Coping with Crisis: Getting the Right Help for an Aging Parent

When an older friend, parent or loved one begins to show signs of needing assistance, how do you step in without overstepping?

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It is a call nobody wants to receive: an energetic, independent parent in a distant state is suddenly behaving differently. When Jane first came to Grimaldi & Yeung her mother, Margaret, was in her early 80s and starting to have some health problems. Worse, she was showing signs of confusion. What could Jane do to take care of Margaret without uprooting either of their lives? Grimaldi & Yeung’s attorneys and social workers:

  • Performed a home inspection to determine what supports Margaret would need to remain at home.
  • Created a financial plan — including a trust — to protect Margaret’s assets and establish her eligibility for Medicaid to provide home care services.
  • Put Margaret’s legal documents — including a Durable Power of Attorney, Health Care Proxy and other Advanced Directives — in order so that Jane could direct her care and, if necessary, act as her agent.
  • Helped Jane identify and hire appropriate in-home health.
  • Consulted with Margaret’s physician to create a simplified routine that was easier for her to follow.
  • Held a “summit” with two care agencies to create a structure for Margaret and remove some of the uncertainty in her life.

Structure had become increasingly important for both Margaret and Jane. Additionally, Margaret’s assets needed to be consolidated and protected. Grimaldi & Yeung worked with the two women on a range of levels — legal, financial and human — to help take care of Margaret’s current and anticipated needs without disrupting either of their lives.

Medicare/Medicaid Planning: Transferring Your House

As we age, we are advised to protect our assets, not only for our needs, but also for our families need. Our homes are one of the most important assets; therefore, we must give special thought and careful consideration to the disposition of this asset. In order to protect real estate, it is helpful to understand how to title the property.

Your Grimaldi & Yeung attorney can help you:

  • Decide how to title your property.
  • Explore the best ways to protect the home while exploring the potential eligibility for Medicaid.
  • Consider other options for preserving the property’s value from tax liability and other factors.

Here is some essential information you should consider:

Tenancy & Co-Owned Property

When two or more individuals co-own property, the relationship between owner is “tenancy”. Deciding on the type of tenancy can determine how and whether the property will pass freely at an owner’s death. Tenancy comes in three forms:

  1. “Tenancy in Common” allows owners greatest flexibility. Each co-tenant has an interest in the property and is free to transfer this interest during life or through a Will. Co-tenants can have different ownership interests and may sever the relationship with other tenants by conveying their interest to another property. This new third party becomes a tenant in Common with the other owners.
  2. “Joint Tenancy” is more restrictive. Joint tenants permits people to own property together, but each owner must have equal ownership interests in a property. If one of the joint tenants die, their interest immediately ceases to exist and the remaining joint tenants own the property.
  3. “Tenancy by the Entirety” most restrictive. It is only available to married couples and is based on the societal value of protecting the family homestead. One tenant spouse is unable to independently convey their interest. Upon death of a spouse, the ownership interest automatically passes to the other spouse. The creditors of one spouse are unable to put a lien on the property or force its sale to recover debt unless both spouses consent.

Medicaid & Deficit Reduction Act

Medicaid, the government benefit program which often provides long-term care and medical costs — including the costs of nursing home care — has special rules covering the availability of homestead property to cover care costs. Under Medicaid’s rules, a home is an exempt asset and its transfer can be exempt from the normal five year look back period of ineligibility if transferred to one of the following:

  1. A spouse.
  2. A minor (under 21), or a disabled child of the individual.
  3. A sibling with an equity interest in the home who resided at the home at least one year before institutionalization.
  4. A son or daughter of the individual who resided in the home for at least two years and provided care to keep the person from becoming institutionalized.

The Deficit Reduction Act, which went into effect in February of 2006, created limits on the exemption of the home by making an individual with a home equity above $786,000 ineligible for Medicaid benefits.

Tax Considerations

Any transfer of a large asset, such as a valuable home, has tax implications. When considering a house transfer, Capital Gains Tax, Income Tax, and Gift Tax consequences must all be fully addressed and reviewed with your financial advisor or accountant. Retaining the right to use and enjoy the property, even if you have transferred same, it will provide capital gains protections by stepping up the cost basis to date of death value.

Protecting Your Property

Before transferring your home to your heirs, or placing the title into a Trust, you should consider:

  • Exploring the idea of Retained Life Estate or Life Use.
  • Reviewing the potential impact of any real estate tax benefits or advantages, such as New York State’s now-discontinued STAR program or veterans’ exemptions.
  • Planning early to avoid rushed and forced decisions.