There is a lot of confusing information out there! The digital age we live in gives us all access to a wealth of information...and often misinformation! One example of this in our practice has to do with protecting real estate for our clients as part of our Estate Planning process. Understandably, a person's home is often the most valuable asset they have! The fact is, real estate is one of those things you should strive to plan ahead for to protect for the best possible outcome, due to the 5 year lookback period for long-term care Medicaid and the nursing home in Virginia.
Depending on your unique situation, an experienced elder law attorney familar with your situation may recommend specific solutions such as a Life Estate Gift Deed, or in some instances, a Trust. Lately, we are often asked more and more about TOD (Transfer On Death) deeds, as an option as well, but make no mistake - these tools are NOT all created equal! So, what are some differences between a Life Estate Gift Deed and TOD (Transfer On Death) deed anyway?
The quick version is that while both TOD and Life Estate Gift deeds avoid the Probate/Estate Administration process, the key thing to keep in mind here is what your goal is and how they both interact with regards to long-term care and the nursing home, creditors, and control. For those worried about the nursing home and Medicaid Planning/Asset Protection concerns and the rising cost of care, it is VERY important to understand the differences between the two types of deeds!
- A TOD (Transfer On Death) deed retains full ownership for the grantor until death. As a result, it offers absolutely NO protection against nursing home costs! If you need nursing home care in the future, the home remains a countable asset, due to its revocable nature at any time prior to your passing. A TOD deed gives a false sense of security, akin to simply putting a bequest of your home in your will. Putting property either in a TOD deed or a will does nothing to protect your home for your heirs from potential clawback by Medicaid later on. In addition, because a TOD deed does not transfer any interest until you pass away, the property remains vulnerable to your creditors and lawsuits during your lifetime!
- A Life Estate Gift Deed, transfers the "remainder or future interest" to your beneficiaries (like your children) while you keep the right to live there. Nobody can kick you out of your own home, and nothing leaves your name during your lifetime. Under Virginia Medicaid rules, this transfer starts the 5-year clock on Medicaid's penalty/look-back period once the deed is recorded. Once 5 years have passed, the home is fully protected from the possibility of being seized to pay for nursing home care. They can't touch it!
Every situation is different and cookie-cutter or 'one-size-fits-most' solutions are not the answer! The details of your situation are important factors to consider with proper guidance. It pays to reach out to schedule a consult with our attorney to determine the RIGHT solution for your needs both now and long-term: We are here to help!