Protect Your Family Home for Your Spouse
This edition of the Koldin Law Center E-Newsletter continues a series reviewing options for how you can protect your family home after you are already ill and even when you are already in a Nursing Home.
In this Newsletter we discuss protecting your home for your spouse who is living in the home (Community Spouse).
All prior newsletters are saved on our website. You can read them by clicking here.
Under the Medicaid law, the family home is a special asset that has important additional protections in the event of a long term illness.
When the community spouse is living in the home, the family home is exempt and is not counted as an asset when determining Medicaid eligibility for the ill spouse who is applying for Medicaid covered home care or nursing home care.
Don’t Keep the Home Owned Jointly Between Spouses
The first mistake families make is to leave the home owned jointly by both spouses.
If the community spouse unexpectedly dies first, the ill spouse in the nursing home now becomes the sole owner of the home. Since there is no longer a community spouse living in the home, the family home loses its exempt status and becomes an available resource.
Typically the ill spouse would have his/her Medicaid case terminated. The home would have to be sold and the proceeds spent towards the cost of care. Once the balance is spent, then he/she would have to reapply for Medicaid.
No Transfer Penalty Between Spouses
Since there is no transfer penalty period of ineligibility between spouses, the ill spouse can transfer his/her one-half ownership of the home to the community spouse. Now, if the community spouse dies first, the ill spouse would not automatically become the sole owner of the home.
Community Spouse Needs to Update Estate Planning Documents
If the community spouse dies first, the home would pass according to his/her Last Will and Testament. Since spouses often have Wills leaving everything to each other, it is important that in addition to transferring the home to the community spouse, he/she also sign a new Will disinheriting the ill spouse.
Right of Election
If the community spouse dies first and disinherits the ill spouse, in New York State, a surviving spouse has the right to object to being disinherited by his/her deceased spouse and demand that a portion of the deceased spouse’s estate be given to the surviving spouse.
This is called exercising the “spousal right of election” to receive the “elective share.” Under this law, the surviving spouse is entitled to demand to receive the greater of $50,000 or one-third of the deceased spouse’s net estate. The Medicaid Agency will typically require the ill spouse to exercise his/her right to receive the elective share.
This elective share amount becomes unprotected funds which need to be spent towards the ill spouse’s cost of care.
Community Spouse Needs Nursing Home Care
If the community spouse later enters a nursing home, he/she is then treated as a single person and is entitled to keep $15,900 (2021 figure). The family home is no longer exempt and must be sold and spent towards the cost of care before he/she would become eligible for Medicaid unless he/she also declares an intent to return home.
As discussed in the previous newsletters, when a single person enters a Nursing Home, the family home is considered an available asset for eligibility purposes and must be sold and spent towards the cost of care before Medicaid will be approved for coverage unless he/she declares an intent to return home.
False Sense of Security
Therefore, merely having a spouse living in the family home creates a false sense of security. While the home may be exempt for the Community Spouse, it is still at risk of ultimately being lost.
The community spouse should consider doing long range asset preservation estate planning for him/herself including establishing an Irrevocable Living Trust.
Planning in Advance Keeps You in Control
As can be seen from this newsletter series on protecting the family home, there are options to protect the home even when you are already in a nursing home such as declaring an “intent to return home,” transferring the home to someone with exempt status (spouse, caregiver child, sibling with equity interest, child who is blind, disabled, or under age 21).
As discussed in the first newsletter in this series, if you are able to plan in advance at least 5 years prior to becoming needing long term care, an Irrevocable Trust is an option you may want to consider. Planning in advance gives you much more control over the family home.
For more information about Irrevocable Trusts, please see our website by clicking here.
For a discussion about how to protect your life savings even if you are already in a nursing home, please visit our website by clicking here.
The Koldin Law Center, P.C. is available to help. We assist families in protecting their life savings even when someone is already in a nursing home.
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. 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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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.
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