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Transfer House to My Children

Robin Burner Daleo • Nov 27, 2023

Question:

My friend suggested that I transfer my house to my children in case I need nursing home care in the future. Is this advisable?

Answer:

In almost all cases our answer to this question is no. Your friend is likely suggesting this because she has heard of the five year look-back. The look-back refers to the time period immediately prior to the filing of a Medicaid application. During this time period the Department of Social Services will review your assets and any transfers that you have made. To the extent that you have made transfers or have too many assets in your name to qualify, further planning will have to be done in before you can qualify for Chronic Medicaid to cover the cost of Nursing Home care. Because of the look-back, in some cases, planning and transfer of assets is recommended.

However, the outright transfer of property raises some concerns. First, it is important to note that should you decide to transfer your home to your child, under the law, that transfer is considered a completed gift. If a time comes that you want it back, your child is under no obligation to transfer it back to you. Once the gift is made, the house becomes an asset of whomever you have transferred it to and accordingly, becomes available to their creditors. Moreover, absent any agreement to the contrary, in the event that your child is married, the house becomes marital property subject to equitable distribution should they later get divorced. Another important consideration when deciding whether to transfer your home to your child is whether you are currently receiving the Enhanced Star benefit or any Veteran’s Exemption. If so, once the transfer is complete, you lose those property tax advantages. Finally, if you transfer the house to your child during your lifetime and they sell it after your death, they will have to pay a capital gains tax on the difference between what you initially paid for the property and the selling price, minus any improvements.

The good news is that there are other ways to transfer property for the purpose of Medicaid planning without the negative consequences listed above. One option is to transfer your home into an Irrevocable Trust for the benefit of your children. You can gain the same protection for the purpose of Medicaid planning without completely losing your rights and interest in the home. I suggest that you consult with an Elder Law Attorney who is familiar with Medicaid planning before making any decisions.

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May is National Elder Law Month

by Robin Burner Daleo • 03 May, 2024

May is National Elder Law Month, for that reason we have decided to switch from our normal format and answer a question that we are oftentimes asked in our practice, “What is an Elder Law Attorney and why do I need one?” Answer: Elder Law is a fairly new and unknown area of the law. As baby boomers and their parents’ age, they are living longer and oftentimes, living with chronic medical conditions. As the cost of long term care continues to spiral out of control and families struggle to meet the needs of their aging members, an experienced Elder Law attorney can help you and your family members establish an estate plan that maximizes protection of assets while ensuring that your loved one has the best care available to them should they face a health crisis. While it is always best to plan proactively, Elder Law attorneys are adept at crisis planning and oftentimes can provide a solution which can preserve assets or save taxes where others you have consulted have told you that no solution existed. Elder Law attorneys must be familiar with multiple areas of the law - contract law, estate planning, trusts and estate administration, Medicare, Medicaid, health care insurance regulations, Public Health Law, Mental Hygiene Law, the Internal Revenue Code & State and local tax issues. In each instance the issues that we deal with are fact sensitive and the clients must be willing to give us the information that we need to formulate the Elder Law plan. This in itself is oftentimes a struggle as the clientele that we deal with tends to value privacy and are oftentimes reluctant to divulge information regarding their assets and private family issues. The various disciplines that make up the Elder Law practice are in a constant state of flux. As a result, it requires the Elder Law attorney to spend a great deal of time reading current journals and cases and continuously taking legal education courses. In addition, many Elder Law attorneys meet in informal study groups to read, understand and strategize. As the facts change, there will likely be different solutions for each client. What works for one client may be totally inappropriate for another. For instance, in one day, we may see two different clients, both clients are 86 years old, own their own homes, and need long-term care. Client A has a daughter, age 55 and Client B has a niece age 55. Client A, on the eve of going into a nursing facility, is advised to transfer her home to her caretaker daughter, who lives with her and has lived with her for more than 2 years. The transfer does not make Client A ineligible for Medicaid. Client B cannot follow the same plan because her niece is not her child. There are no exceptions for transfers to caregiver nieces. Because we do not have an exempt transfer available to us for Client B I advise Client B to sell the home and advise her that even though no pre-planning has been done, we will likely be able to save more than sixty percent of her aunt’s assets by engaging in crisis planning. Remember - one size fits all – is not the rule. Your Elder Law plan is personal, fact sensitive and requires a careful review of all of the facts and circumstances. By: Robin Burner Daleo, Esq.