Nothing pressing, just planning for the future if medicaid is ever needed.
According to lawyers, the gold standard to avoid medicaid recovery of say a house is to put it into a trust. But with some states passing laws that allow for transfer on death deeds, is there a point to it anymore? A TOD deed is basically the same as specifying a beneficiary on a bank account. The action occurs on death and the asset gets transferred to the beneficiary. As with a bank account, this avoids probate. In many states, medicaid recovery is only against probate assets. No probate means no medicaid recovery.
This seems far more flexible than a trust. There is no risk of medicaid disqualification since nothing happens until after the person dies. It can save thousands of dollars versus having a elder law attorney set up a trust.
That's the way I understand it at least. Is this wrong?
As for transferring the house over now. I don't want to do that. Priority is that the parents get the care they need. So if it comes down to medicaid I don't want a gift in the past clouding qualification. A transfer on death deed or a child caregiver exemption happens either after death or at the time of the medicaid application so shouldn't be a factor. The child caregiver exemption at the very least is exempt from medicaid qualification or recovery.
Back to the topic of this thread. Regardless of those issues, I'm not seeing the benefit of a trust if your state has a TOD deed. Trust can be tricky I've found. Is there a clear advantage to a trust that I'm currently missing?
And whomever assets - house, land, stocks - transferred to has $$ to pay ALL costs of assets (taxes, insurance, maintenance, etc.) from that point on. With NO asset costs ever being paid directly by the old owner(s). So there is never the possibility of transfers being viewed as a “straw man” situation.
State laws and administrative codes can & are changed. And regularly. Life Estates were viewed as sacrosanct for medicaid planning but now some states place recovery action on LE’s. Just like with LEs, a state can remove TOD exclusion from MERP. Politically if little fallout & can be a sold to legislators as easy plus for state budget woes, it’s gonna happen. State doesn’t have to pass an actual law -which can mean pesky hearings- but just a new line into existing administrative code. Adios TOD as a way to avoid MERP.
Also regarding probate, in theory, yes MERP is done as probate court action. So in theory, no probate = no recovery. BUT some states allow a lien placed on property while the elder on Medicaid is alive. Liens cause “clouds” on title. To sell or borrow, clouds have to be lifted as otherwise no mortgage /no lending as no clean, clear title. Lien can also then become claim against the estate if that’s how your states laws run and probate gets opened.
WashHair - I’m assuming your concerns are all about your getting ownership of house that you live in with both your parents & grandmother. So 3 generations who provide income & assets that maintain household, right? Can you afford property costs? Whether house in a trust or TOD or outright transferred to just your name, there’s still property co$t$. Realistically Can you make it work? & likely make it work till whenever all 3 become Medicaid eligible? And then for however long you have house?
If your parents & grannie go into LTC Medicaid, their income (like SS) MUST be paid to the facility as the required copay unless a parent remains a CS. Once each go in a NH, they can no longer be paying you rental income, buying groceries, their share of utilities, paying you a personal needs contract. Can you swing realistically all $ needed? If so, get it transferred now to you & hope, pray, do whatever till past 5 yr look back in Spring 2023 for whichever former house owner hits Medicaid LTC application first.
Please keep in mind that each must qualify “at need” BOTH medically AND financially for Medicaid. Overwhelmingly on this site, folks are all about elders $$$$. But just as important they have to also be documented “at need” medically. For skilled nursing care, aka a NH, that can be a pretty high criteria to meet. Just being old, iffy on ADLs, having a doctors note, needing medication management.... may not be enough. Some states - CA - are now narrowing LTC eligibility to those coming from a hospitalization. From a health policy & planning perspective, with the oncoming tsunami of baby boomers hitting aging issues, this makes total sense. But it’s going to totally keep that 20% - 40% entering a NH without hospitalization from being easily eligible for Medicaid. Short of going all “Blanche & Baby Jane”, folks are going to end up caregiving at home or private paying for care as elders may not be “at need” medically till very much towards end of life in what my crystal ball shows.
Aging in America is not going to be pretty.