Risks of Transferring Your Home Ownership or Adding a Child to the Deed

Medicaid Nursing Home Planning in Yonkers, NY

Why Shouldn't I Just Transfer My Home to My Child to Protect It?

For many middle-class families in Yonkers and throughout the Hudson Valley, the family home is not just a residence but the cornerstone of family wealth, often the most significant asset to pass onto the next generation. At Parker Law Firm, we understand the instinct to protect this valuable asset from the costs of nursing home or long-term care by simply transferring ownership to a child. However, this well-intentioned strategy carries several significant risks and complexities, especially concerning Medicaid eligibility and asset protection in New York State.

How Does the Transfer of Home Ownership Impact Medicaid Eligibility?

Medicaid’s lookback period is a critical factor to consider. Any transfer of assets, including property, within five years before applying for Medicaid to cover long-term care can trigger penalties. These penalties could delay eligibility for Medicaid, potentially costing thousands in out-of-pocket care expenses.

Tax Implications to Consider

Loss of the Senior Star Exemption During a Deed Transfer

One specific consideration for Yonkers residents is the preservation of the Senior Star Exemption as part of the School Tax Relief (STAR) program, a vital property tax relief available to eligible senior homeowners. If the home transfer to a child is not structured correctly, you could lose this exemption, significantly increasing your property taxes. In the following video, Yonkers Elder Law Attorney David Parker emphasizes the necessity of drafting the deed with specific language that allows the parent to retain this benefit.

Gift Taxes Apply If You Add Your Child’s Name to a Deed 

When you add your child’s name to your home deed, the IRS considers this a gift. Depending on the home's value, you might have to file a gift tax return, potentially leading to substantial tax implications. It’s crucial to consult with an experienced elder law attorney to navigate these tax rules effectively. Read more about how taxes impact real estate ownership and Medicaid in our article, Tax Basis - Homeownership and Medicaid Can Be Problem.

Disadvantages of Co-Ownership

Co-ownership can complicate decision-making about the property. If your child disagrees with your decisions about selling, renting, or mortgaging the home, their consent will be necessary, which can lead to conflicts or legal challenges. Moreover, if your child encounters financial problems, such as divorce, debt, or bankruptcy, your Hudson Valley home could become vulnerable to their creditors.

Protecting Your Home from Nursing Home Costs

Working with Elder Law Attorney David Parker provides you with a strategic advantage. Attorney Parker can help you develop a tailored strategy that not only aims to protect your home from being consumed by long-term care costs but also ensures that you or your loved one in a nursing home receives the care they deserve. He understands the complexities of Medicaid rules and tax implications in New York and offers guidance that respects both legal frameworks and family dynamics. Read more in our article, Paying for Nursing Home Costs: A Guide to Medicare, Medicaid and More.

Why Choose Parker Law Firm for Your Medicaid Nursing Home Planning?

At Parker Law Firm, we are committed to helping our clients in Yonkers and the Hudson Valley navigate the challenging landscape of elder law and Medicaid planning. We ensure that every action taken is in your best interest, preserving your assets while maintaining eligibility for critical benefits like Medicaid. Book a call with us today to discuss how we can help protect your family’s future while ensuring the highest level of care for your loved ones.

Key Takeaways: 

1. Understanding Medicaid Lookback: Transferring your home to a child can affect Medicaid eligibility due to the five-year lookback period. This period scrutinizes asset transfers made up to five years prior to applying for Medicaid, potentially leading to penalties and delayed coverage.
2. Tax Consequences of Property Transfer: Adding a child’s name to your home deed is viewed as a gift by the IRS, possibly requiring a gift tax return. These tax implications must be carefully managed to avoid unexpected financial burdens.
3. Retaining the Senior Star Exemption: Incorrectly transferring your home can result in the loss of valuable property tax exemptions like the Senior Star Exemption. Proper legal language in the deed transfer is essential to maintain these benefits.
4. Risks of Co-Ownership: Sharing ownership of your home with a child can complicate future decisions about the property, from selling to borrowing against its value. It also exposes your home to potential claims from your child's creditors or legal issues.
5. Seek Professional Guidance: Consulting with an experienced elder law attorney like David Parker is crucial. He can help craft a strategic plan that protects your assets, ensures eligibility for Medicaid, and addresses all legal, tax, and personal implications.