessed value and not what Marie paid for it two generations ago. That usually means:

• A recent appraisal from a licensed appraiser in the property's home state
• A comparative market analysis from a local real estate agent
• The county's current assessed value, sometimes accepted as supporting evidence

Families are sometimes surprised that a modest little cabin has appreciated into real money after thirty or forty years of lake-front demand. That appreciation is exactly why this conversation needs to happen before a crisis, not during one. Waiting until a hospital discharge planner is asking about a nursing home bed is the worst possible time to be pricing out a Michigan lake house.

What Marie's Family Can Actually Do About the Cabin

Once we know the cabin is countable, the conversation turns to what to do about it. In Marie's case, and in most families I work with, there are really four paths:

• Sell it. Converting the cabin to cash doesn't reduce countable assets by itself, but it does simplify things and creates funds that can be spent down properly on care, debts, or exempt purchases. It also avoids the valuation guesswork entirely.
• Transfer it now and start the clock. Gifting or transferring the cabin to children triggers Florida's five-year lookback. If the transfer happens more than five years before a Medicaid application is filed, it generally will not create a penalty. If it happens inside that five-year window, it can create a period of ineligibility calculated using the state's current penalty divisor, roughly the average monthly cost of Florida nursing home care. This is a rule I've covered in detail elsewhere, but it's worth repeating here: waiting until care is needed to make this gift is often the most expensive mistake a family can make.
• Move it into an irrevocable trust. Placing the cabin in a properly drafted irrevocable trust, structured under Florida's trust code (F.S. Chapter 736) and compliant with the federal Medicaid trust rules, can remove it from Marie's countable estate, but again, only if this is done outside the five-year lookback window. The trust doesn't shortcut the clock; it just changes how the asset is held once the clock has run.
• Keep it and rent it out. If the cabin is converted to genuine rental property, Florida applies the same exemption logic it applies to in-state rental real estate. This path requires real documentation, actual rental activity, and often isn't practical for a cabin the grandchildren use every July, but it is worth knowing it exists.

Ancillary Probate and Why Marie's Family Cares About It Later

Even if the cabin isn't sold or transferred, there's a second issue lurking for Marie's family: what happens when she passes away while still owning that Michigan property in her own name. Florida probate only reaches Florida assets. A cabin titled individually in Marie's name in Michigan will require a separate proceeding there, called ancillary probate, in addition to whatever administration happens in Florida.

That matters for Medicaid too. Florida's Medicaid Estate Recovery Act (F.S. § 409.9101) allows the state to seek reimbursement from a deceased recipient's probate estate for benefits paid. Recovery generally reaches only assets that pass through probate, not assets that transfer automatically at death by operation of law, such as property properly titled in a trust or with a valid transfer-on-death mechanism recognized in that state. A cabin sitting in Marie's individual name, subject to ancillary probate in Michigan, is exactly the kind of asset that stays exposed both to the hassle of a second court proceeding and to potential estate recovery claims.

The Tax Basis Question Nobody Wants to Skip

One more piece belongs in this conversation, and it's the one families sometimes overlook in the rush to protect an asset: what happens to the cabin's tax basis. If Marie gifts the cabin to her children during her lifetime, they generally inherit her original cost basis, meaning decades of appreciation could become taxable capital gain when they eventually sell. If instead the cabin passes to them at her death, it typically receives a stepped-up basis to its value at that time, which can substantially reduce or eliminate that capital gains exposure.

Sources

• Florida Senate, Chapter 409, Section 9101, Florida Statutes (Medicaid Estate Recovery Act)
• Boca Elder Law, "Ancillary Probate," January 6, 2026
• Boca Elder Law, "If We Have Assets In Another State, How Will That Impact Our Financial Planning For Long-Term Care in Florida?" September 24, 2025
• ElderNeedsLaw.com, "How Medicaid Trusts Work in Florida to Protect Assets," July 9, 2026
• Zoecklein Law, P.A., "How to Avoid Florida Medicaid Estate Recovery (2026 Guide)," August 2026

This article is for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship. Florida estate, elder, probate, and real estate law are fact-specific and change over time. Consult a licensed Florida attorney about your individual circumstances. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.