Yo, Vinnie! Do I Transfer Da House?
I was in church the other day when two friends of mine cornered me and quietly asked me if – at their age – they should transfer the house to their children to try to protect it. He is 82 and she is 84. Both in good health for their ages, but they recognize that time is ticking…
He is also born and raised on the East Coast and for a reason I don’t know always calls me “Vinnie” (really, my names is “Stana” – how does he get Vinnie from that?). And it is always “Yo! Vinnie!”
So the conversation started, “Yo! Vinnie! Whaddaya tink? Should we put da house in da kids’ names yet?”
It is technically a question better answered by a lawyer, honestly. But since they owned long term care insurance that would pay for 5 years of care if/when either of them needed it, my informal advice was to not transfer the house….yet, and maybe never.
Long term care insurance is designed to protect your net-worth from the ravages of a long term care situation. So if you own a policy that pays for a substantive period of time, the house should not be vulnerable to being liquidated to pay for the cost of care. But this is a decision that should ALWAYS be made in light of your overall estate plan. So if you don’t have an estate plan or are not sure if you need one, we HIGHLY recommend you purchase this book to help you winnow thru the process of what you may or may not want to put in place: Handing Down the Kingdom. Then talk to a lawyer – a good one. We recommend you talk to someone who specializes in Medicaid and/or VA Planning so that you have a lawyer well versed in the current ins-and-outs of those complex government programs.
Each family’s situation is different – there can’t be a blanket answer on this. Here are a few things to consider below. But generally you are best served to get good legal counsel.
- Do you trust your family? If you put any assets in their name, those assets are now THEIRS. They can kick you out of the house, sell property or liquidate accounts once the assets are in their name.
- Do the family you are considering have high risk? Let’s say you do trust them, but the son you are considering is a medical doctor. This occupation has a high risk of law suit. Your assets may not be “safe” in his name because of this risk. There can be other risks: divorce, car accidents, death that leaves everything to a daughter-in-law with whom you don’t have a good relationship and on and on.
- Do you have a trust? If so what type is it? Revocable trust will to protect assets from liquidation to pay for care expenses. Only non-revocable trusts can do that (for now…who knows what the legislatures will do moving forward?)
- Do you own long term care insurance? If so, how many years of care will it cover? DO you have time to do estate planning and still cover the 5 year look-back provision?
- Do you care? Are you OK spending every last penny you have earned to care for yourself. If you are OK with that strategy, then the rest is a moot point.
If you are exploring estate planning with your family this is a great reference for long term care insurance, estate planning and how it all goes together
LINKS ABOUT BUYING LONG TERM CARE INSURANCE
- FAQ’s for Buying Long Term Care Insurance
- Why Do I Need A Long Term Care Insurance Policy?
- Buy Young
- Hybrid vs Traditional Long Term Care Policies
- How Do I Pick A Long Term Care Insurance Carrier?
- Consequences Ahead
- It Ain’t Your Grandma’s Medicaid
- Affordable Health Care Act vs Long Term Care Insurance
- Federal Veteran Benefits for Long Term Care
- Can your Portfolio Handle the Cost of Long Term Care?
- Glossary of Terms for Long Term Care