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February 11th, 2010

Watch out for the Governor’s budget

Sanford Altman, Esq.

Question: I know that Governor Paterson’s budget contains spending cuts. Is there anything of specific concern to we seniors?


There are many areas of concern and, as you know, I have always spoken out against past attempts to balance government budgets on the back of seniors. As an elder law attorney, I work toward helping seniors retain their assets, especially their homes, in the event they need long term care such as nursing home in the future. These two goals meet on one of the Budget provisions which may undo the time honored method of protecting one's home - the deed to your children with a retained life estate.

Here is some background. When you have worked all your life and have accumulated life savings and have been fortunate enough to purchase a home, naturally you want to leave your home and other possessions to your children, not to the government or a nursing home. One of the methods of protecting your assets utilized by elder law attorneys is to create a plan which will enable you to become eligible for Medicaid while retaining at least a good portion of your assets for future generations. However, obtaining Medicaid is not enough since the government can recover every penny that Medicaid spends on you from your estate once you pass away. We have always been fortunate in New York since estate recovery has been limited to one’s Probate estate. This would include everything that passes through your Will by a Probate proceeding in the Court. However, there are items that pass without the necessity of probate, such as joint bank accounts and jointly owned real property, which have not been subject to estate recovery for Medicaid. The new Budget proposal would change this protection.

As those of you have been following my column may know, one of the ways that elder law attorneys have successfully protected seniors’ homes against both Medicaid liens while you are alive and Medicaid claims against your estate is by preparing deeds in which you retain the right to live in your home for life ("the life estate"), and transfer the ownership after you die to your children. With a deed with the retained life estate, immediately upon your death, your children become the owners of your home. (This works, of course, with others besides your children). Since the home was transferred directly, there is no need for Probate proceedings, and, therefore, no estate recovery by Medicaid. This is a wonderful tool and has helped countless seniors feel secure in their homes. It should be pointed out, that such deed transfers must be done early enough so as to not conflict with other Medicaid eligibility rules.

Governor Paterson’s proposed Budget would end this protection by opening up estate recovery from Medicaid to "any other property in which the individual had any legal title or interest at the time of death, including jointly held property, retained life estates, and interests in trust to the extent of such interests". Whether or not the hundreds or even thousands of deeds with retained life estates already in place will be safe is still up in the air.

This tactic has often been proposed before our State Legislature but has always been defeated. It has always been believed that this small part of the American Dream, a person’s home, should be protected from the government. This has been viewed as fair and simply the right thing to do. Now that the State is experiencing the effect of tough economic times, it is more likely than ever before that the Legislatures may turn their back on this principal. In some cases, buried as it is in a large budget bill, they may not even know that it is there. We should not allow this to happen. If you agree, I urge you to contact your Assemblymen and State Senators and express your view. Please remember that they run for office every two years and seniors are large enough numbers to be a powerful elective force. So please do not feel that they will not listen to you. Seniors deserve this protection!

Sanford R. Altman is an Elder Law Attorney with a firm in Orange, Dutchess and Sullivan Counties, a member attorney of the AARP Legal Services Network, a member of National Academy of Elder Law Attorneys (NAELA), and frequently writes on Elder Law issues for local publications. He may be reached at the following number (845) 778-2121. Please note that while this column is intended to give general legal information, everyone’s circumstances differ. This column is not a substitute for obtaining legal advice directly from an attorney which will address your particular circumstances.

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