Disturbing Massachusetts court case for seniors with life estates

A "life estate" is the right to live in a house or apartment for the rest of one's life even if that property is owned by someone else.  If a person sells or gives away a property but retains a life estate, lawyers believe the property no longer belongs to him legally even though he can still live there.

This is important in nursing home planning because MassHealth/Medicare will not pick up any of the costs until the individual is without any assets.  (i.e. destitute)  Using irrevocable trusts and life estates has been a popular way of preserving property in the family when one member needs lengthy care in a nursing home.

A Massachusetts court recently ruled that a house that had been placed in an irrevocable trust many years ago was still a "countable asset" for MassHealth/Medicare calculations and thus disqualified an elderly man who had retained a life estate in the property from financial support.  This court decision was contrary to previous ones and may be overturned, but it could pose a problem in long-term care planning.

Attorney Harry Margolis has analyzed this case.  You may read his report by clicking on this link: