Owning a Life Estate in Your Home

This edition of the Koldin Law Center E-Newsletter is part of a series reviewing Medicaid treatment of different forms of primary residence ownership: single owner, joint owner, life estate owner, and Irrevocable Trust owner.

In this newsletter we review how Medicaid treats a home when the nursing home resident owns a life estate.

All prior newsletters are saved on our website. You can read them by clicking here.

One method to protect your family home is to transfer it to someone else, typically your children, and reserve a life estate. As discussed in previous newsletters, if 5 years elapses from the date the home is transferred, it is not countable for Medicaid eligibility.

However, if the home is sold during your lifetime, the value of the life estate becomes unprotected.

Example: My father signed over his house to his children 10 years ago and reserved a life estate. He is now in a Nursing Home and we want to sell the house. Is his life estate unprotected?

Answer:

• When the home is sold, a portion of the sale must be paid to your father because he owns a life estate.
• Medicaid has a required table that must be used to calculate the percentage ownership of the life estate which is based on the age of the life estate owner.
• The portion that must be paid to your father is unprotected and would be considered part of his life savings for Medicaid eligibility purposes or for recovery by Medicaid as reimbursement for any nursing home care already paid out for your father.

Therefore, owning a life estate would protect the family home for so long as the home is not sold during your lifetime.

There are also many other risks and disadvantages when you transfer your home to your children. These risks are discussed in a prior newsletter which you can read by clicking here.

Another option is to transfer your home to an irrevocable trust. The Koldin Law Center can prepare an irrevocable trust along with a deed containing specific life use language that will allow you to maintain your current exemptions while also allowing for the sale of the home during your lifetime without any of the proceeds having to be returned to you.

The next newsletter will discuss transferring your home to an Irrevocable Trust.

At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care.

The Koldin Law Center, P.C. limits its practice to the specific field of Elder Law which includes estate planning and Medicaid law.

Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy.

When the Koldin Law Center, P.C. handles a Medicaid case, we not only handle the entire application process, but we also review asset protection options with our clients. We review with our clients who are already in a Nursing Home options to protect some or all of their assets beyond merely establishing Medicaid eligibility.

We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.

There is something you can do.

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Our Attorneys are available to speak to your organization

Our Attorneys speak to groups throughout New York State as a public service. If you would like to arrange for one of our Attorneys to speak to your group, please contact our office.

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We appreciate your referrals

We have been told by many clients who are in a crisis that they wish they had known about our firm much sooner. We are proud of the many families we have helped in times of crisis.

We are also proud of the many families we helped avoid financial crisis by doing estate planning in advance.

We all share the responsibility for making our family and friends aware of the planning options available to them.

Your referral to the Koldin Law Center could make a major difference in the lives of your family and friends if they are someday faced with a long term illness.

Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning.

THERE IS NO FEE FOR THE INITIAL CONSULTATION