Transferring Your Home
Transferring Your Home in New York
Serving Clients in New York City and the New York Metropolitan Area
As we age, we are advised to protect our assets for our individual and family’s needs. Because your home is one of the most important assets in your estate, careful consideration and special thought is required before you consider gifting or transferring your home. In order to protect your real estate, it’s helpful to understand how your property may be titled. Following are brief descriptions of various forms of property ownership:
Type of Tenancy or Ownership
When individuals own property, the relationship between owners is called “tenancy.” Deciding on the type of tenancy can determine how and whether the property will pass freely at the time of the owner’s death. Tenancy can come in the following forms:
- Sole Ownership – The property is owned by a single individual who has total lifetime control of the property and there are no survivor rights. The passing of title at the death of the owner will follow the Last Will or, if there is no Will, the state’s inheritance laws. Property held under sole tenancy will often need to go through probate to pass title at the death of the owner.
- Tenancy in Common allows co-owners the greatest flexibility. Each owner (“Tenant”) has an interest in the property and is free to transfer this interest during life by a Deed or through a Will. Tenants can have different ownership interests and may sever the relationship with the other co-tenants by conveying their interest to another party. This new third party becomes a “Tenant in Common” with the previous owner/s. Tenants in common deeds have no survivorship rights and passing of title is governed by each owner’s separate estate plan.
- Joint Tenancy with rights of survivorship (JWROS) occurs when the co-owners must have equal ownership interests in a property.
If one of the joint tenants dies, that owner’s interest immediately ceases to exist and the remaining joint tenants own the entire property. The
disadvantage to both Joint Tenancy and Tenancy in Common is that creditors can attach the tenant’s share of the property to satisfy debt.
This type of ownership is not governed by your Last Will. The property passes by death to the surviving owner/s.
- Tenancy by the Entirety is only available to married couples and is based on the societal value of protecting the family. One
member of the couple is unable to convey interest on his or her own – they must act together. Also, upon the death of one spouse, the interest in the property automatically passes to the other spouse. The creditors of one spouse are unable to attach the property or force its sale to recover debt unless both spouses consent. This is the most protective way a couple can hold property. A disadvantage, if one of the spouse is incapacitated their share cannot be transferred without their active participation.
Medicaid Eligibility at Your Home
Medicaid, the government benefit program which often provides long-term care to medical coverage, has special rules covering the availability of homestead property as an asset to cover care. Under Medicaid’s rules, a home is an exempt asset as long as the applicant or the spouse resides in the premises and the equity value is not greater than the operable Medicaid homestead cap at the time of application. A homestead will not be attached to cover a Medicaid bill or claim while exempt.
The transfer of a home can be exempt from the normal five-year look-back period resulting in ineligibility if the property is transferred to one of the following:
- A spouse
- A minor (under 21), or a disabled child of the individual
- A sibling with an equity interest in the home who resided at the home at least one year before a Medicaid applicant applies for
- A son or daughter of the individual who resided in the home for at least two years, prior to Medicaid application institutionalization, and
provided care to the applicant
A house or houses with a value in excess of the Medicaid home equity cap can result in ineligibility for Medicaid coverage. Consult with the Grimaldi Yeung Law Group to implement options to reduce the house equity value and to protect your home from creditors or Medicaid claims.
Any transfer of a large asset, such as a valuable home, has tax implications. When considering a house transfer, you must be aware that a capital gains tax, income tax, and gift tax possible liabilities. Prior to a house transfer, tax issues must all be fully addressed and reviewed with an attorney such as the Elder Law experts from our firm and your financial advisor or accountant.
Before transferring your home to your children or other heirs, or placing the title into a Trust, you one should consider:
- The pros and cons of retaining a Life Estate and/or retaining an interest to allow you to continue to have a license to occupy the home
- The impact on any real estate taxes, such as the New York State STAR, senior citizen, or Veteran’s exemptions – retaining a life estate will preserve these exemptions.
- Planning early to avoid rushed and forced decisions, which will help you involve your heirs in the decisions
Understand that gifting your home outright to your children could make the property subject to your children’s divorce, debts, disability claims, and other circumstances in their life which may expose your home and property to liens of your children’s creditors and impact your ability to safely continue to reside there.
A transfer to another will trigger a possible penalty or waiting period for Medicaid benefits, except for the exempt categories described above. Proceed with caution before gifting your home as it has tax, Medicaid, and family considerations. Contact Grimaldi Yeung Law Group by clicking here before making such an important decision involving your home.