As estate planning attorneys, clients often ask us if they should simply retitle significant assets, such as their home, into their children’s names to smooth the transfer of assets upon their passing. In many situations, the answer will be no, and here’s why….
Medicaid Look-back Periods
Senior citizens often must turn to Medicaid, a need-based, joint state/federal program, to help with the catastrophic costs of nursing home expenses. Medicaid may review gifts and transfers of assets up to five years prior to the application for benefits. Transferring a home into a child’s name may disqualify an applicant from receiving Medicaid benefits for a time period.
Stressful situations can cause family dynamics to change. It’s unfortunate, but it happens. A residence is often a family’s largest asset, and it’s best to maintain control of that asset, no matter how well-intentioned the transfer may be.
There are better choices in estate planning that can suit the needs of a senior citizen later in life. For example, a living trust allows the home to avoid probate while appointing a trustee, as well as a successor trustee, to manage assets for the best interest of a named beneficiary. This allows not only for a smooth transfer of ownership, but management of the asset in case of incapacitation.
An estate planning attorney is experienced with wills and trusts, and can best advise you of the tools that can be used to meet your family’s needs and your goals, as well as options that can reduce estate taxes and avoid probate.