Transferring your Home to an Irrevocable Trust
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 the previous newsletter we reviewed how Medicaid treats a home when the nursing home resident transferred his/her home to the children and reserved 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 an Irrevocable Trust. As discussed in previous newsletters, if 5 years elapses from the date the home is transferred, it is not countable for Medicaid eligibility.
In the previous newsletter in this series, we discussed the following example:
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, the life estate is also being sold and a portion of the proceeds of sale must be paid to the life estate owner and becomes available to be used towards the cost of care.
Example: My father signed over his house to his children 10 years ago and did not reserve a life estate. He is now in a Nursing Home and we want to sell the house.
Answer: When the home is sold, your father would not receive any of the proceeds of sale. All sale proceeds would go to the children and be fully protected. However, the children would now have to pay taxes on the entire capital gains. The children do not get their father’s primary residence tax exemptions or a stepped-up date of death basis value for the home if their father is deceased.
Irrevocable Trust
If the father had transferred his family home to an Irrevocable Trust and if the Trust is prepared with the proper language, the home can be sold and:
(1) the proceeds of sale fully protected from Medicaid
(2) the Trust would be able to claim the same primary residence capital gains tax exemption if the father is living or the stepped-up date of death basis value for the home if the father is deceased.
In a prior newsletter, we compared in great detail the advantages and disadvantages of transferring the home to children versus to an Irrevocable Trust. You can read this newsletter by clicking here.
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 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
