How Can I Protect My Property for My Sons if I Need Long-Term Care?
I am 72 years old in good health at the present time. However, I own a piece of land with an estimated value of $1,000,000, but do not own a home or anything else of value. What is the best way that I can avoid Medicaid taking the property if I have to go to a nursing home? I would like to leave this to my two sons. I have considered creating an LLC or a gifting trust. Any advice?
An irrevocable trust probably makes the most sense. You could also give the property directly to your sons, but there are tax advantages to their receiving it only after you pass away, namely the step-up in basis which is explained in: What’s a “Step-Up” in Basis and Why Would You Want It? But be aware that the transfer to the trust will make you ineligible for Medicaid benefits for the subsequent five years and you will no longer have access to the principal of the trust, meaning that you won’t be able to borrow against it or receive distributions if the property is sold. On the other hand, you can receive income that the property generates, whether that’s rent, farm income, timber rights, or anything else.
Every state Medicaid agency applies the rules around trusts differently, so make sure that you work with an experienced elder law practitioner. One good source of elder law attorneys is www.elderlawanswers.com.