Purchase of Life Estate

A life estate is an interest in real property which gives the life estate holder the legal right to live in the property during one’s lifetime. This is considered advantageous for many of our clients who wish to remain in their homes without fear of being forced to leave had they transferred the real property outright (i.e., to their children).

Purchasing a life estate in another person’s property is a legitimate way of spending down and preserving one’s assets for the purpose of achieving Medicaid eligibility. Under the DRA, a purchase of a life estate will not create a penalty period provided that the individual resides in the property for a period of one year after the purchase. For example, a parent could purchase a life estate interest in the home of a child and live there for one year. Furthermore, the value of the life estate interest is zero for Medicaid eligibility purposes. In addition, Florida’s Medicaid rules permit an individual to be temporarily absent from the property for vacation or rehabilitation without jeopardizing the one year time frame.