LIFE ESTATE IN HOME NOW SUBJECT TO MEDICAID COLLECTION RISK

Posted February 17, 2012 by banszog
Categories: Estate Planning

Tags: , , , ,

To protect the value of their home from being used to pay nursing home bills or subject to a claim by Medicaid, many people, often parents, have transferred title to their home to another person, often one or more children.  The transfer often includes the grantors retaining a “life estate,” the right to stay in their home for the rest of their lives.   Common benefits of retaining a life estate include: the homeowners remain eligible for basic STAR and other enhanced STAR school tax exemptions; the life estate is unaffected by a judgment against or bankruptcy filing by the child; and as owners of the life estate, the grantors cannot be evicted from the home.

The law in New York is that five (5) years after a parent’s transfer of home ownership to a child – even where a parent retained a “life estate” – Medicaid cannot recover any part of the home’s value in reimbursement for paid benefit.

This appears likely to change.  New York State has proposed regulations to enable it to recover the value of a retained life interest from a Medicaid benefit recipient.  This is true even if the life use was created more than five (5) years ago.

The value assigned to the retained life estate is expected to based on tables that state a percentage of the home’s fair market value (“FMV”).  For example, New York State has used the example of a person aged 76 dying in October 2011 with a retained life estate in a home with a $270,000 FMV.   The life estate is determined to be worth  $57,323.70 (life estate factor for a 76 year old is .21231 multiplied by the $270,000 FMV).   Medicaid would have a claim against the estate of the 76 year old decedent for $57,323.70.

Homeowners who have already transferred ownership and retained a life estate may wish to consider extinguishing the life estate, selling the life estate to whom they transferred the interest, or transferring the life interest to an irrevocable trust.  Each of these changes has possible negative consequences such as loss of the basic and enhanced STAR Exemptions, tax consequences (gift and possible loss of step-up in tax basis), and starting a new five-year Medicaid look-back period.  The age and physical and financial health of the client are considerations, as is the availability and attractiveness of long  term care insurance through the New York State Public/Private Partnership for Long Term Care.

The lawyers at Bansbach Zoghlin P.C. can help you decide what to do if you have a retained life interest and about other estate planning topics. If we can help, please let us know.

BANSBACH ZOGHLIN P.C.

http://www.BansZog.com

Tel:  (585) 227-2610

John M. Bansbach, Esq. jbansbach@banszog.com

Mindy L. Zoghlin, Esq.   mzoghlin@banszog.com

Gerald F. Wahl, Esq.     gwahl@banszog.com

The information contained in this article is not legal advice.  Bansbach Zoghlin P.C. provides legal advice to clients who retain it to provide services.

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banszog.wordpress.com: Government Incent

Posted January 10, 2012 by banszog
Categories: Uncategorized

banszog.wordpress.com: Government Incentives Lead to Private Investment in Green Buildings:           In early 2011, President O… http://wp.me/p23313-1l

Government Incentives Lead to Private Investment in Green Buildings

Posted January 10, 2012 by banszog
Categories: Uncategorized

Tags: , , , ,

          In early 2011, President Obama announced a plan to make commercial buildings twenty percent more energy efficient within ten years, known as the Better Buildings Initiative (“BBI”).[1]  The BBI proposed a series of initiatives designed to spur energy efficiency, including:

  • changing a tax deduction for commercial building upgrades to a tax credit;
  • increasing loan size limits for energy efficiency retrofit loans;
  • providing competitive grants to states and local municipalities to streamline standards and encourage upgrades; and
  •  challenging CEOs and university presidents to make their organizations more energy efficient.[2]

          Significant progress has been made since the announcement of BBI.  In June of 2011, the Obama Administration debuted the Better Buildings Challenge (“BBC”) to provide $500 million in private sector financing in energy efficiency projects, upgrading some 300 million square feet of space.[3]  This was later increased to a $4 billion investment from the public and private sectors- $2 billion dedicated to the energy upgrades of federal buildings and $2 billion committed by CEOs, mayors, universities and labor organizations for energy efficiency projects in 1.5 billion square feet of office, industrial, municipal, hospital, university and school building space.[4] 

          In addition to reducing businesses’ energy costs by nearly $40 billion over the next decade, the increased investment through the BBC is estimated to create tens of thousands of jobs in the construction industry.[5]  The energy savings and job creation has won the praise of both business and labor groups, and a number of CEOs, municipalities, universities and labor organizations have committed to the BBC. 

