Will a Life Estate Deed Protect Your House From Medicaid Creditor Claims?

How complicated is it to keep your property out of probate? It depends on what kind of property it is and what kind of non-probate asset category you use. Transferring a house to a trust is so complicated that it is only worthwhile if doing so is the only way to prevent a major probate battle. Most people who transfer houses to trusts do so because they are rich, shady, or both. As for the rest of us, we can keep our houses out of probate by executing a life estate deed, which is a simpler process. When you sign a life estate deed, you designate your children or other heirs as the beneficiary, known in life estate deed terminology as a remainder beneficiary, while you designate yourself as a life tenant. This means that, while you are alive, the ownership of your house is in limbo. The only way to sell or refinance the house is by consent of both the original owner, namely you, and the remainder beneficiary. If all you care about is keeping your house out of probate and ensuring that you and your spouse always have a place to live, then a life estate deed is a beautifully simple solution. If you are trying to protect your house from Medicaid creditor claims, then a life estate deed can make things more complicated. For help preparing for the astronomical costs of long-term care and protecting yourself and your family from the financial devastation they can cause, contact a Bronx estate planning lawyer.

What Can Go Wrong With a Life Estate Deed?

A life estate deed where you are the life tenant and your children are remainder beneficiaries can make you feel like a stranger in your own house, and it can make you feel like your children are vultures waiting for you to die so that the house can truly belong to them. That is only when everything goes as planned. If you decide to sell the house, borrow against your home equity, or refinance the mortgage, you must make this decision jointly with the remainder beneficiaries. If you are wondering how easy or difficult it is to make a decision jointly, rewatch that Garfield and Friends episode where Garfield sows discord between the unshakably collegial Buddy Bears by asking them to agree about which pizza toppings they want to order.

You Need Long-Term Care Insurance More Than You Need a Life Estate Deed

A life estate deed may or may not protect your house from Medicaid creditor claims. You might go through all the trouble only for your children to pressure you into selling the house while you are alive, thus losing the financial benefit of the life estate deed. A better way to protect your estate from Medicaid claims during probate is to buy long-term care insurance, if you can qualify for it, or hybrid life insurance.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

An estate planning lawyer can help you be strategic about protecting your house from Medicaid creditor claims.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

nysba.org/will-a-life-estate-deed-protect-my-home-from-medicaid/?srsltid=AfmBOooe__s9KFhER_kl6hU5WF5jkKfQ5AVgsOTrnCTetfUnqIeIqSMB