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If some one has a life estate and and has to be placed in a nursing home, must the property be sold to pay for the care.

Attleboro, MA |

My Mom has a life estate, if she needs to be placed in a nursing home, can we be forced to sell her property to pay for the care.

Attorney Answers 7

Posted

In a word, "No". She doesn't own the property, just the life estate. Presumably the nursing home could try to get any net rents arising from the life estate, if the property is income producing, but they can't make you sell what isn't hers (the fee residuum) to sell.

Of course, if they can show that she divested herself of the fee interest with the intent to avoid nursing home bills, they may be able to unwind the conveyance as a "fraudulent transfer".

The foregoing answer does not establish an attorney client relationship, is not confidential, and should not be relied upon in place of an actual consultation with an attorney. Mr. Boone is licensed to practice in Massachusetts, before the U.S. Tax Court, and the Federal District Court of Massachusetts. Most initial consultations are free. Further information is available on my profile and at www.boonehenkofflaw.com.

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5 comments

Jefferson W. Boone

Jefferson W. Boone

Posted

I think I meant to say "fee remainder". A long time since my poperty class.

E. Alexandra Golden

E. Alexandra Golden

Posted

This isn't correct. In 15 years of elder law practice, I've never seen or heard of MassHealth or a nursing home going after a transfer as a fraudulent conveyance. Rather, the agency will simply not provide the benefit if the transfer occurred within five years of the requested starting date for benefits. There is nothing illegal about Medicaid planning.

Jefferson W. Boone

Jefferson W. Boone

Posted

As I understand it, "Fraudulent transfer" is a term of art, which does not necessarily imply criminal or civil wrongdoing, but merely used to describe a transaction which can be reversed to claw back assets for the benefit of a creditor. However, I bow to your elder law experience, which far exceeds mine, with respect to what to expect from Mass Health. I think I assumed that the benefits (or debt or judgment) had already been paid or incurred, per recent advice I received from a bankruptcy specialist with respect to credit card debt judgments occurring within five years of an estate plan which involved life estates.

E. Alexandra Golden

E. Alexandra Golden

Posted

There's certainly fraudulent transfers in the elder law context, but they usually involve children exercising undue influence or otherwise breaching fiduciary duty.

Jennifer A Deland

Jennifer A Deland

Posted

Mr. Boone, you may have the best intention, but you should understand that the rules of property law and the rules governing availability for purposes of financial qualification for MassHealth are completely different. I hope you have learned from this conversation that these are cases in which you need to recommend that your client seek the aid of counsel who is experienced in this area.

Posted

The short answer to your question is no but you will want to make sure that your mother's Medicaid application is completed correctly. You should contact an elder law attorney to help you with the process. Best of luck.

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Posted

On a strictly legal level, a life estate is a possessory interest which, while it is a form of partial ownership, is not one with any permanence or real value on the open market. MassHealth cannot force a sale or place a lien on the property, but if it is rented out on mom's behalf, the profits must be paid over or else a disqualification will be triggered if discovered.

However, most times elder law attorneys get asked this question, the underlying situation is that at some point in the past mom executed a quitclaim deed to herself and the kids giving them the property and retaining a life estate for herself. If that is the situation in your case, the deciding factor is whether the conveyance was made within 5 years of the MassHealth application. If so, it is a disqualifying transfer to the extent it was gifted* to the co-owners. In such a case, they can't force a sale, but they will deny care for a period of years, and you may still have to sell the property to privately pay for the nursing home in the interim.

Additionally, you may want to sell the property now, or buy out mom's remaining interest so that you can rent it without intrustion, even though it means some money will be directly turned over to the state/nursing home. Doing so may not require as much money as you would think, and should be discussed with an experienced elder law attorney.

