Latest / The Financial Exchange Show / Ask Todd: Protecting property while applying for medicaid

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Ask Todd: Protecting property while applying for medicaid · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  Speaker 1: If you have an existing estate plan or in the
• 0:07
  Speaker 1: market for one, Todd Lutsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
• 0:19
  Speaker 1: with a state and tax planning, Medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
• 0:28
  Speaker 2: And we are now joined by Todd Lutsky from the
• 0:31
  Speaker 2: law firm of Cushing and Dolan. We got the phone
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  Speaker 2: lines open because the segment is Ask Todd, where you
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  Speaker 2: get to Ask Todd your estate planning questions live on air.
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  Speaker 3: Right now.
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  Speaker 2: Eight eight eight two zero five two two sixty three
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  Speaker 2: is the number. We do have limited space on the phone.
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  Speaker 2: In fact, we got someone calling right now, so if
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  Speaker 2: you got a question for Todd, get in line by
• 0:54
  Speaker 2: calling eight eight eight to zero five two two sixty
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  Speaker 2: three so we can get to your estate plan questions.
• 1:01
  Speaker 2: That number again is eight eight eight two zero five
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  Speaker 2: two two six three. Mister Latsky, how are you doing today?
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  Speaker 3: I'm good I'm afraid to ask you though.
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  Speaker 2: I'm doing great. Actually, I finally I got I got
• 1:16
  Speaker 2: a new side hustle.
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  Speaker 3: Oh yeah, side gig.
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  Speaker 2: I'm getting paid to do a sleep study. Oh yeah,
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  Speaker 2: it's actually my dream job.
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  Speaker 3: I would think.
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  Speaker 2: So, yeah, that's pretty good, Tod, I want to talk
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  Speaker 2: a little bit about last minute medicaid situations or I
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  Speaker 2: guess qualifying for medicaid in kind of a last minute situation.
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  Speaker 3: Sure, I would.
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  Speaker 2: Say, someone is heading into a nursing home. Is there
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  Speaker 2: anything that can be done in order to protect real
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  Speaker 2: estate assets in that type of emergency situation?
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  Speaker 4: So do you want to talk about any real estate
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  Speaker 4: or do you want to talk because there's different you know.
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  Speaker 2: On my list here I had primary vacation in rental,
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  Speaker 2: all with question marks after them.
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  Speaker 3: Okay, so should we pick one?
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  Speaker 2: Start with primary residents?
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  Speaker 4: So primary residence is the most important one. Most people
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  Speaker 4: have it, after all, and it's treated differently for a
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  Speaker 4: married couple versus single people. So quite frankly, for a
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  Speaker 4: married couple, if you have gotten sick and you're faced
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  Speaker 4: with one spouse going in the nursing home, as long
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  Speaker 4: as the healthy spouse is living in that home and
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  Speaker 4: it is the primary residence.
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  Speaker 3: Of the healthy spouse.
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  Speaker 4: And it is located in Massachusetts, then it is considered
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  Speaker 4: non countable period hard stop. You do not need to
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  Speaker 4: show it as an asset, and it is non leanable,
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  Speaker 4: meaning doesn't matter how long your spouse stays in the
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  Speaker 4: nursing home, when that spouse passes away, assuming of course
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  Speaker 4: they pass away, in order that there will be no
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  Speaker 4: estate recovery for the state to get paid back. Now,
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  Speaker 4: you don't want to leave the house that way. So
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  Speaker 4: if that was the only asset and you got eligible
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  Speaker 4: for medicaid after making that, the house was probably owned jointly, right,
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  Speaker 4: don't leave it that way because if you die out
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  Speaker 4: of order, then that jointly held house would end up
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  Speaker 4: in the hands of these six spouse who's in the
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  Speaker 4: nursing home.
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  Speaker 3: And that's different. So we don't love that.
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  Speaker 4: So change it, put it in the healthy spouse's name
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  Speaker 4: on their own, and then of course do planning for
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  Speaker 4: the healthy spouse after eligibility. I promised you that we
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  Speaker 4: talk about it also for a single person. If you're single,
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  Speaker 4: it's a little different. Primary residents located in Massachusetts and
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  Speaker 4: you had been living there before you went to the
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  Speaker 4: nursing home, and you went directly to the nursing home
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  Speaker 4: from the house, then you need to check a box.
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  Speaker 4: Believe it or not that the house is someplace you
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  Speaker 4: intend to return home to, even though you may never
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  Speaker 4: be able to do that doesn't matter. It's a subjective intent.
