Posted by: BlogMaster | January 17, 2012

Should you change your Estate Plan if you have a Life Estate Deed?

My Dec. 11, 2011 blog discussed Medicaid’s expanded recovery against life estate deeds. 

For my clients who have prepared such deeds, consider these suggestions before you panic about what could happen to your estate and Medicaid plan:

  • It may be more beneficial to keep the existing deed in place because the transfer or gift of the life estate to the remaindermen (persons to whom the home is transferred) will create a new penalty period for nursing home care if Medicaid is needed.  And, if there is no power of attorney, a legal guardianship proceeding may be needed to lawfully transfer pr extinguish the life estate interest.
  • The value of lower real property taxes from enhanced STAR, senior exemption and/or Veterans exemption may be worth more than the recovery against the life estate value based upon the senior’s age and life expectancy and the value of the home.
  • If an adult child has resided with the parent at least 2 years before the senior received Medicaid (called the “care-giver child”), consider a transfer/gift of the life estate to that adult child  if he or she can afford the increase in the real property taxes.
  • If an adult child is disabled, consider the transfer of the life estate to that child.  Remember that their real property taxes may increase. 
  • If no change was made to the life estate deed, and the Medicaid recipient dies, there may be compelling circumstances or hardship to the remaindermen on the deed which would reduce or waive recovery against the life estate by Medicaid. Consult my office to determine if your circumstances qualify for this exception.
  • Typical life estate deeds are created when the senior transfers the remainder of the home to family and the senior still retains the life estate. Medicaid will also recover against a life estate interest that was granted for the benefit of the senior if the life estate owner dies within 5 years of the grant of the life estate. 

As I always tell my readers, the best plan is to have a plan. 

If you are a past client of this law firm with a life estate deed, contact the office to determine which option is best for you and your family.

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