Weather Alert  

Coastal Flood Statement issued December 13 at 5:33PM EST until December 14 at 2:00PM EST by NWS Upton NY * WHAT...Up to one half foot of inundation above ground level expected in vulnerable areas near the waterfront and shoreline. * WHERE...Southwestern Suffolk, Southeastern Suffolk and Northeastern Suffolk Counties. * WHEN...During the times of high tide Saturday morning through Saturday afternoon. * COASTAL FLOOD IMPACTS...Brief minor flooding of the more vulnerable locations near the waterfront and shoreline. * SHORELINE IMPACTS...Breaking surf of 9 to 13 ft along the Atlantic Ocean beachfront will cause significant beach flooding and erosion during the times of high tide Saturday into Saturday Night. Scattered areas of dune erosion and localized washovers are possible during the times of high tide Saturday morning into afternoon.

Use of a Life Estate Should be Rare - Part 4

LongIsland.com

MEDICAID RAMIFICATIONS The Medicaid ramifications must also be considered when using a Life Estate. If the life tenant is not on Medicaid, then in the case we have been discussing in previous newsfaxes, 50 percent ...

Print Email

MEDICAID RAMIFICATIONS

The Medicaid ramifications must also be considered when using a Life Estate. If the life tenant is not on Medicaid, then in the case we have been discussing in previous newsfaxes, 50 percent of the sales proceeds will be returned to the life tenant in an unprotected manner, necessitating a transfer (subject to lookbacks and penalties) all over again. Now that the client is older and perhaps less healthy, we are jeopardizing the assets, albeit half, all over again.

If the life tenant is on Medicaid, then Medicaid will have placed a lien on the life tenant's portion of the property which then must be satisfied at the closing. Here, we would simply lose 50% of the property.

In either case, if the property had been transferred originally to an irrevocable grantor trust, then the sales proceeds would have been payable to the trust, not returned to the senior. The trustee can then, if appropriate, purchase another home or otherwise invest the sales proceeds, without any further concern for the Medicaid system.

CONCLUSION
The bottom line is that a life estate poses tax and Medicaid problems during a sale of the property during the life of the life tenant. An irrevocable grantor trust will also keep the senior in control, protect their homes from long term care, avoid probate and preserve all tax benefits, but allows the senior (or her trustee) to sell the house at any time during their life without tax and Medicaid issues. The use of a life estate ties the hands of a senior because of the practical inability to sell the house during life.

When a lawyer approaches a client about this issue, the first question that should be asked is whether they are prepared to give up the right to sell their house during life. In those rare cases where the client is willing to give up all desires and rights to sell the house during life, the life estate is the appropriate tool to use.