It is a common problem for New York residents: how to protect your ailing parents’ assets. For many families, the largest asset is the family home. Many seniors spent their entire lives pouring money into their home, with property rates increasing over the years, the home is a significant asset to be passed on to heirs. At the same time, if the senior does not have long-term care insurance, there is always the risk of the home being lost to pay for a nursing home or other support services.
The Life Estate
After first considering the risk, many adult children who are unfamiliar various elder law and estate planning tools attempt rudimentary protection efforts. For example, the adult son or daughter may convince their parent to sign a new deed, giving ownership of the home to the child. This seemingly avoids having the transfer go through probate and may protect the home from some long-term care costs (though this is not always the case).
A slightly more sophisticated transfer is the “life estate.” This works by signing a new deed from the parent to the parent for life with the remainder interest to the children. The idea is the same except that the parent technically retains an ownership interest in the property until their death.
Yet, both of these options are rarely, if ever, the ideal approach to meet the stated goals For one thing, to fully protect assets from possible nursing home costs and the need to enroll in New York Medicaid program, the transfer must be made five full years before enrollment. For seniors who need support earlier, the outright transfer of assets to children or use of a life estate offer little protection. This is not including the various adverse tax ramifications and potential family conflict created by transferring assets in this way.
In virtually all cases, use of trusts is a far superior way to avoid probate and save assets from Medicaid. A trust is far more flexible in allowing assets to be sold or transferred as necessary. In addition, the trust is more comprehensive; many different types of assets can be transferred into it. Trustees can also help manage the process and steps can be taken to limit the potential for conflict between siblings or in-laws.
Do Not Go It Alone – Get Legal Help
Considering the significance of securing proper care and protecting family assets, it is critical not to make haphazard choices on these matters. Elder law estate planning attorneys are experienced specifically in ensuring you take advantage of all options available to streamline the inheritance process and protect assets from long-term care costs. Secure the help of professionals.