Stay at home. Avoid probate. Plan for Long Term Care.
Have you heard of giving away your home whilst retaining “lifetime rights?” We call those transfer documents “life estate deeds” because the owner gives the property to someone and retains a “life estate” (the right to live there) for their lifetime. This post will give a little more information about how that can work, so that you can speak to your attorney about whether a life estate deed is a good option for you.
There are a number of reasons why someone may wish to do a new deed to their home, but the most common reasons are: (1) avoid probate and (2) plan for Long Term Care.
As our earlier post describes, the Probate process can last as long as a year, but assets that pass outside of probate go to the beneficiaries more quickly. By using a life estate deed, the owner of the real property can retain exclusive right to live in the property, sell it, mortgage it, etc. for so long as the owner (or owners) are living, but know that the property will pass to whomever they wish upon their death.* No probate!
Some homeowners wish to preserve their home for future generations whilst still qualifying for government long term care or Medicaid assistance for a nursing home. A life estate deed may help such an homeowner, but it will cost the homeowner some control over the property, and the timing must be right. First, the life estate deed must be without powers, meaning that the owner relinquishes the right to sell or mortgage the property after the new deed is recorded. Second, for the long term care planning to be effective, it must satisfy the look-back period under the Medicaid regulations; currently, in Maryland, that look-back period is 5 years.
- The lifetime rights include the lifetime responsibilities of the owner for maintenance, upkeep and real property taxes.