Property Ownership is more than just paying the mortgage. It is the home where you and your family sleep at night. It is the rental property that provides a steady income. It is the speculative investment that may appreciate. It is the vacation spot that is your Oasis. Safeguarding real property requires organizational thinking.
For example, let’s say you own multiple properties in different states (a primary residence in New York, a rustic cabin in Vermont). Placing both properties in a Trust may avoid paying probate fees in New York and Ancillary Probate fees in Vermont if you pass away. Placing them in an Irrevocable Trust will also provide additional protection against creditors. Almost all of my clients know the Enhanced STAR exemption in New York for Seniors offers property tax savings. Less well known is the disability exemption. If an individual sole owner or one spouse of a jointly titled primary residence is disabled they should complete an RP-459-c Property Tax Reduction form to request property tax relief.
Besides transferring property to trusts, retaining a life estate in a transferred property may provide tax savings when the property is later sold for a large gain. This tax savings is known as a Stepped Up Basis. A life estate may also be useful when a disabled individual cannot or does not want to completely relinquish control over their property to an irrevocable trust but requires Medicaid for home care. If the Medicaid Applicant has a relatively high income that exceeds Medicaid income limits they can utilize a Pooled Supplemental Needs Trust to protect the excess income and allocate the Pooled Trust money to pay for the housing expenses.
A property can be exposed to a Medicaid lien when it is individually owned and that individual owner applies for Medicaid following a move to a nursing home or assisted living. This occurs when the Medicaid applicant continues to reside in the facility for a significant time period while still owning the property causing the property to be deemed an available resource. Measures such as an Intent to Return Home letter may provide short term protection, but without proper planning only a portion of the home’s equity may be preserved through a sale where there is no spouse or close relative caregiver to transfer the property.
Planning equals protection when it comes to property. Contact Sloan & Feller to schedule a consultation to find out more information.
