As they grow older, many people begin to worry about the possibility of their health declining and how that may affect their finances. You may be among those with concerns about your future. Nursing home care can be expensive and threaten to wipe out the estates of those who don't take precautions to protect their assets. In fact, it is possible that, if you move to a nursing care facility, you may have to sell your home to qualify for Medicaid benefits.
You may fear that, if you move to a nursing home, you will have nothing to leave your children at the end of your life. However, there are ways to protect your home and remain in it as long as possible. One of those options is a life estate.
How does a life estate work?
A life estate holds the deed to the property in reserve for your heirs. You keep control of the property, meaning you are still responsible for its upkeep, taxes and insurance. The deed passes on to your heirs, known as remaindermen, upon your death without waiting for probate. The benefits of using a life estate include:
- You continue to live in your house as long as you are able.
- The remaindermen automatically receive full ownership of the house upon your death.
- A life estate protects your home from any claims from nursing homes or Medicaid.
- Using a life estate may protect your heirs from capital-gains tax because the value of the house will be adjusted at the time of your death.
Of course, after executing a life estate deed, you won't be able to sell your house without consent from the remaindermen. Additionally, your home would count as an asset for any remaindermen who face bankruptcy or divorce. It will be important to consider these drawbacks when making your decision.
Taking advantage of every opportunity
Probate administration is simply the law's way of distributing your assets in an orderly and fair way. It can be quite complicated, even for a simple estate, unless you take care to prepare. There are many options for you to plan your estate in a way that will create a minimum burden for your family, and perhaps a life estate is appropriate for you.
Discussing your alternatives with a Louisiana estate planning attorney will provide you with answers to your questions and sound advice for moving forward with your plan. An attorney will help you with the necessary documents suitable for your needs and guide you and your loved ones through the process. Having a plan in place well before the need arises will offer you peace of mind for the future.