a. Life Estates
An estate is used to express the nature, duration or extent of an interest in land. A life estate is an estate which is measured by the life of a specified person, by the joint lives of two or more specified persons, of by the last survivor of two or more specified persons. A right to use and occupy is not a life estate.
Advantages of a Life Estate:
- Right to live in house.
- Removes remainder interest in the house from Medicaid estate after five (5) years of transfer.
- Medicaid will only count the value of the remainder interest on transfer, which is a significantly lower value than if the whole were transferred.
- Original owner still maintains full control of property and its management also retains Veterans and STAR tax exemptions.
- Full value is included in original owner’s estate for tax purposes, but remainderman still receive a full basis step up to fair market value upon death.