For most of us, our home is our most valuable and prized asset. And unless you want to have to choose between receiving the healthcare you need and the loss of your home, it's important for you to take steps today to preserve and protect your family home.
However, you're not alone! The elder law attorneys at Cona Elder Law offer years of experience helping people like you protect their family home without sacrificing their healthcare needs. We utilize a range of tools to help protect your home and achieve your goals.
Continue reading to learn three ways you can preserve and protect your family home for generations to come. It's important to understand, however, that these tools have certain Medicaid planning consequences as well as tax consequences. Because of this, it's critical to work with our knowledgeable and experienced Cona Elder Law attorneys.
Did you know you can transfer your home to someone else, such as a spouse, by signing a new deed in their name? This simple step can help ensure Medicaid will never place a lien on your home. In addition, it will prevent your home from being counted in your estate's countable assets, which can potentially help reduce taxes.
However, whenever you transfer your home, you could lose key tax exemptions, such as veterans' deductions or the Enhanced STAR deduction. Most importantly, you could potentially lose the ability to continue residing in the house.
Furthermore, the new owner you've transferred the house to could incur serious tax disadvantages, especially if the home will not be their primary residence. There will also be a Medicaid penalty period based on the transfer of the entire value of your home.
Another way to protect your family home for future generations is to transfer title to another person but retain a life estate. When you have a life estate, it means you retain the obligations and rights regarding the property while you're alive. For instance, you will keep the absolute right to live in the home throughout your life. You will also be responsible for any taxes, all upkeep, and will remain eligible for all real estate tax exemptions.
You’d continue receiving any Veterans' real estate tax benefits or Enhanced STAR tax benefits. Because you will continue to be obligated to pay real estate taxes, you'll still be able to realize these tax benefits as an itemized deduction on your personal tax return.
For your heirs to get the full benefit of a life estate transfer, it is best that the property not be sold during your lifetime. If this is a possibility, an irrevocable trust is best (see below). However, if the home is sold during your lifetime, the cost basis will be apportioned between the person you transfer ownership to and yourself. The cost basis is simply the amount you paid for your property in addition to the value of any capital improvements you have made.
The property will automatically transfer to your designated beneficiary at the time of your death. This transfer will happen without the need to probate your will. By transferring your family home through a life estate, you will protect it from Medicaid by preventing a lien from being placed on the property.
In addition, the Medicaid penalty period that will be levied because of the transfer will be reduced for planning purposes. When you choose to protect your family home with a life estate, there are a range of different considerations and ramifications that must be effectively considered. The experienced team of elder law attorneys at Cona Elder Law can help guide you through the process.
The most protection is afforded by transferring the home to a trust to protect it for asset protection and Medicaid purposes. Only an irrevocable trust will protect your home. In addition, you can keep all the advantages of a life estate within the trust.
An irrevocable trust will protect your family home from Medicaid after the five year look-back period has passed. By maintaining a life estate within the trust, the irrevocable trust will allow you to retain any real estate tax exemptions. In addition, your heirs or beneficiaries will receive certain tax advantages and will inherit the home without the need for the probate of your will. However, the house can be sold without losing any capital gains exclusions, which is different from the life estate transfer.
Unfortunately, far too few older adults truly understand their options regarding long-term care and how to pay for their care while preserving assets for the next generation. However, the elder law attorneys at Cona Elder Law offer decades of experience working with New York State's Medicaid programs.
We use our knowledge and experience to work within the law to produce favorable outcomes for our clients. Because every case is different and has its own set of unique facts, we will always create a strategy best suited for you and your family.
Contact Cona Elder Law today to create plan to protect your family home.
Cona Elder Law is a full service law firm based in Melville, LI. Our firm concentrates in the areas of elder law, estate planning, estate administration and litigation, special needs planning and health care facility representation. We are proud to have been recognized for our innovative strategies, creative techniques and unparalleled negotiating skills unendingly driven toward our paramount objective - satisfying the needs of our clients.
The Difference Between Elder Law and Estate Planning Attorneys
5 Types of Trusts in New York
Why Hire An Elder Law Attorney
Health Care Proxy vs. Living Will: What’s the Difference?
Estate Planning for Your Pets: Arranging for the Care of Your Beloved Pets After Your Become Incapacitated or Pass
Legislature simplifies the power of attorney process