For tax purposes, your friend is probably better off inheriting the home, but in terms of Medicaid liens she may be better off having it transferred to her before her father's death. However, she needs to have lived with and cared for her father for two years in order to qualify for the “caretaker child” exception to Medicaid's usual penalty period for transferring assets. Since there is no one-size-fits-all answer, I strongly recommend that your friend consult with a local elder law attorney.
For more on Medicaid's transfer rules and exceptions to them, click here.
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