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John Elder
John Elder, Estate & Elder Law
Category: Estate Law
Satisfied Customers: 4631
Experience:  Over 14 years experience in Medicaid, Estates, Trust.
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My brother passed away Sept 2012 and left real property equally

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My brother passed away Sept 2012 and left real property equally to me & my siblings. The estate is still in probate so we have not inherited it yet. One sibling has intellectual disabilities & lived with my deceased brother in side-by-side houses on a 150-acre property. We have a potential buyer with the stipulation that my brother with disabilities continue to live in his separate house there. He has always lived alone, drives, and is 68. We help him with financial matters. The siblings intention is for our share to go to our disabled brother. If our disabled brother disclaims his share during probate, would that help out with government assistance for him if he doesn't own assets? The remaining siblings would split the proceeds & put them into a trust for him or can he put his own inheritance direct into a trust? What makes the most sense to protect his assets from unscrupulous people, keep him on the property, and maximize any potential government assistance?
Submitted: 1 year ago.
Category: Estate Law
Expert:  John Elder replied 1 year ago.
Welcome! Thank you for your question.

Unfortunately this is extremely complex because of any government benefits that your disabled brother receives. If your disabled brother receives SSI, Medicaid or Food Stamps then his disclaimer will cause him to be ineligible for one or all of those benefits for a period of time based on the amount of assets disclaimed.

Disclaimer is considered a gift of assets in this situation. When he gives assets away then SSI, Medicaid and food stamps penalize that gift as a transfer of assets.

The best way to protect the assets that he receives from the sale is to use a Special Needs Trust. The assets he receives can be transferred by your brother to the special needs trust. So long as it is done within a few days of receiving the money he will not be penalized for the transfer and will not loose his benefits. The money in the trust can be used by the trustee (a family member if he chooses) to provide for his extra needs beyond what government benefits provide. The only downside is that upon his death, any assets he places in this trust will have to go to pay Medicaid back for the care provided to him.

The money that you receive can go into a similar special needs trust. However, it should be different and separate because if you contribute your assets to a special needs trust for him then a Medicaid payback provision as discussed above is not required on this trust.

All of this is so complex then you are really going to need the assistance of an Elder and Special Needs Attorney in your area. You can find one at www.naela.org

I cannot provide you with legal advise. I have provided you with information about the law related to your question. My answer, and any information that you find online, should not take the place of having a consultation with a lawyer in your area to advise you regarding your specific issues.

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Thank you,

John

Customer: replied 1 year ago.

Isn't a special needs trust only for individuals age 65 & under? In our question, I specified he was 68.

Expert:  John Elder replied 1 year ago.
Leila,

I am sorry that I missed that number. Him being over 65 does not prevent you from setting up a special needs trust for him using your money.

With your brother's money, he can still set up a trust very similar to a special needs trust. This trust is called a "pooled trust." The transfer to the trust is still exempt, the assets in the trust can still be used to make his life better. However, the trustee of the trust has to be a specific type of non profit organization in Pennsylvania. When your brother dies the money in the trust will have to go to either Medicaid or the non profit.

The alternative is for your brother to receive the money and spend it within 10 days or loose benefits until the money can be spent. He can spend it on the home, personal property, preneed funeral or a car.
Expert:  John Elder replied 1 year ago.
I hope that I helped clear up your concerns. Please let me know if you need additional information. If I have been helpful, please rate me excellent.
Customer: replied 1 year ago.

Dear XXXXX - could you also address from the original question what is the best way to ensure that he stays on the property until the end of his life? I mentioned we had a buyer who will offer him a life estate at no charge. As far as protecting him to stay on the property and not getting in the way of any government benefits, what would you recommend - life estate, lease, etc. The buyer also wants owner-financing. Are there any situations where someone can kick my brother off the property?

Expert:  John Elder replied 1 year ago.

The life estate interest is probably the best option. He should retain an ownership interest in the property because that will not cause him benefits issues. All benefit programs will exclude ownership of his residence. If he were to rent back then the trust could not pay the rental fee and that would have to come out of his monthly check based on the rules for a pooled trust.

 

The owner financing could cause issues if it is not done correctly. The owner of the note and payee should be the trust for your brother's share. If the note is not owed by the trust then it is a countable asset and causes him to be ineligible for benefits.

 

Good questions.

 

John

Customer: replied 1 year ago.

One last thing - you have been wonderful helping me. With the life estate, are there any situations where my brother could be kicked off the property, such as buyer not paying his real estate or income taxes, bankruptcy, etc?

Expert:  John Elder replied 1 year ago.
If they as your brothers property is separated out then be is responsible for the real property taxes on his portion. He has to pay the tax for his life. The buyer would be responsible for the rest of the property taxes. Any other obligations of the buyer would have no bearing on your brother including income taxes by the buyer.
Customer: replied 1 year ago.

Does your first sentence mean if the property is legally subdivided by hiring a surveyor? We were trying to do this as a life estate.

Expert:  John Elder replied 1 year ago.
If it is not subdivided with a survey so that the buyer owns part outright and your brother just has a life estate in his house and lot then your brother is responsible for the upkeep (maintenance) and property tax on the whole property until his death.

I would think the best is you have to get a survey and subdivide.
Customer: replied 1 year ago.

Is my brother responsible for the maintenance & property taxes if the buyer puts it in the sales agreement that the BUYER will be responsible?


If the buyer ends up not paying his real estate taxes one year, can my brother get kicked off the property?

Expert:  John Elder replied 1 year ago.
Yes, even if the sales agreement says that the buyer is responsible for the taxes, the life estate holder still is responsible. Your brother can get kicked off the property if the real property taxes are not paid.
John Elder, Estate & Elder Law
Category: Estate Law
Satisfied Customers: 4631
Experience: Over 14 years experience in Medicaid, Estates, Trust.
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John Elder
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Over 14 years experience in Medicaid, Estates, Trust.