The Law Offices of Alan Jay Ackerman will often establish a "life estate" as the most appropriate alternative for protecting the home from estate recovery. A life estate is a form of joint ownership of property between two or more people. They each have an ownership interest in the property, but for different periods of time. You, as the current owner of the residence, hold the life estate and enjoy possession of the property for the rest of your life. The other owner, known as the remainderman, has a current ownership interest but cannot take possession until the end of the life estate, which occurs at your death. As with all transfers without consideration, the life estate deed can trigger a Medicaid period of ineligibility.
Based upon the facts of your particular asset protection plan we may advise the creation of a life estate where you have retained powers to sell and enjoy the proceeds of sale of the residence without regards to the remainderman. We would do this to avoid the period of eligibility. Again there are risks associated with this form of plan and only careful consultation can determine if this arrangement is suitable for your plan.
Life estates are created by executing a deed conveying the remainder interest to another while retaining a life interest. Once the house passes to the remainderman, the state cannot recover against it for any Medicaid expenses that you may have incurred.
