Should I Transfer my House to my Kids? Presented by Timothy L. Takacs Certified Elder Law Attorney Intro – Audience profile – attorney, bankers, financial advisors, real estate professionals, insurance professionals, farmers/land owners…… How do we save the home – TennCare recoupment of Medicaid debt at time of death from the estate of the Medicaid recipient – usually house is only asset left due to financial rules. House is exempt www.tn-elderlaw.com

Homestead Exemption 552K for single person No limit for married couple Includes all contiguous land

A deferred Countable Asset Estate Recovery – legal basis Federal statute 42 USC § 1396p State statute TCA § 71-5-116 No lien – No lien unless court judgment for recovery of benefits incorrectly paid. What we are really talking about is estate recovery. Apply to 55+ LTC, HCBS, hospital and RX The State of Tennessee is required under federal law to seek estate recovery as a condition to receive federal funds. We understand that Medicaid or TennCare is a mix of state and federal money. Each state is allowed to define estate – limited or expanded – in TN the definition of estate is limited to probate estate. Case law evolution

Protecting the home Estate Recovery limited to Probate Estate only for those that die on Medicaid. Probate avoidance options: Transfer to spouse Transfer to disabled or blind child Transfer to a trust Sell prior to death No lien. limited to probate estate only – so if the Medicaid recipient does not own any assets at the time of his/her death – other words there is nothing in his/her name TCA 71-5-116 c2 not receiving TennCare benefits at time of death. Probate avoidance options: courts are chipping away at definition of probate estate – Trigg – real property vesting in heirs immediately at death does not avoid TennCare recoupment claim. Gregory-14 months after death opened probate, TennCAre filed claim – notice requirement to TennCare overrides probate SOL. Actual notice – ie TennCare Release. Seems to reverse Tanner 2009 case ie 1 yr SOL. Really just adds condition by defining notice - Stidham (RLT) Transfer to spouse. Transfer to blind or disabled child (any age) out right or Transfer to trust fbo disabled person under age of 65, or disabled child but not a Revocable trust – no protection. And not an Irrevocable trust for own benefit or benefit of child not disabled - offers protection but initiates 5 yr clock - planning ahead- Sell it – generates funds for spend down – home ownership can be burdensome

Planning ahead 5 year rule Gift to children Pros and Cons Transfer to a Trust Life estate Proper planning in advance of illness – some crystal ball gazing required 5 year rule – Medicaid “looks back” prior 5 years from time of application to see what happened to assets. Transfer between spouses is permissible Giving to children – generally bad idea; creditors, divorces, unanticipated illnesses, bankruptcy etc Also have to consider tax basis consequences You can retain a life estate – that helps secure your interest and for now still escapes estate recovery - Use of trusts – irrevocable trust – major advantage is creditor protection and major disadvantage is inflexibility and loss of control.

Joint ownership with sibling Reverse mortgage Unique situations Caregiver child rule Minor child Hardship Joint ownership with sibling Reverse mortgage Caregiver child rule – 2 yrs lived with elder and prevents elder from going into a nursing facility. Proof of residence and statement from PCP re caregiving. If using caregiver child situation can transfer prior to death. Minor child – survived by a minor child <18. this exception has to be in place at time of death not application. Hardship – not well defined, could be viewed as temporary and duty to report changes. This exception has to be in place at time of death not application. Sibling – might fall under hardship – depends on equity interest Reverse mortgage – if a reverse mortgage has depleted equity in home – little or nothing for TennCare to recover from DHS did not inform of estate recovery If you did not transfer property prior to death but are survived by spouse or disabled child – no recovery during their life time.