Medicaid Planning Using Rental Property Strategies: A Radio Interview of Attorney John R. Frazier by Attorney Joseph Pippen
Attorney Joe Pippen:
Let’s go to attorney John Frazier, calling in with a Medicaid tip of the week. Hey John, how are you?
Attorney John Frazier:
Hey, Joe. How are you doing today?
Attorney Joe Pippen:
Good. John and I are creating a little series of Medicaid tips and some of them involve protecting your estate, protecting your legacy, and maximizing government benefits if you can. And John what’s the tip this week?
Attorney John Frazier:
Today, I’m going to talk about Medicaid Planning using rental property strategies. I think most people are aware that there’s a very limited asset limit for Medicaid. It’s a $2,000 asset limit for an unmarried Medicaid applicant. So let’s say that you have a Medicaid applicant with $500,000 in the bank. And so we would need to take about $499,000 and restructure and protect that money to bring it to less than $2,000. And one of the ways that we can do that here in Florida is that rental property is actually exempt for Medicaid purposes. And I think many people are not aware of this. So the way that it would work in an example like that is the power of attorney. There’s typically a power of attorney working on behalf of the Medicaid applicant. The power of attorney would go out and purchase a $499,000 rental property.
Let’s say that the rent was $1,500 a month. The state of Florida would allow the Medicaid applicant to escrow property taxes, property insurance, most of the expenses associated with the property, monthly maintenance fees. And so let’s say that those expenses were $750 a month. So those $750 per month would be escrowed. And the state of Florida would approve that Medicaid case. It’s very important when you have rental property, you would have to name beneficiaries for the property. So let’s say that there are two children, 50% beneficiaries. We would have to avoid probate under Florida law or else the state of Florida would recover against that property when the Medicaid recipient passes away.
And there are two primary ways to do that under Florida law, with a revocable living trust to avoid probate, or something called an enhanced life estate deed, also known as a lady bird deed. Critically important, if a probate is opened within two years of the Medicaid recipient passing away, the state of Florida would then recover against all the Medicaid benefits paid out. So in summary that’s how we can shelter large amounts of money for unmarried Medicaid applicants with the use of rental property.
Attorney Joe Pippen:
So basically the homestead is also exempt. So a person could have an exempt homestead property valuable up to what? $650,000 is it?
Attorney John Frazier:
Well, actually that is exempt up to $603,000 with the Deficit Reduction Act of 2005, which was adopted by Florida at the end of 2007. It started out with a half a million dollar cap. It’s up to $603,000 now. So that’s adjusted for inflation every year or so. So in theory that Medicaid applicant could have a million dollars worth of real estate and still be qualified for Medicaid, over a million dollars worth of real estate.
Attorney Joe Pippen:
Yeah. And then there’s other things too, John, like personal service contracts. So we’re creating a little series of these tips. If you would like more information about those, you can call or email John Frazier. Give us your contact information John.
Attorney John Frazier:
The office number is (727)586-3306, extension 104. My cell phone is (727)748-5374. And my email address is John@attypip.com.
Attorney Joe Pippen:
And John you offer, if you’ve got some listener has a loved one in a nursing home, you offer a free consult about the many things that can be done to preserve and protect assets and maximize government benefits and preserve the estate and do some good estate planning. All of that, most of that can be geared around everyone having a proper power of attorney with some Medicaid choices initialed. But John, I appreciate you calling in this morning and for the tip of the week, and we’ll continue doing this to give the listeners some ideas on how they can protect assets and maximize government benefits. So thank you very much, John.
Attorney John Frazier:
All right, thank you. Have a great Sunday.
Attorney Joe Pippen:
All right, you too.
Something you may need to be thinking about is what the Florida Supreme Court had to say about Medicaid Planning.
You also might want to review the other “Ask An Attorney” radio interviews to see if those topics interest you.