Should I get a life estate for my 76 year old mother?

I am working with an elder care lawyer who reccomended a Life estate for my mother. She has been living with my husband and me for six months. She has the beginnings of Alzheimer鈥檚 and can't do somethings for herself. We are in the process of selling her house. We are using the Life Estate to perserve what little money she has left, and make her medicade eligible when she can no long live with us and needs nursing home care. Our attorney said we can realistically shelter $150,000 by having an life estate, as long as she lives with us for one year. Upon her death the money would be divided between her heirs. I know very little about this topic and the infomation on the internet is very confusing.

I'm a little confused about your question... Are you buying something for your mother or are you acquiring your mother's stuff to keep it for her until her death?

Here's what a life estate is... it's a transfer of property for the life of that person. It means that when an owner transfers to (we'll call her) Sally, then Sally has all of the rights to the property for the duration of her life. She can use it how she wants, she can sell it, she can expand it (build on land or something like that), she can do anything that a normal owner of a piece of property would do. The only difference between a life estate and normal ownership is that when the life ends, the ownership ends, and it reverts back to the original owner, the person the property transfered from. That means that Sally could not pass that property in her will to her friends and family. At Sally's death, the original owner gets the property back and has all of the ownership rights again and that person can pass it through his will to whoever he chooses, or he can sell it or build on it or whatever.

If you were taking your mother's property for the duration of her life, you would have complete control over the property until her death, and when that day comes, her will would determine what happens to the property at that point.

If you were looking to buy your mother a house or something like that for the duration of her life, it would probably save you money because the original owner would get it back when the life ends and it you would not have to worry about what happens to it after her death because it would be the original owners again. The only problem would be if your mother could no longer use that property, but didn't die for years afterward... it would be like owning an apartment for 10 years and not being able to use it after the 5th year... you'd still pay for the other 5, but you wouldn't have much use for it: and you'd have a lot of difficulty selling it because people would want to own it for as long as they desired rather than for the 5 years remaining... and it's even harder with a life estate because we can't predict when anyone will die: we could buy the rest of the life estate tomorrow and the person dies in a week and so that's all we get to use the property for.

If you were giving something to your mother for a life estate... like if you were conveying something to her (we'll say it's a shirt because that should make it easy to understand)... she would have complete use of that shirt until she dies. She can wear it as often as she wants, wash it however she wants, she can decorate it, she can let others wear it, she can gift it to someone else... she can do anything, but when she dies, it is yours again and you have complete say over the shirt again... even if she tried to will it to someone else, it would be yours. or if she had gifted it to (we'll say) your sister while she was living, when she died, the sister would have to give it back to you because it would be yours again.

I hope that clears some things up for you. If your attorney said it would save you money, I'm sure you can trust him. I'm not really sure what sort of conveyance you're talking about, but your attorney is there to serve you. Estate planning lawyers really know what they're talking about, and if he says this is the best way to provide for your family, then he's probably right. If you estate plan correctly throughout a few generations, you can literally save millions of dollars... I did a big essay on it 2 summers ago.

If you'd like more information, you can clarify your question and I can do my best to explain more. If not, good luck in all of your decisions :)

Medicaid practice is different in every state. However, if your attorney is recommending a life estate for your mother it would seem the Medicaid program in your state would allow that type of asset to remain excluded from consideration of your mother's countable assets to determine Medicaid eligibility. This is a common practice in those states that allow this action. I used to practice elder law in a state that had a similar program. Is an excellent way to protect some of her estate. Without some protection it is possible that all her assets would be used before she was qualified. Make it happen. Good luck.