[WSBAPT] Life estate and Medicaid question

[Candace Wilkerson]

Hi Listmates,

I have a WA client who wants to leave a life estate for her CIR partner in her will, allowing him to live in the house titled in her name after her death as long as he wishes to do so (he is to pay the home's expenses, including the property taxes-mortgage is paid off).  She also wants to leave him a percentage of the house sale proceeds if he leaves the house before his death, at which time the house is to be sold.  The problem, as I see it, is that it's entirely likely that her partner will need to go on Medicaid for long-term care at some point around the time he might receive the life estate and/or the proceeds.  He is already in his late 60s.

Question 1:

Would a life estate be considered a possessory interest that might disqualify her partner from receiving Medicaid benefits?  It doesn't seem like it, since if he needs long-term care most likely he would be moving out of the house anyway.

Question 2:

If he is already over 65 years old, could she still create a third-party special needs trust for his benefit into which to place the house sale proceeds going to him?  And if so, could she simply make this provision in her will for the creation of the SNT if needed after her death?  I have worked with SNTs for people under 65, but wasn't clear on whether they could still be created by a third party for someone over that age.

Thanks in advance!
Candace



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