Category Archives: Senior Tips

Home Sweet Home

Home Sweet Home

 

For most of us, our home is our biggest investment and our most valuable asset.  But, a home is more than just a number on a ledger sheet.  Within the walls of our homes, our families have lived, loved and learned the lessons of life.  Seniors frequently want to leave their homes to their families.

 

When is the best time to transfer the home to the family:  during life or after death?  Each transfer has specific rules and consequences that are important to understand.  Today’s Tip will discuss life-time transfers; Augusts’ tip will discuss transfers that take place after death.

 

A recorded gift deed will transfer the title of your home to your family.  The following are some of the consequences of transferring your home during your lifetime:

 

ADVANTAGES:

  • Your family will not have to file for probate to obtain the title to your home.

DISADVANTAGES:

  • Once your children own the property, they are in complete control—they can sell or mortgage your property without your permission.
  • If your children are faced with bankruptcy or divorce, your home could be used to satisfy their creditors or be divided in their divorce.
  • You will lose your homestead exemption, and your property taxes will increase.
  • After gifting your home, you will be ineligible for Medicaid for 5 years unless your children reconvey your home back to you.
  • When your family sells your home after you are gone, they will have to pay capital gains tax. If your property has appreciated in value, this tax could be substantial.

 

Wills, trusts and nonprobate transfers are used to transfer a home after death.  The consequences of using these methods will be the subject of our next Senior Tip.

 

The content here is not intended to be legal advice.  If you have a specific question, you should consult with an attorney.

 

Tom Packer is an Elder Care Attorney serving all of Southeast Idaho.  As a Life Care Planning law firm, the Elder Care Practice of Tom Packer offers a holistic solution for families struggling with the demands of an elderly loved one’s care.

Long-Term Care Partnership Program

One of the biggest challenges facing seniors is financial security. A key aspect of this challenge is the need for long-term care insurance verses the affordability of the policy. The federal government is trying to help. In 2005, Congress passed the Deficit Reduction Act (DRA) in an effort to encourage and enable people to purchase long-term care insurance. The DRA created the Qualified State Long-Term Care Partnership program, which offers long-term care insurance policies that allow buyers to protect assets and qualify for Medicaid when the long-term policy benefits run out. When you purchase a policy, the state will not count an equal amount of assets as the face value of the policy when it determines your eligibility for Medicaid assistance.

 

For example, if you are single you would normally be allowed to keep only $2,000 in assets to qualify for Medicaid. However, if you buy a Qualified Long-Term Care Policy that provides a $150,000 of benefits, you would be allowed to keep $152,000 in assets and still qualify for Medicaid. When purchasing long-term care insurance it is important to purchase a qualified policy and to understand the different coverage options offered under the policy. For example some policies will offer inflation protection of 5% a year and non-forfeiture benefits which returns a least part of the premiums to you if you cancel or let your policy lapse. You should also understand when the policy will begin to pay for your care, what services are covered (skilled nursing facility, assisted living, home care) and the length of care covered. To get more information call the Idaho Department of Insurance Senior Health Insurance Benefits Advisors at: 1-800-247-4422.