Using an irrevocable trust

My husband is 73, and I am 78. Our house is in my name. What are the Medicaid ramifications if one of us needs to enter a long-term-care residence? Should we jointly own the house? Should I give my husband a life tenancy and leave it to our children?

While you're both alive, the house is an exempt asset for Medicaid purposes. Either or both of you can live there for life. What happens after one of you die depends on which of you is the Medicaid nursing home recipient.

As things stand, if you enter a nursing home, Medicaid has no claim on the house while your husband lives there. But if he dies while you're in the nursing home, it becomes an asset available to pay for your care. And if he survives you, Medicaid can put a lien on it and recoup the cost of your care when he dies or sells it.

One option to consider is transferring the house into an irrevocable trust for your children, says Jennifer B. Cona, a Melville elder care attorney. Your respective states of health are an important factor in this decision, she adds, because the transfer delays Medicaid eligibility for five years. You could retain a life estate in the house within the trust. Readers, take note: Last September, New York State passed a law permitting Medicaid to claim a dollar value for a retained life estate after its owner's death. But late last month, the Legislature repealed that law. Medicaid now can only assert a claim to recover benefits from a decedent's probate estate, which doesn't include a retained life estate.

The bottom line Consult an elder law attorney to become fully informed about the complex trade-offs involved in Medicaid planning.

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