How Can I Protect My Property for My Sons?
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 million, 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.
A trust probably makes more sense than a limited liability company (LLC). You can leave the property to your sons through a properly drafted trust. Doing so will make you ineligible for Medicaid benefits for the five years following the transfer, so make sure you stay healthy. The trust will also give your sons a step-up in basis after you have passed away, which could save them a substantial amount in taxes on capital gain when and if they sell the property.
An LLC splits ownership and management of the property. If you continue to be the owner, then it provides no Medicaid protection. If you make your sons the owners, they will lose the advantage of a step-up in basis upon your death as described above.
You’ll need to consult with a local elder law attorney to make certain that the trust is drafted to work in your state. The sooner you do this, the sooner the five-year waiting period begins and ends.