If you have assets, such as equity in your home, it could negatively affect your eligibility for Medicaid and mean higher probate costs after you die. You may think that transferring your home to your children can provide the necessary protection.
However, this may not work out as you hope it would, and it can also have disadvantages. So, even though it can have significant advantages, it is not right for every situation.
Once the transfer takes place, you no longer have control over the property. If you have a life estate deed now and decide you want to make changes to your estate or sell your property later, it can be more difficult to achieve this. It can also mean inconvenience for your children if you change your mind later and decide to sell the property.
To avoid issues like these, you should carefully consider whether a life estate deed is a reasonable option beforehand.
A life estate deed offers benefits to both you and your heirs. The latter receive an income tax advantage and can save on probate costs after your death because the transfer of the deed to your house will already have taken effect. Therefore, your home will not be a part of your probate property.
You may want to stay in your home for the rest of your life, but that may not be possible. If you do have to go into a nursing home, your equity in the property will not affect your Medicaid eligibility. On the other hand, if you are able to stay in your home, you retain ownership of it as long as you are still alive.