Rethink Giving Everything Away for Probate and Medicaid

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At first glance, adding your children’s names to the titles of your assets might seem like a straightforward solution. It’s a path that many find appealing for its apparent simplicity and clarity. However, this approach can lead to unforeseen complications and challenges when trying to avoid probate and Medicaid.

Consider the story of Louise Friar, who decided to transfer her certificates of deposit and the title of her house to her sons, maintaining a life estate for herself in the home. She intended to sidestep probate and potentially qualify for Medicaid more easily. While her goals might have been partially met, she overlooked several critical outcomes.

Medicaid

Following the transfers, Louise found herself financially vulnerable, having relinquished all her liquid assets. This shift from financial independence to dependency on her sons was a source of regret and discomfort for her. When she sought to reverse these transfers, one son complied, but the other, J.D., did not. This disagreement led to protracted legal battles and strained family relationships.

The implications of adding a child to the title of your property extend beyond a loss of control. For instance, if that child faces legal judgments or liabilities like Darrell hypothetically encountering a lawsuit from an automobile accident, the assets transferred to him could be targeted by creditors. Moreover, if Darrell were married, his spouse could assert rights over the property, complicating matters further in the event of a divorce.

Fortunately, more prudent strategies are available for those wishing to avoid probate or engage in Medicaid planning. Establishing a revocable living trust, for example, can achieve probate avoidance without the downsides experienced by Louise. Trusts offer a protective layer against creditors and marital disputes, ensuring that your assets remain safeguarded for the intended beneficiaries.

This cautionary tale underscores that asset transfer decisions should not be made lightly or seen as straightforward. Consulting with an experienced estate planning attorney can provide crucial guidance, helping you to navigate these complex issues effectively and avoid the pitfalls that come with seemingly simple solutions.

From the desk of Attorney Brandon McGee, McGee Law Firm

Brandon McGee
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