Why Life Estate Isn’t Always the Best Choice in Massachusetts

Here at Jordan & White LLC, we understand that planning for the future is no easy task, particularly when it comes to the distribution of your property. You may have come across the concept of a life estate as a method of passing your property to your children, avoiding probate in the process. While this might initially sound appealing, a life estate can lead to more complications than it resolves, requiring costly measures to avoid serious losses.


Understanding What a Life Estate Is on the North Shore in MA

Essentially, a life estate is an interest in a property that exists for the duration of the holder’s life. It involves joint ownership, where the other owner—usually a child—receives the property’s remainder once the life estate holder passes away. Typically used for real estate, both the life estate holder and the remainderman own a valuable share. However, the value of this share is hard to determine as it hinges on the life estate holder’s lifespan.

The life tenant retains the right to use and maintain the property during their lifetime but cannot sell it without the remainderman’s agreement. Therefore, by setting up a life estate, you are giving away your property while retaining the right to use it for the rest of your life.


Implications of a Life Estate on Medicaid Eligibility in Massachusetts

One critical aspect to understand is that creating a life estate is essentially considered a gift under Medicaid rules. If you’re trying to qualify for Medicaid’s long-term care benefits and you establish a life estate within five years of applying, this could work against you. Furthermore, even after the five-year lookback period, the life estate portion is still considered an available asset, affecting your Medicaid eligibility. In the worst-case scenario, you might end up having to sell your property to pay for long-term care costs while waiting to establish Medicaid eligibility. Moreover, the life estate could be subject to estate recovery.


Considering the Best Options for Your Situation in Massachusetts

If you’re contemplating a life estate or already have one in place, it’s crucial to consult with a seasoned estate planning attorney, ideally someone well-versed in elder law and related issues. In certain cases, a life estate may work in your favor. However, without a thorough understanding of your unique circumstances, it could set you up for significant future losses. At Jordan & White LLC, we take the time to comprehend all the unique factors impacting your future needs. We understand how a multitude of federal and Massachusetts laws can affect your financial situation during your lifetime and beyond. Allow us to guide you in finding the right plan to protect your estate for yourself and future generations.


Get Expert Guidance at Jordan & White LLC

Navigating the complexities of estate planning doesn’t have to be a daunting task. At Jordan & White, LLC, your estate planning attorneys on the North Shore of Massachusetts, we are dedicated to helping you make well-informed decisions for your family’s long-term benefit. Avoid the complications that come with a life estate. Let us assist you in exploring more flexible and beneficial estate planning options. Give us a call today at 978-744-2811 or contact us online for comprehensive assistance with your estate planning needs. Your peace of mind is only a call or click away.