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  Speaker 4: Then it would be non countable, provided, however, that it
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  Speaker 4: is not exceeding this dollar amount, which by the way,
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  Speaker 4: is changing under the new BBB Act, but for now
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  Speaker 4: it's approximately one million, thirty three thousand dollars in Massachusetts,
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  Speaker 4: and it seems to be index for inflation. If it
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  Speaker 4: exceeds that value, then you're denied Medicaid hard stop. If
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  Speaker 4: it doesn't, then you're gonna be non countable. So you
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  Speaker 4: can get on Medicaid, which is great, much lower rate,
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  Speaker 4: but it's leanable, so when you die there'll be a
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  Speaker 4: payback to the state, but at a much lower rate.
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  Speaker 4: So it's still a win better than right. In the
• 4:42
  Speaker 4: big check talk.
• 4:43
  Speaker 2: With Tod Lootski from the law firm of Kushiingan Dolan.
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  Speaker 2: We do still have room on the phone lines at
• 4:47
  Speaker 2: eight eight eight two zero five two two sixty three.
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  Speaker 2: So if you've got questions about estate planning. This is
• 4:54
  Speaker 2: your chance to ask them. That phone number again is
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  Speaker 2: eight eight eight to z zero five two two six three.
• 5:03
  Speaker 2: We're gonna take a quick break here, but when we
• 5:05
  Speaker 2: come back it's going to be right to your questions
• 5:07
  Speaker 2: with Todd again. We still have just a little bit
• 5:09
  Speaker 2: of room there, so get calling so you can ask
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  Speaker 2: Todd your questions. That number is eight eight eight to
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  Speaker 2: zero five two two sixty three. One more time eight
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  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
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  Speaker 1: at visit usvii dot com. Changes to medicaid occur almost
• 6:33
  Speaker 1: every year, and if you are not informed, your assets
• 6:35
  Speaker 1: could be at risk, especially if you or your spouse
• 6:38
  Speaker 1: need nursing home care. Cushing and Dolan are experts in
• 6:41
  Speaker 1: elder law, and their new guide is called Last Minute
• 6:43
  Speaker 1: Medicaid Eligibility. It'll help you understand the Medicaid process, which
• 6:47
  Speaker 1: is critically important if you're retired or getting close to retiring.
• 6:50
  Speaker 1: The guide has important information regarding numerous strategies that can
• 6:53
  Speaker 1: protect your assets from the nursing home. It could be
• 6:56
  Speaker 1: your primary home, a vacation home, or any rental property
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  Speaker 1: you may own. You've worked hard to achieve wealth, so
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  Speaker 1: don't take chances when it comes to protecting it. Get
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  Speaker 1: You're listening to ask Todd with Todd Lutsky on the
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• 9:51
  Speaker 2: All right, let's get right to your questions with Todd Lotsky.
• 9:54
  Speaker 2: First up, we got Gene in Medway. Gene, you're on
• 9:58
  Speaker 2: with Todd.
• 9:59
  Speaker 7: Hello, so thank you very much. Hi Todd. About ten
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  Speaker 7: years ago, you helped my husband and me set up
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  Speaker 7: two irrevocable trust We put our assets in those. My
• 10:13
  Speaker 7: husband died in twenty twenty and you helped me again
• 10:17
  Speaker 7: to do the legal work required, and my husband's trust
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  Speaker 7: then became remainders share. Yes, now we're selling the property
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  Speaker 7: in Virginia. Okay, it's been a rental for over forty
• 10:33
  Speaker 7: years and we're now so we're selling it. My son
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  Speaker 7: is the trustee, so he's handling everything for me. We
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  Speaker 7: have a buyer, we have a settlement date. I had
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  Speaker 7: never changed the deed to read that the trust was
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  Speaker 7: a remainder share. Does that matter.
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  Speaker 4: It's not going to prevent the sale. Let's put it
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  Speaker 4: that way. It's not going to prevent the sale. But
• 10:58
  Speaker 4: you know, it may or may not depending on the
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  Speaker 4: size of the estate, which I cannot answer without pulling
• 11:03
  Speaker 4: your file and looking at it. It may or may
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  Speaker 4: not matter. Have you ever rented this property over the
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  Speaker 4: years since twenty twenty.
• 11:10
  Speaker 7: It's still rented. Yes, okay, so the rental contract ends
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  Speaker 7: at the end of July.
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  Speaker 4: Yeah, so you know it, it's probably not going to
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  Speaker 4: be an issue number one. It's just that you might
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  Speaker 4: want to just retitle it now to the remainder share
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  Speaker 4: and then dad it out of the remainder share or
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  Speaker 4: sell it, you know, from the remainder share, so you
• 11:30
  Speaker 4: could deposit the money into the remainder share under a
• 11:33
  Speaker 4: new tax ID number, which if we opened up the
• 11:35
  Speaker 4: remainder share, we would have got you that new tax
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  Speaker 4: ID number long ago, because you've probably been receiving the
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  Speaker 4: rent and depositing it in a bank account in that trust.
