July 12, 2016
Medicaid and Protecting your Residence with Proper Planning: Part 1
With proper planning, whether you are married, widowed, or single, a primary residence can be protected from sale.
When a widowed or single individual seeks Medicaid benefits, Medicaid requires that they spend their available assets down to $2,000.00 before receiving such benefits. If a person enters a nursing home without a reasonable expectation to return to their primary residence, Medicaid will expect them to sell their residence to pay for nursing home care.
(Read more: Medicaid Planning)
Medicaid examines all gifts made within five years of a person applying for the program. As a result, if a senior tried to transfer a home outright to their loved ones before entering a nursing home they may be subject to a penalty period for which Medicaid will not cover nursing home costs.
If a spouse enters a nursing home, the “community spouse” is able to continue living in the house.
(Read more: Planning for People Alzheimer’s Disease: Part 1)
“Deed with a life estate remainder” is among the most common techniques for elder law asset protection planning. The transfer of a remainder interest is simple and noninvasive compared to other techniques. Requirements include the preparation of a new deed and associated real estate transfer documents. No realty transfer tax is imposed because this gift is a transfer without consideration. The “step up in basis” rule was reinstated by the tax bill signed by President Obama on December 17, 2010.
(Read more: https://sunnybubbleslaundromat.com/hospice-or-skilled-nursing-a-difficult-choice/)
The grantor would transfer the house to his or her children while retaining the rights to live in the house during his or her lifetime. The life estate technique assures the life estate holder that nothing has dramatically changed. Legally, she is obligated to pay all expenses of regular maintenance, upkeep, and property taxes, in addition to being able to deduct these.
Whoever holds the Life Estate is entitled to all rents from the property and to exclusively occupy the premises, without fear of eviction. The holder of the Life Estate is also protected against the remainderman’s creditors. When retaining a Life Estate in the property, you are not transferring or giving the entire interest in the property away, rather, giving the remainder persons the right to own the property after you died.
Read more:
http://eckman-elderlaw.com/articles/medicaid-and-your-residence/