Imagine your estate plan is created and ready to go. You are protecting your home,…
A frequent question I get from clients who are considering putting their house into a Medicaid Asset Protection Trust is,“If my house is in the trust, can I sell it if I so choose in the future?”
First, let’s look at why someone would put their house into such a trust (the trust is irrevocable and the client cannot be the trustee of the trust). The reason to consider such a transfer would be to protect the value of the house in the event the person needs long-term care (especially in nursing home) in the future. Since there is a five year look back for nursing home Medicaid, the person who established the trust would need to stay out of a nursing home until the five year period has passed.
But who know what the future holds? The client wants to know: if she decides she wants (or needs) to sell the house in the future, can she sell it if it is in the trust?
The short answer is “No.” And the reason is that she no longer owns the house. The trust owns it. Therefore, she needs the trustee to agree to sell the house. The good news here is that in our Medicaid Asset Protection Trusts, we include a provision allowing the client to change the trustee if they choose to in the future.
For example, let’s say she named her son as the trustee and she decides the house needs to be sold. She informs her son, the trustee, and he does not agree to sell the house. She will have the power to fire him as trustee and put in another trustee who will agree to sell the house.
So even though the technical answer is “No, you can’t sell the house,” the practical answer is yes, since she will have control over the trustee.
It is important to note that in this scenario, the proceeds from the sale of the house are paid into the trust and NOT to the client. The trust can then use the proceeds to buy another house for the person or invest the proceeds with the guidance of the planning attorney and a qualified financial planner.
Russo Law Group, P.C.
100 Quentin Roosevelt Blvd., Suite 102
Garden City, NY 11530