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  Speaker 3: Right, correct. Yeah, so you're probably doing everything right. You
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  Speaker 3: have to understand.
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  Speaker 4: Without the file in front of me, it sounds like
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  Speaker 4: you're doing it right and it's definitely going to be
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  Speaker 4: able to be sold. But you might want to just
• 11:55
  Speaker 4: call in and just talk to me off air a
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  Speaker 4: little bit so I can have the details of exactly
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  Speaker 4: what you're doing in front of me. But it does
• 12:02
  Speaker 4: sound like it'll be okay, all right, So I hope
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  Speaker 4: that helps a little and give us a ring. Thanks
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  Speaker 4: for that call, and I'm glad to see and folks,
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  Speaker 4: that does show you how flexible these trusts are. They
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  Speaker 4: live on and they work really well. But lots of
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  Speaker 4: times people don't have time to do planning and they're
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  Speaker 4: stuck with this last minute situation where they enter a
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  Speaker 4: nursing home. That's what this guide is about this month.
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  Speaker 4: It's all about taking care of assets last minute. Whether
• 12:28
  Speaker 4: it's a house that we talked about earlier with Chuck,
• 12:31
  Speaker 4: or a piece of rental property or a vacation home.
• 12:34
  Speaker 4: They're treated differently life insurance four to oh one k's
• 12:38
  Speaker 4: bank accounts that are jointly held, whether a spouse or
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  Speaker 4: a non spouse, how are they treated versus investment accounts.
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  Speaker 4: All these answers are in the guide Last Minute countable
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  Speaker 4: non countable assets, and even how to avoid the five
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  Speaker 4: year waiting period for certain limited situations. My question, my
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  Speaker 4: comment to you is just don't write the check, folks.
• 13:01
  Speaker 4: If you're faced with nursing home care, get this guide.
• 13:04
  Speaker 4: Learn what you can do last minute to protect these
• 13:07
  Speaker 4: assets before you write the check. Eight six six eight
• 13:12
  Speaker 4: four eight five six nine nine or legal Exchange show
• 13:16
  Speaker 4: dot Com again eight six six eight, four, eight, five, six,
• 13:20
  Speaker 4: nine nine or Legal Exchange show dot com and you
• 13:23
  Speaker 4: can download the guide right there.
• 13:26
  Speaker 2: Todd, we get another one here for you. Let's go
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  Speaker 2: to Eric in Springfield. Eric, what's your question for Tom Lunsky?
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  Speaker 8: Good morning, guys. My mother is going to be giving
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  Speaker 8: me my wife twenty thousand dollars to help pay my
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  Speaker 8: son's school. Is she going to be on the hook
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  Speaker 8: if she goes in a nursing home for that five
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  Speaker 8: year look back?
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  Speaker 3: Yeah? Yeah.
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  Speaker 4: Anytime you make a gift, and this is what the
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  Speaker 4: rule really says, is any time you'd make a disqualifying transfer.
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  Speaker 4: Right now, What the heck is that a disqualifying transfer
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  Speaker 4: that creates a five year waiting period is anytime you
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  Speaker 4: take an asset like twenty grand that was available for
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  Speaker 4: the nursing home and put it somewhere where it's no
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  Speaker 4: longer available for the nursing home and not take back
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  Speaker 4: fair market value for what you gave away, you have
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  Speaker 4: a disqualifying transfer for five years. So, unfortunately the answer
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  Speaker 4: is yes, each and every time those gifts were made,
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  Speaker 4: they will be a five year waiting period associated with
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  Speaker 4: each gift. That does not mean that there's not last
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  Speaker 4: minute things we can do to fix that problem if
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  Speaker 4: you find her or she finds herself faced with nursing
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  Speaker 4: home care.
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  Speaker 3: So hopefully that that helped a little.
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  Speaker 2: Todd, I got another four you. Let's go to Dan
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  Speaker 2: in New Hampshire. Dan, you're on with Todd a Lutski.
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  Speaker 9: Thanks for taking the time, Todd. Todd, I've got to
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  Speaker 9: purchase going on of some property. It's going to be
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  Speaker 9: a cash deal. I currently have a revocable trust. Can
• 15:02
  Speaker 9: that go into that revocable trust? Or is there a
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  Speaker 9: process and it's a revocable trust of like two thousand
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  Speaker 9: and eight?
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  Speaker 4: How is this property owned currently? Is it in your name?
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  Speaker 4: Is it in your wife's name?
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  Speaker 9: Its purchase?
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  Speaker 6: Oh?
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  Speaker 4: I see, so you're gonna be buying the property. I'm
• 15:20
  Speaker 4: sorry I missed that. Okay, So you're going to be
• 15:22
  Speaker 4: buying the property. So you can do one of two things.
