Legal Question in Elder Law in Massachusetts

LIfe Estate Deed

My husband and sister-in-law were deeded their parents house in 1998. It was sold to them for $1.00, but with a life estate for their parents. My father-in-law passed away in August and my mother-in-law has since been put into a nursing home. She is on medicare/mass health and is being fully covered for the nursing home expenses at this time as she does not own the house. My husband has power of atty for his mother.

We now want to sell the house since she is no longer living in the house. We were told that medicare may have a stake in the house because of the life estate, is this true? My sister in law is fighting us and supposedly checked with a lawyer and said that they would get 52% of the sale of the house. The transfer of deed was over 10 years ago and my mother in law is incapable of ever returning to the home.

Please advise. Thank you.

Asked on 3/19/08, 4:14 pm

2 Answers from Attorneys

Re: LIfe Estate Deed

Your sister-in-law is correct. Depending upon the age of your mother-in-law, your mother-in-law may be entitled to 52% of the net proceeds from the sale. The life estate calculation is dependent upon a 110 year life, so even at 70 years or more, there is substantial interest left in the value of the life estate.

If your mother is receiving Medicaid, they are entitled to be reimbursed out her portion of the proceeds.

Depending on the situation, it may be better for you to rent the home.

If you would like to meet and see if we can come up with a better solution for you, please feel free to contact me without obligation

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Answered on 3/19/08, 4:38 pm

Alexandra Golden Golden Law Center

Re: LIfe Estate Deed

You should NOT sell the property without first consulting with an elder law attorney.

A life estate means that the property will pass outside of probate. The life estate was created so long ago that the gift is not countable for MassHealth purposes. Under current law, MassHealth cannot seek reimbursement from assets which pass outside of probate. On the other hand, if your husband sells the property during your mother's lifetime, she will receive a substantial amount of the proceeds and be disqualified from coverage until she has reduced her assets to below $2,000.

Since your sister-in-law has a remainder interest in the property, it cannot be sold unless either she agrees to the sale or the court orders that the property be "partitioned" -- a messy, time-consuming and expensive process. There are also tax implications for your husband and his sister if the house is sold that need to be examined.

Please feel free to contact me if you wish to discuss this matter further.

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Answered on 3/19/08, 4:48 pm

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