Medicaid planning and life estates

On Behalf of | Jul 7, 2020 | Estate Planning |

As people age, they may rely on Medicaid benefits to ensure they receive the care they need. However, eligibility for such assistance may come at the price of draining the assets they long worked for and hoped to pass on to their loved ones.

Through estate planning options, such as creating a life estate, people may ensure they meet the qualifications for assistance through the Medicaid program and protect the property they hope to pass down.

What is a life estate?

According to the New York State Department of Health, a life estate grants a limited interest in real property to the estate holder for the duration of his or her lifetime. While life estate holders may use, profit from and must maintain the property during their lives, they no longer retain full title to the real estate. For example, a man may place a generational home owned by him into a life estate for his daughter. During his life, the man could reside at and use the property and ownership would transfer to his daughter upon his death.

How do life estates affect Medicaid eligibility?

Life estates do not qualify as countable resources for the purposes of Medicaid eligibility. According to, when determining benefit eligibility, the state does not calculate the value of property transfers based on the home’s actual market value. Rather, it applies the New York State Department of Social Services’ tables to calculate a percentage of the fair market value in order to establish a transfer value. Additionally, transferring real estate through a life estate may also expedite the timeframe for when people gain eligibility to receive benefits.