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  Speaker 4: If you've set it up right, you can make the purchase.
• 15:31
  Speaker 4: You can make the purchaser the revocable trust. Are you
• 15:34
  Speaker 4: borrowing money to buy this No, So you can make
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  Speaker 4: the purchaser on the p and s us trustee of
• 15:42
  Speaker 4: the revocable trust. In that way, the deed from the
• 15:45
  Speaker 4: seller will be deeded directly into the trust. Many people
• 15:49
  Speaker 4: don't do this, Many people don't remember or think about it.
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  Speaker 4: That's just an option. If you've not done it that way,
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  Speaker 4: you can simply close the deal and get the deed
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  Speaker 4: in your own name and then go to your estate
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  Speaker 4: planning attorney and have another deed prepared transferring the property
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  Speaker 4: from you to the revocable trust, and then it will
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  Speaker 4: be in there. So it's either two steps or one step.
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  Speaker 4: But you are absolutely right, it belongs in your revocable
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  Speaker 4: trust for sure, Todd.
• 16:18
  Speaker 2: I got one more for you here, we got Philip
• 16:20
  Speaker 2: on the Cape. Philip, what is your question for Todd Lutsky?
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  Speaker 10: Hi, Tod, I seven years ago you did an irrevocable
• 16:32
  Speaker 10: trust for me for the properties, and I'm asking now,
• 16:36
  Speaker 10: can I swap one of the properties in Massachusetts for
• 16:40
  Speaker 10: a property in Florida? And but it does it go
• 16:45
  Speaker 10: in the irrevocable trust?
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  Speaker 3: So when you say swap, I don't I don't understand that.
• 16:50
  Speaker 3: What does what does that mean? Swap?
• 16:51
  Speaker 4: Are they are these properties already in the trust? Or
• 16:54
  Speaker 4: are you buying selling and buying a new.
• 16:55
  Speaker 10: One, selling and buying a new one?
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  Speaker 9: Oh?
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  Speaker 4: Okay, so the answer is going to be a quick yes,
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  Speaker 4: but let me explain it. So, if it's in the
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  Speaker 4: trust already, which it is, and I seven years ago,
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  Speaker 4: By the way, that's very important for all the listeners
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  Speaker 4: in general. Seven years ago means that these properties are
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  Speaker 4: beyond that five year waiting period that we just heard
• 17:17
  Speaker 4: about when Eric asked the question. So these are already
• 17:23
  Speaker 4: protected from the nursing home. So now the question is
• 17:26
  Speaker 4: I want to sell my mass property and buy Florida property, perfectly, okay,
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  Speaker 4: So what will happen is you'll prepare a P and S,
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  Speaker 4: the trustee of the trust will sign it. Property will
• 17:36
  Speaker 4: then go out of the trust to the buyer, and
• 17:41
  Speaker 4: the buyer will cut a check to the trustee of
• 17:43
  Speaker 4: the trust and deposit it in the trust bank account.
• 17:47
  Speaker 4: Do not put it in your personal name even for
• 17:50
  Speaker 4: one second. It needs to go directly into the irrevocable trust.
• 17:57
  Speaker 4: Now the money's in the irrevocable trust that you're gonna use,
• 18:00
  Speaker 4: I suspect to buy this new Florida property. So now
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  Speaker 4: out will go the money to the seller, and in
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  Speaker 4: will come the new property you're buying into the trust.
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  Speaker 4: Again directly into the trust. If you do that transaction,
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  Speaker 4: there will be no resetting of the five year waiting
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  Speaker 4: period because remember, folks, nothing new went in. All we
• 18:29
  Speaker 4: did was change what was in there from one investment
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  Speaker 4: to another. So now you continue to have all these
• 18:37
  Speaker 4: assets fully protected from the nursing home. And since these
• 18:42
  Speaker 4: trusts are grant or trust for income tax purposes, your
• 18:46
  Speaker 4: capital gains tax liability is exactly the same as it
• 18:52
  Speaker 4: would have been had you sold the property not in
• 18:56
  Speaker 4: these trusts. Just to say, in case this is your
• 18:58
  Speaker 4: primary residence. What I'm mean by that is, if it's
• 19:01
  Speaker 4: your primary residence and you had used it for two
• 19:05
  Speaker 4: of the last five years, you'll get your two fifty
• 19:07
  Speaker 4: exclusion or if you're married, your five hundred thousand dollars exclusion.
• 19:13
  Speaker 4: So hope that helps and answers the question for you,
• 19:16
  Speaker 4: mister Watsky. As always, we appreciate you joining us today.
• 19:19
  Speaker 4: Thanks so much, always pleasure.
• 19:22
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