Is property with a lifetime right considered an asset?

Oh I wanted to add, sometimes the usafruct is way for Dad to say to his kids from marriage # 1, "I'm leaving everything to you & Sissy" but without telling them that, Yes, they inheirit everything, but Brittanny - his 3rd wife which is younger than them - has a usufruct on the property(s) for her lifetime. LOL!

Abby - could the lifetime right be a "usufruct"? Usafruct is often used when you want to have others inherit land or other property or asset but the spouse or other interested party has the right to continue to use the property (an asset of the heirs) for their lifetime as they wish.

Usafruct is often done when there is a second or third spouse, and hubby wants to leave the asset to his kids from marriage # 1 but wants wife from later marriages to be able to continue to use their home, or beach house or vacation condo as she did when he was alive. The property is not an asset for the wife as she doesn't own it but it is an asset for the kids as they are the owners.

You can also do a usufruct from parents to kids, so say you want your kids to inherit property upon your death but the surviving spouse who is the birth parent of the kids retains a usafruct on the property. On usafructs there usually is some sort of trust or savings account set up to pay for things for the property and usually tied into an investment portfolio to fund the trust so there is money to pay for taxes, maintenance, fees, etc. Not all states allow for usufruct - Louisiana does and alot of folks will use LA as a residence for probate so they can do this (even though the vacation home or condo is in FL or Alabama gulf coast or elsewhere)

Hmmm...this is definitely a good question and one for a lawyer from your state to research for you. Sounds like perhaps your parents put their home into a life estate, but a lawyer is definitely the best person to look into this.

Here's what I can tell you about life estate planning in my own personal experience, maybe it will give you some insight. In 2005, my parents and my sibling and I met with eldercare attorney's and drew up a life estate for the home they own. The whole purpose of setting this meeting up was to protect their home as an asset so that if they ever needed long term care placement, the house could not be considered an asset. Back then, the Medicaid look back period was still 3 years and I knew that the Bush administration was about to change the law from 3 years to 5 for the look back. My parent's were in their early 70's. Anyway, the lawyers told us that putting the house into a life estate was the way to protect it as an asset. It was drawn up so that essentially the house was in my name and my brother's jointly, but that technically my parent's were still considered the owner's of the house. My mom passed away in 2008 and we met again with the attorney's; I was told then that essentially my father was considered to have a percentage of ownership of the house, and every year that passes, he would have a smaller percentage. Last year, he moved to assisted living and converted to Medicaid in November. The house was not considered an asset and he was approved for the Medicaid benefit with minimal hassle. However, the case worker tells me that if/when I sell the house, they have to be notified. Depending on whatever my dad's percentage of the value of the house is figured to be at the time of the sale, Medicaid may have to readjust his "budget" and some of the house money can be considered income for my dad. Basically, if his portion is over a certain amount, he may have to spend that amount down again and then go back on Medicaid for assisted living. The case worker did say that its rare that it comes to that, but nonetheless, they have to be notified to make that determination.

I find it interesting that even with putting the property in a life estate, it technically is something that can count as an asset for my dad...I asked the case worker about that too. She says that Medicaid laws are becoming stricter, and while I have no problem with my dad having to potentially spend down money from the eventual sale of the house (after all, its his money--he paid the mortgage for 30 years), it was a bit of a surprise to me. I figured that once we passed the look back period a few years ago, the house would officially be off the table. But apparently, it isn't completely.

I live in NY state too, so this may not be applicable in other places. But I thought I'd share my experience and hope that it helps a little with the original question!

This is a tough question. I am accustomed to hearing of life tenancy when there has been a step parent, but this may actually be a good way to pass real estate down. The life right in the property does have a value, since the house could be rented out during her lifetime to provide income (unless a condition is that she has to reside in the house to maintain the right). I don't know how the value would be calculated if she did need to qualify for Medicaid. I wonder if you would be given the option to buy her interest in the house or if she would have to have a penalty period for the value. This is a good question for the experts, because it may be seen as a way to avoid recovery if the surviving parent is not well when the first parent dies and there are no other resources.