PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 5 Life Estates

Cohen & Oalican, LLP discuss: PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 5 of 7

Life Estates

Another option to protect your house is with a Life Estate deed. With a Life Estate deed a client is typically giving away their house to their children but they are retaining certain rights of ownership over the property. Most commonly, clients keep the right to live in the house and the rights to rental income. They also still have an obligation to pay the house expenses. However, the house cannot be sold or mortgaged without everyone’s consent. The parents retained interest in the house is called a Life Estate. A child’s right to receive the property at death is called a remainder interest. Because a Life Estate deed passes automatically at death outside of probate, a Life Estate deed avoids Medicaid’s claim at death. One drawback to a Life Estate deed is that the house will only be protected as long as it is not sold until after the death of the Medicaid recipient. If the house is sold during the person’s life, a portion (this value is based on Medicaid’s actuarial tables) of the proceeds will pass to the Medicaid recipient and the funds will be taken by Medicaid. On the other hand, if the house is held in an irrevocable trust, all of the proceeds from the sale stay in the trust and remain protected regardless of when the house is sold.

Consult with one of the attorneys at the offices of Cohen & Oalican, LLP for Mediciad planning.

This has been Part 5 in a series of 7, brought to you by Cohen & Oalican LLP, Elder Law Attorneys Boston, Raynham, Andover