* gifted includes outright gifts, or if sold, any significant amount the property was sold for less than fair market value. However, fair market value is not merely a reasonable price at the time of the deed, but that price LESS the actuarial value of the right your mom kept to possess the property for her life expectancy. Figuring this out is just one of several reasons you need a good elder law attorney if this transaction was within the 5-year MassHealth look-back.

Attorney Rosenberg is admitted to practice in Connecticut and Massachusetts, and currently practices in South-Central Connecticut with an emphasis on estate planning, elder law, probate, and tax matters. He may be contacted confidentially by email at Scott@ScottRosenbergLaw.com or by phone at (203) 871-3830. All correspondence through this website appears publicly, is not confidential, and does not create an attorney-client relationship between you and Atty. Rosenberg. Discretion should always be employed when posting personal information online. ~~~~~~~~~~~~~ All online content provided by Atty. Rosenberg on this and other websites is provided for general informational purposes only, and does not constitute legal advice. All content is general in nature. Attorneys are unable to ask the questions necessary to fully understand the legal issues faced by any particular poster. Postings and responses to questions only provide general insights on the topic discussed. They are not tailored to any reader’s specific situation, will not be accurate in all states, and are never updated or maintained to reflect changes in the law. No person should take action based on the information provided by anyone on Avvo.com or any other law-themed website without first consulting a local attorney with significant experience in your area of concern. Persuant to Circular 230, no online content may be used by any person to avoid taxes or penalties under the Internal Revenue Code.

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Posted

No. A life estate takes the property out of the "estate rule" and the government cannot place a lien on the property that will allow for foreclosure.

Matthew Johnson phone# 206.747.0313 is licensed in the State of Washington and performs bankruptcy, short sale negotiations, and estate planning in Whatcom, Skagit, Snohomish, King and Pierce counties. The response does not constitute specific legal advice, which would require a full inquiry by the attorney into the complete background of the facts and circumstances surrounding this matter; rather, it is intended to be general legal information based on the limited information provided by the inquirer; it This response also does not constitute the establishment of an attorney-client relationship, which can only be established after a conflict of interest evaluation is completed, your case is accepted, and a fee agreement is signed. Johnson Legal Group, PLLC

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1 comment

E. Alexandra Golden

E. Alexandra Golden

Posted

Not exactly -- MassHealth can and will place a lien on the property -- if it is sold during the elder's lifetime, the state will collect against the value of the life estate.

Posted

The simple answer is "no." The more complex answer, as Attorney Rosenberg indicates is "it depends." How long ago was the life estate created? Long enough ago that there's no disqualifying transfer? If your mother is not living in the house, how will the costs of upkeep and property taxes be paid? If the property needs to be sold, will that sale occur before or after she is receiving MassHealth benefits?

As you can see, the answer to your question is going to be very fact-specific. I strongly suggest you see an elder law attorney for a proper evaluation of your mother's needs.

E. Alexandra "Sasha" Golden is a Massachusetts lawyer. All answers are based on Massachusetts law. All answers are for educational purposes and no attorney-client relationship is formed by providing an answer to a question.

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Posted

No. The life estate is good. The issue is, did the person make a gift of the remainder interest? You do not tell us enough to advise. I would guess that you are considering doing some planning in advance. This is wise. However, you should discuss the matter with an elder law attorney. There may be other options for planning you have not thought of.

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Posted

Some states have a broad definition of an "estate" for purposes of Medicaid recovery. In broad or expanded definition states, when someone like your mother passes, Medicaid will go after the value of her interest the moment before she died, based on actuarial tables. The elder law attorneys in Massachusetts know how life estates are treated in Massachusetts, but don't think that the rule applies everywhere. Contact a local elder law attorney for advice.

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2 comments

E. Alexandra Golden

E. Alexandra Golden

Posted

This reading of the law does not apply in Massachusetts.

Kelly Scott Davis

Kelly Scott Davis

Posted

I understand that. My point is that Massachusetts law may not apply if the Medicaid applicant and life estate are not in that state. The question does not indicate whether it is a Massachusetts application.

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