          With the energy savings so significant and the organizations participating in the BBC so diverse, the next ten years should be prove to be a renaissance in green building development and, hopefully, for many years beyond. 


[2] Id.

[4] Id.

Zoning Out Fast Food Restaurants

Posted January 4, 2012 by banszog
Categories: Environmental, Land Use

Tags: , , , , , ,

Towns typically use zoning laws to ensure that their communities develop in well-thought –out and perhaps even sustainable ways. Like uses are grouped together.  Buffers are placed between high density and low density uses.  Space is set aside for recreation, industry, natural resource extraction.  Uses that trigger special concerns, like adult book stores, are kept a minimum distance away from schools.

So how does fast food zoning fit into all this?  The Ontario County Supreme Court addressed this issue in Mead Square Commons LLC v. Village of Victor.  Mead Square Commons  bought commercial property on Main Street in the historic Village of Victor and proposed to replace the existing building with  a mixed use building featuring commercial uses downstairs and upscale residential upstairs.   One of the proposed downstairs tenants was a Subway restaurant.

The Village Zoning Code prohibits “Formula Fast Food Restaurants” in the Central Business District.  It defines a Formula Fast Food Restaurant as “any establishment, required by contract, franchise or other arrangements, to offer two or more of the following:

[i] Standardized menus, ingredients, food preparation and/or uniforms.

[ii] Prepared food in ready to consume state.

[iii] Food sold over the counter in disposable containers and wrappers.

[iv] Food selected from a limited menu.

[v] Food sold for immediate consumption on or off premises.

[vi] Where customer pays before eating.”

Mead Square Commons challenged the “Fast Food Ban” as illegal and unconstitutional under New York state law and the United States Constitution. Ontario County Supreme Court disagreed.

The Court first noted that the Fast Food Ban was a Village law entitled to a presumption of constitutionality. The Court did not articulate what compelling public purpose it advanced.   Reading between the lines, it appears the Court agreed with the Village’s claim that §170-13 had a legitimate purpose “to maintain the unique village character and vitality of the commercial district.”   However, the Court did not connect the dots as to how an absolute Fast Food Ban advanced this purpose. Many communities address this concern through the site plan review process.

The Court disagreed with Mead’s argument that the Fast Food Ban illegally zoned based on property ownership, not use because it found that the Fast Food Ban treated all Fast Food owners the same and was based on “neutral planning and zoning principles.”

Finally, the Court rejected Mead’s claim that the Fast Food Ban was an invalid over-regulation of business operation detail because such restaurants were prohibited, not micro-managed.

New York’s Land Bank Law – A Powerful Tool to Fight Blight

Posted December 24, 2011 by banszog
Categories: Environmental, Land Use

Tags: , , , , , , , ,

Many New York municipalities now have a powerful new tool to fight blight within their borders.  The recently enacted “Land Banks Act” lets governmental entities with the power to foreclose on tax liens create a not-for-profit corporation to facilitate the return of vacant, abandoned, and tax delinquent properties to productive use.  They cannot force the sale of property under NY’s eminent domain law.

The Land Bank Act was established under Article 16 of the New York State Not-for-Profit Corporation Law (the “Act”).  To be considered for approval as a Land Bank, the municipality must meet the following requirements:

1. The applicant must be a Foreclosing Government Unit (“FGU”).

2. The applicant must have adopted a local law, ordinance or resolution which specifies:

i. the name of the land bank;

ii. the number of members of the board of directors, which shall consist of an odd number of members, and shall be not less than five members nor more than eleven members;

iii. the initial individuals to serve as members of the board of directors, and the length of terms for which they are to serve;

iv. the articles of incorporation for the land bank, which shall be filed with the secretary of state in accordance with the provisions of the Act.

3. If two or more FGUs and/or municipalities agree to create a single land bank, they must execute an intergovernmental cooperation agreement which includes provisions for dissolution of the land bank.

4. If a school district participates in a land bank, it must execute an intergovernmental cooperation agreement with the FGU(s).

5. The composition and activities of the land bank’s board must comply with Section 1605 of the Act.

There are a couple of significant limitations:

  • Only ten land banks can be formed within the state.
  • The Land Bank must be approved the New York State Urban Development Corporation, dba Empire State Development.
  • March 30, 2012 is the deadline to submit an application for approval to form a land bank.