Save Your House From Medicaid

When some people create an estate plan they can also create a plan for long term care. This can include a plan to qualify for medicaid so that an admission to a nursing home or assisted living is paid for by medicaid. This is generally refereed to as medicaid planning. Generally, assets are examined and there are rules which govern which assets are counted and which are not. If the countable assets that are owned are lower than a threshold, then a person can qualify for medicaid and the cost of a nursing home or assisted living will generally be covered. All states allow a person to own a home and qualify for medicaid. However, after that person passes away, all states are required to recover what medicaid paid out for care. That recovery will generally include a person’s home. Here are two ways Rich can help your family avoid losing a home to medicaid reimbursement if your property is located in Washington DC.

Put your house in an Irrevocable Trust

Putting a home in an irrevocable trust at least five years before a person tries to qualify for medicaid would generally put the home beyond the reach of recovery after the person dies. An irrevocable trust can also hold nearly all other assets and givens a person very fine control over how their assets are to be distributed after they pass. An irrevocable trust also avoids probate. In Washington D.C. probate lasts at least 6 months. It should be noted that some types of property cannot be put in an irrevocable trust (like some condominiums or cooperatives). Irrevocable trusts also provide a greater degree of privacy.

One of the disadvantages of putting a house in an irrevocable trust is that there a loss of control. Only the trustee (which cannot be the property owner wanting to qualify for medicaid) can decide to sell a property. Another disadvantage is that Trusts having a higher cost to setup and maintain.

Re-deed your house while retaining a life estate

If a person knows who they would like to leave their home to after they can re-deed their home to that person at least 5 years before they try and qualify for Medicaid while retaining life estate in the property. Retaining a life estate guarantees a persons right to live in the property until they die, but put the property generally out of reach for recovery after they pass on. One of the main advantages of re-deeding the house but retaining a life estate is that it gives the person who is receiving the house a stepped up basis in the house which would likely all but eliminate estate taxes.

One of the disadvantages of re-deeding the house is loss of control. In order to sell the property, the person that owns the remainder of the house needs to consent. Also, if the property is sold, the person retaining the life estate is only entitled to a portion of the proceeds.

Contact Rich for more information about putting your home in an irrevocable trust of re-deeding your house while retaining a life estate in order save your house for your family.