Preserving & Protecting Your Family’s Assets & Legacy

Medicaid trusts may be a better planning option than transfers to a family member

On Behalf of | May 23, 2024 | Medicaid Planning |

Jaclyn T. Kramer

You’ve lived in your home for decades, and now that you’re getting older, it is time to make some difficult decisions with respect to your estate and/or Medicaid planning. You wish to protect your home for your loved ones should you require long-term care in the future. You have complete confidence in your children, so you may be considering a simple deed transfer of your home to them or another family member. You may want to reconsider that idea.

Sometimes transfers to a family member – despite appearing as the simplest option – may not be the right decision about how to protect your home and your family’s assets. Why not? Well, there are some negative, potential consequences for you as the original owner. First off, you lose a sense of control over your home. For example, if you wanted to change ownership on the deed in the future to remove a named child or to add another child, you would need the consent of the child who was originally put on the deed; he or she may not provide consent to your new plan.

Additionally, regardless of how much you love and trust your family, unanticipated life circumstances may arise which could be of consequence to you. For example, if an unforeseen incident presents itself in your child’s life (divorce, bankruptcy, lawsuit, creditors, etc.), then the value of your house, which is titled in your child’s name, is now exposed.

There are also tax consequences to consider in transferring your home to a family member. There could be large capital gains tax consequences for the family member named on the deed should the home be sold during your lifetime. You could potentially lose your real estate tax exemptions that you are receiving or are entitled to receive if the deed is not prepared properly.

Luckily, there are other options that provide you with more control of the home you’ve worked so hard for.

On February 3rd, Jaclyn Kramer, Esq., of Futterman, Lanza & Pasculli, LLP (New York), held a virtual seminar through World Wide Land Transfer, LLC to a group of attorneys who primarily focus on real estate. In her seminar, “Protecting the Home Through Proper Estate and Medicaid Planning,” she presented options and routes that could most benefit people looking to protect their homes.

One route she presented was transferring the home to an Irrevocable “Medicaid” Asset Protection trust. Although the name “Irrevocable” may sound intimidating, this planning tool allows you to maintain a level of control over the home. The Trust allows you to change the Trustees and trust beneficiaries if your family circumstances change, and there is no need to obtain consent of your children to do so. You do not have to worry about any unforeseen circumstances in your children’s lives because they do not own the property in their individual names. Designated Trustees merely own the property in a fiduciary capacity. You maintain all your real estate tax exemptions. The bottom line is that while Medicaid trusts are irrevocable trusts, they can provide more options and flexibility for you if anything unexpected happens within the family.

Deciding which route to take in protecting your house can be a daunting task and it’s certainly not a “one size fits all” plan. That’s why our attorneys at Futterman, Lanza & Pasculli, LLP (New York) can help guide you and determine what is best given your specific situation.


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