Living Estate and Why You Want One When You're Older
Living estate can help keep your home in the family. A living estate, or life estate, has become almost synonymous with elderly planning… and for good reason. Many people do not know how much of their assets are at risk when they receive government assistance. Below, we discuss living estates, and how they benefit both the individual and family in planning for the last phase of life.
A Brief Talk about Medicaid Recovery Without a Living Estate
You planned to pass your home onto your children upon your passing and,
You were a Medicaid recipient the last two years of your life.
Unfortunately, it is the state’s responsibility to attempt to recover money from your estate to offset the expense of your care. Most people at this age and time in life only have their house as their most valuable asset.
This means the state can lay claim to the house by placing a lien on it and use the funds to pay for any benefits used by an individual. Now, it’s important to note that laws vary by state and it’s recommended you consult with the proper elder law attorney or senior care planning specialist for the best answers to your questions.
Enter the Living Estate…
To avoid asset recovery, some individuals chose to place their home in a living estate. Essentially, it is dual ownership of a home that allows you to transfer a home to an assigned individual upon your death.
A life estate allows you to avoid probate.
“I have a will so my house won’t go into probate.”
That is not always the case. Your will just explains to the court how to separate your estate. A house in a living estate, however, is not part of what’s called your probate estate so they state can not touch it (if set up properly)
Another benefit of a living estate is that it gives you a quick and immediate transfer of property ownership so the second owner may move right in.
Here’s how it works:
Life Tenant (you) = The person holding the estate. You can live in your house and you own the property while you are still living.
Then there is a…
Remainderman (usually a family member or other loved one) = They have ownership interest in the home but cannot get the property until the life tenant passes away.
You still have roles and responsibilities as a homeowner under this setup. You are still required to do the following:
Pay the mortgage,
Pay property taxes and homeowners insurance,
Maintain and make appropriate repairs to the property, and
You are still allowed to sell the property. (If you do sell, the portion you own is based on you’re your age. The older you are the smaller your portion in relation to the remainderman).
Creating a life estate is just an example of how you can protect one of you many assets from recovery. Before making any changes to your home ownership status, always consult with your elder law attorney and senior care specialists.
For more information: Contact Senior Care of Michigan below to speak with a Senior Planning Expert.