Smart Senior Daily is beginning a new series of Q&As with noted elder care attorney Harry S. Margolis where he will answer the most frequently asked questions that seniors have about how to navigate the world of elder care. This in our first installment.
My wife has dementia and is too far along for the five-year rule. Should I take my wife’s name off the home and put it in my name with my children as beneficiaries?
Harry's response:
Yes, it would make sense to put the house in your own name, but you may or may not be able to add your children as beneficiaries.
There are two issues here:
- The “five-year” or “lookback” rule to which you refer and
- The types of real estate ownership permitted in your state.
Applying for Medicaid? Then, take note...
As you are aware, if you apply for Medicaid coverage of nursing home care, you must report any transfers of assets you or your spouse may have made during the prior five years and unless an exception applies will be ineligible for benefits for a period of time. In effect, this acts as a five-year penalty for transfers of assets.
Some exceptions apply, including for transfers between spouses. So there would be no penalty for putting the house in your name alone and removing your wife’s name.
Whether you could also name your children as beneficiaries depends on your state. Some states permit the creation of transfer on death or "ladybird" deeds that are not considered transfers of assets. These are similar to naming beneficiaries on TOD or transfer on death accounts at banks or investment companies or on retirement accounts. You remain the owner of the account and the beneficiaries have no rights until your death.
Laws can differ from state to state
In other states, you would have to create a life estate that would be subject to the five-year look-back rule just like a transfer into trust. A local elder law attorney could let you know what the rules are in your state.
Also, in addition to putting the house in your name alone, it’s important that you execute a new will that bypasses your wife. Otherwise, if you were to pass away before her, everything could go to her and have to be spent down for her care.
Gary P Guthrie
Harry S. Margolis practices elder law, estate and special needs planning at Margolis Bloom & D’Agostino in Wellesley, Massachusetts. He is author of The Baby Boomers Guide to Trusts: Your All-Purpose Estate Planning Tool and answers consumer questions about estate planning issues at www.AskHarry.info. You may post your estate planning questions there.
