Ok, first the estate would need to be probated. Whoever is named in the will as the Executor would need to file a probate action in Probate Court. The Executor will be responsible for gathering all the assets of the estate, paying any bills, and then distributing the estate according to the terms of the will.

As part of that distribution, the Executor will get an order from the court transferring the house to your mother by will. Once all the debts are paid and the assets distributed, the Executor will file a notice with the court to close the estate.

After the estate has transferred the house to your mother, she can deed it to whomever she wants to by filing a Quitclaim deed transferring her interest to the stepchildren.

There is a 5 year "lookback" period that Medicaid has to look at any transfers. Medicaid will look back 5 years to see if the elderly person transferred any assets for less than fair market value, and if so, will deny Medicaid benefits for a period of time (the ineligibility period) based on the amount of assets transferred.

So if she gives the property within 5 years of going into nursing care, she will have to pay for the resonable value of the care for the time period.

This basic example illustrates the need for effective and early planning in order to allow the look-back period to expire before applying for Medicaid, so that there will be no ineligibility period.

After Archie's death, Edith gave her vacation home to her daughter Gloria. The market value of the home was $200,000 and the monthly cost of nursing home care was $5,000. Edith's ineligibility period is therefore 40 months ($200,000/$5,000 per month = 40 months). The ineligibility period begins to run when Edith applies for Medicaid and seeks long-term care assistance, and expires 40 months from that date. However, if she gives the house to Gloria more than five years before her application date, the look-back period would have expired, and there would be no penalty period imposed.

Another option for her would be to "disclaim" her interest in the will bequest if she needed nursing care right now. This means that she refuses any bequest and the asset would transfer as if she was already deceased. There are certain conditions that need to be met.

The renunciation of a gift or bequest-known for federal tax purposes as a "qualified disclaimer"--is described under § 2518, the following must happen:

1. The disclaimant puts the disclaimer in writing;
2. The disclaimer is received by the transferor of the interest, his legal representatives, or the holder of legal title to the property to which the interest relates no later than nine months after the date of transfer creating the interest (or nine months after the disclaimant reaches 21);
3. The disclaimant does not accept the interest or any of its benefits; and
4. As a result of the refusal, the interest passes without direction on the part of the disclaimant either to the spouse of the transferor/decedent or to a person other than the disclaimant.

If these four conditions are met, the disclaimant will be treated as if he never received the gift in the first place. The property interest will pass to whomever is specified, whether by instrument or operation of law, as the "taker in default" (an alternative donee), without such passing being considered a gift or transfer by the disclaimant. It is this that makes the disclaimer an attractive and most effective post-mortem estate-planning tool.

I would highly suggest talking to a Probate or Estate Planning attorney if you decide to go this route as you want to make sure it is done perfectly to avoid any problems later.

Thanks.

Matt

Expert:	Barrister
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Answered:	9/1/2009

Attorney

12 yrs practice, Realtor, Landlord 20+ yrs

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