Long-term care can become very expensive over time. Medicaid recipients receive some form of assistance with these costs; however, once you or a loved one passes away, the State may try to get some of the money it spent on healthcare back.
Estate Recovery is when the State attempts to repay itself from the estate of a Medicaid recipient that passes away. Oftentimes for Medicaid recipients, the only asset that is available is the house he or she lives in. Depending on if the recipient has a life estate or a trust, there are differing methods to protect themselves and their home from Estate Recovery.
A Life Estate is the most simple and appropriate alternative to protect a house from Estate Recovery. A Life Estate is a type of joint ownership of property between two or more people. All of the parties in the Life Estate have some ownership interest in the property and home. A Medicaid recipient would possess the property for the entirety of his or her life. After he or she passes away, the property would immediately transfer to the other person or party that is included in the life estate. This would protect the house and property from Estate Recovery.
A Trust is another method to protect a Medicaid recipient’s property and home from Estate Recovery. An Irrevocable Trust is when the deed to the house, or the proceeds from selling the house are kept in an account for someone else such as a child or grandchild. This is an alternative to a Life Estate; however, an Irrevocable Trust can be less flexible.
An experienced Smith Strong, PLC attorney can advise you on estate planning options, how to set up a Life Estate or Trust, and whether a Life Estate or Trust is best for your needs.
To sign up for our free Estate Planning Seminar or schedule your first meeting with attorney Van Smith and his team please call one of our offices at (804) 325-1245 (Richmond) or (757) 941-4298 (Williamsburg).