How Can I Protect My Home with Minimal Impact on My Life?
By: Anthony J. Enea, Esq.
For more than three (3) decades I have alerted seniors of the need to be proactive in taking steps to protect their home from the cost of long-term care. Amazingly, and in spite of all that has been written about Elder Law, Medicaid eligibility and asset protection planning over the last three decades, there are still tens of thousands of at-risk seniors in New York who have not taken any steps to protect their life savings, and specifically, their home.
Of all the differing assets one owns, the home is perhaps the easiest to protect with minimal impact on one’s life and finances. For example, one’s home (single or multi-family primary residence, vacation home, condo and if the Co-op Board permits, a cooperative apartment) can be transferred to an Irrevocable Medicaid Asset Protection Trust (MAPT). When doing so the owners of the home creating the MAPT retain the right to the use and possession of the home (transferred to the MAPT) during their lifetime. The Trustee(s) (presumably their children or other loved ones) cannot sell or rent the home without their permission. The creators of the MAPT can retain the power to remove and replace the Trustee(s) and to change their mind as to whom will receive the trust assets upon their demise. The transfer of the property to the MAPT will create a five (5) year lookback (ineligibility period) for Medicaid nursing home and soon it is anticipated to create a thirty (30) month lookback for Medicaid homecare in New York (once COVID emergency is lifted).
If properly drafted, the MAPT can be structured so that the creators of the MAPT are deemed the owners of the home and trust assets, for income tax purposes. Thus, retaining the ability to utilize the personal residence exclusion for capital gains taxes ($250,000 if single, $500,000 if married), in the event the house is sold by the MAPT during the life of the MAPT creator(s). Additionally, the creator(s) retains any STAR, Senior Citizens, Veterans and other tax exemption they may be entitled to.
If the house is sold after it is transferred to the MAPT and before the creator(s) passes, the proceeds of sale can be used to purchase another home in the name of the MAPT. Thus, once the lookback period has expired the newly purchased home and any remaining proceeds of sale will be protected and not impact eligibility for Medicaid.
Thus, as stated above, transferring one’s home to a MAPT presents little or no inconvenience to the homeowners. They continue to maintain the home and pay all of the expense of the home as if they and not the MAPT owns it. The only bill that changes is the property and casualty insurance for the home, which needs to name the Trust as the primary insured.
In conclusion, using a MAPT to protect one’s home(s) from the cost of long-term care is minimally intrusive to one’s lifestyle and finances, while providing the eventual benefit that one’s equity in the home is sheltered.
* Anthony J. Enea is a member of Enea, Scanlan and Sirignano, LLP of White Plains, New York. He focuses his practice on Wills, Trusts and Estates and Elder Law. Mr. Enea is the Past Chair of Elder Law and Special Needs Section of the New York State Bar Association (NYSBA), and is the past Chair of the 50+ Section of the NYSBA. Mr. Enea is a Past President and Founding member of the New York Chapter of the National Academy of Elder Law Attorneys (NAELA). Mr. Enea is the Immediate Past President of the Westchester County Bar Foundation and a Past President of the Westchester County Bar Association. Mr. Enea can be reached at (914) 948-1500 or at [email protected].