Medicaid and Protecting your Residence with Proper Planning: Part 2

For Medicaid purposes, the gift of the remainder interest if a transfer for Medicaid purposes. Once the deed is recorded with the county clerk, the five year look-back period begins. As a result, if an individual transfers the remainder interest this year, this gift will is not susceptible to Medicaid’s reach five years from the date the deed is recorded. Medicaid examines any and all transfers during the look-back period.

(Read more: Medicaid and Protecting your Residence with Proper Planning: Part 1)

In the event that you give an asset away and retain a life estate in that asset, the life estate serves as a string that pulls 100% of the value of the asset into your taxable estate. This means that 100% of the value of the house in included in the decedent’s taxable estate, and the cost basis of the house is increased to the value of the house on the date of death.

Real estate taxes are paid for by the whomever holds the life estate. Once the deed is filed with the County Clerk, a copy is provided to the Municipal Tax Office.

(Read more: Medicaid Planning)

The basic rule of Medicaid estate recovery states if an individual has received correctly paid Medicaid benefits then upon death, those benefits may be recoverable from the recipient’s estate, if he leaves no surviving spouse, child under age 21, or blind or disabled child.

It is important to be proactive to determine if the estate planning techniques makes sense to protect your assets from a nursing home.

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