Attorney Thomas B. Burton answers the following question: How Can We Protect House From Nursing Home For Our Children? Attorney Burton discusses the techniques used to protect a house from the nursing home under the current Medicaid laws and also discusses why a home often works well for a special type of trust used often in this situation.
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Welcome back!
I'm Attorney Thomas Burton. I'm an estate planning and asset protection attorney here in Wisconsin and today we return to my popular Question and Answer Series where I answer Real Viewer Questions from across the State of Wisconsin related to my practice areas of Estate Planning, Real Estate and Business Law and today's question comes from Mayville, Wisconsin and they write the following: "How can we keep our house for my young adult children, who live here protecting it in case we ever have to get nursing home care. Our three young adult sons live with us and our plan is for them to stay here. Our concern is how to not lose the house, leaving them homeless. If hubby or I, ever end up in a nursing home and then the spouse dies, so the state could take it. Looking for options, can we somehow now put it in our son's names or is it trust the way to go? What are advantages and disadvantages? Thank you!"
Thank you for asking, this is a good question and there are many facts you should consider carefully about your own situation and consult with your individual attorney before deciding which method is best for you. However, in general, based on what you've told me, I would look at using an irrevocable trust and transfer the title of the home into the irrevocable trust, at least five years before you need Medicaid nursing home assistance because five years is the look back period for any gifts made, any divestments made for less than value. So transferring an asset into an irrevocable trust would be considered a divestment. So this type of planning, you would want to do at least five years in advance of when you would need it and then you would also need to name a third-party, person, to act as trustee of the trust. So in your example, it could be one of your sons or it could be another friend or relative whom you trust.
I would be cautious about putting your son's names directly on the home because in the event one of them goes through a divorce or gets sued or is pursued by creditors, then the title to the home you live in, could be at risk. So the trust needs to be set up specifically for this type of planning, in these situations. So it's beyond the scope, I can give you the general overview today but you really would need to discuss the specific details with your own attorney before deciding if this type of irrevocable trust planning is appropriate for you but again, I caution clients against putting their children's names directly on the deed to a home because often, the age when parents are considering doing this, the parents are older and have generally accumulated a good amount of assets and their children are younger and still in that accumulation phase, working hard, raising a family etc. and sometimes, during those years, something can happen and not that your children are bad people, it can be someone hits them in a car accident and then one of the other drivers starts suing everyone involved and they see your child's name is on the title to your home. well, I can tell you creditors, attorneys are quite smart and they know how to look up real estate records for the names of all parties in a lawsuit and it would be fairly easy for them to discover that your child's name is on the title to a home, oftentimes people I'm talking to, later in life the homeless paid for. So that would be a big asset you could recover in a lawsuit or at least put a lien against, you know, if you get a judgment in a lawsuit.
So that's one reason I wouldn't put child's name on the deed while you're currently alive and living in the home, it's much better to have it, the house placed in a trust and the trust is not named, the same as the child, it's not going to come up in a real estate search, if the child gets in a car accident, gets sued. In fact, the child has no interest in the piece of real estate in the trust, until after death of the parent or both parents in this example, and that keeps the asset protected during your life but can pass it to the child upon death which is what it sounds like you're looking to do.
The other advantage is, it can also remove the asset from your own individual name, for the asset protection you're seeking from the nursing home.
So again, this type of planning would need to be done five years in advance, of when you need the Medicaid long-term care, nursing home care. So for a lot of clients, that means you should look at doing this in your 60s, mid 60s is a good time, depending on your health situation. Now if you have a serious health condition, you may need to do it sooner but in general, if you're in pretty good health, that's a good time to look at doing it. So you have a reasonably good chance of living past that five-year look-back period and before you would need the Medicaid nursing home care. So I always tell my clients, it's up to you and your own assessment of your family health history and your personal health history when to do this but generally, the sooner the better because once you pass the five-year look back period for Medicaid nursing home asset protection, then the house would be protected and the key with the irrevocable trust is it protects it not only for Medicaid qualification, removing it from your name but after you pass away when you mentioned that the state could take it. It's after you pass away that the state seeks to get repaid from the home, for the funds they expended on your behalf in the nursing home care.
So good question, dealing with trust and whether the pros and cons of putting your child's name on the deed to your home, I would caution against that but I suggest, you sit down with your own estate planning attorney and discuss it in detail before deciding what plan of action is best for you.
So thank you for asking and thank you to the viewers for watching. If this video has been helpful to you, please consider giving it a LIKE, so that others can see, benefit from this information as well because the reason I answer these questions pro bono, on the channel, is to help you take charge of your own estate planning and also because I know many of the people are going through similar situations and by answering real reader questions, I know it helps others who are going through a similar situation.
So thanks for watching and we'll see you next time.
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