@Amd813 , agreeing with comments by my colleague @Anonymous_ , I would just to say the following:
(a) need to distinguish between " spend down" and "recovery".
(b) L/E ( i.e. retaining the "use rights only") has the benefit of "step-up" and thereby shield the beneficiaries from Capital Gains tax , especially if the transfer is through a "gift" or "sale equivalent"
(c) Joint ownership in its different forms ( and depending on the state laws) may not allow "step-up" of the whole asset -- in worst case would ONLY be available to the decedent's portion. Thus the other owners may be exposed to Capital Gains tax ( the quantum dependent on exact facts and method of transfer)
(d) This being the main residence of the father ( donor/seller/?? ) it would be immune for inclusion for purposes of "spend-down" i.e. for eligibility for Medicaid.
(e) There is anecdotal evidence / suggestion that in some cases Medicaid has forced/ strongly suggested liquidation of main residence since the "patient" is not expected to ever be able to go home --- " Hospice" situation.
(f) Post passing of the "father/patient" Medicaid ( and depending on exact situation and facts ) may use recoveries , especially if the Estate is sizeable . Obviously in such a case a complete disposition of the residence ( gift , sale etc. ) would preclude any recovery procedure -- a person's debt generally is extinguished post probate (i.e.. does not pass on to inheritors) but the debt(s) is/are dealt with before distribution to inheritors..
(g) Gifts during life have no tax implications -- just documentation. But settlement / reconciliation of Estate/Gift tax is done at probate and before distribution of assets to inheritors.
I am not an expert on this area of taxation and therefore suggest a discussion with an elder / Estate attorney. I recognize a trust set-up is not cheap ( I just did my own ) . You can do a lot of research on-line ( and lot of the hype is not true ) at sites like Nolo or similar.
Is there more I can do for you ?
pk
