As some of you might know, last Spring, Rhode Island attempted to pass legislation which would have ended the procedure by which many Rhode Islanders have been able to save their homes from loss for payment of nursing home expenses, without giving up control of their homes. This process is known by many different names, such as enhanced life estates, ladybirds, non vested or contingent (or conditional) remainder and other names. Regardless of the name, last Spring, we warned clients that because of proposed legislation, this technique might soon become unavailable. The proposed legislation did include “grandfathering” language, which said if your home was structured in the particular manner prior to the effective date of the law, it would continue to receive the protections unavailable to others after the passage of the law. This resulted in a number of people taking advantage of the short time that was then possibly remaining to consider whether such option was appropriate for them.
The good news, for most of our clients, is that the bill did not pass. Therefore, this technique to protect your home, yet retain full control, (subject to an equity cap of just over $500,000) remains available. However, I warned that here was a good likelihood that the State would reintroduce similar legislation in the 2014 legislative session, and that rather than wait for such changes to become imminent, it would be far better to give whatever consideration you believe is appropriate to the question sooner, rather than later.
Well, now that the 2014 legislative session has started, I can tell you that yes, indeed, the prognostication was correct and specifically it is proposed budget Article 27. As drafted, the proposal does contain “grandfathering language”. In particular, the proposal provides that any Rhode Island Medicaid applicant who has such an arrangement in place before the effective date “shall not be ineligible for medical assistance on the basis of such deed …”
Many of our clients have already availed themselves of this technique to save their home, or have been considering whether to implement this technique as regarding their home. If the proposed legislation were to pass, the homes of those clients with the proper arrangements in place would be safe. We would strongly recommend that you sit with your legal advisors to evaluate the advantages and disadvantages of using this approach. Be certain to allow yourself time to implement this solution, if in the end you find it desirable. For those readers with homes in Rhode Island, while the technique currently remains available, time may soon be running out.