What does a life estate protect?
A life estate lasts for the lifetime of its creator. It prohibits the selling of the assets without the permission of its beneficiaries. For example, a parent cannot sell a home without permission from their children if their children are beneficiaries in the life estate.
Is a life estate Revokable?
Life Estates in an Estate Plan Importantly, a life estate is not revocable. Once you have set up a life estate for your property, you cannot sell the property in that estate. This approach can ultimately protect homeowners from having the property taken to pay for long-term care.
Can a life estate protect the family home?
However, as an advance-planning technique it offers a great advantage of protecting the most important asset owned by the parent, the family home. There are many other rules and planning techniques that can benefit individuals who are unsure whether they will have enough funds for long-term care when the time comes.
What happens to the property in a life estate?
The deed includes a provision stating that the parents “retain the right to use and occupy the property during their lifetimes,” a so-called “life estate” in the property. Upon the death of the parents, the life estate ceases to exist and the children own the property free and clear of any lien for long-term care costs.
How to protect your home from Medicaid with a life estate?
Protecting the Home from Medicaid with a Life Estate. If a person qualifies to receive Medicaid assistance while in a nursing home, the patient need only contribute their Social Security and other income, and then the Medicaid program will pick up the balance of the bill.
Who is the owner of a life estate?
Each of the people in a life estate has an ownership interest in a piece of real estate — typically your primary home — but over different time periods. The person who holds the life estate is called the life tenant. So that’s you if you’re the homeowner. As the life tenant, you own the property during your lifetime.
What happens to your property in a life estate?
To divest yourself of property, yet keep the right to use it, you can deed your property to another but retain the use of the property for your lifetime. After you pass away, the property goes to the remainderman. Remember our example above?
However, as an advance-planning technique it offers a great advantage of protecting the most important asset owned by the parent, the family home. There are many other rules and planning techniques that can benefit individuals who are unsure whether they will have enough funds for long-term care when the time comes.
Protecting the Home from Medicaid with a Life Estate. If a person qualifies to receive Medicaid assistance while in a nursing home, the patient need only contribute their Social Security and other income, and then the Medicaid program will pick up the balance of the bill.
Can a lien be placed on a life estate?
The property will be subject to a lien for the life estate Medicaid benefits. It is important to understand that if the parent receives Medicaid benefits, whether in a nursing home or in the community, the Commonwealth will place a lien against the parent’s property.