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Frankenstein Deeds: The Creature that could save your Real Property

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It’s Alive! Reborn in the lab of a mad law scientist is a creation that will shock and awe. It’s the Frankenstein Deed—a combination of two types of deeds to make one incredible estate planning tool. The Franky Deed is a combination of the tenants in common and joint tenants with right of survivorship to protect property and help qualify for benefits to pay for Long-term Care.

Tenants in Common (TIC)

If you own property along with someone else other than your spouse, you will hold the property as tenants in common. As tenants in common, you have an undivided interest in the property. This means that you may own a one-half or one-third interest in the property, but you still have an equal right to use and occupy the property. This arrangement of ownership can break down to just about any proportion e.g., a common set up is one owner holding ninety-nine percent and the other owner holding one percent.

When one of the tenants passes, their property interest will pass to their heirs. Their heirs will assume their place as a co-tenant. This method of ownership does not avoid probate and the interest/title in the property must pass through the estate to vest in the heirs.

Joint Tenants with Rights of Survivorship (JTROS)

JTROS is very similar to tenants in common. A very important distinction, however, is the right of survivorship. Specifically, the difference is what happens to the property interest when one of the owners dies. Let’s say that A and B own a home as JTROS. When A dies, her property interest will immediately go to B. B will be the sole owner of the property immediately upon A’s death.

Another difference is that each owner must have an equal share in the property, which can make planning difficult.

This method of ownership avoids probate. The interest in the land does not pass through the probate estate of A because her interest immediately vested in B when A died through the right of survivorship.

The Frankenstein Deed: Tenants in Common with Right of Survivorship

How Does Medicaid Treat this Deed?

Under the current rules for Long-Term Care Medicaid, a Medicaid applicant can own real property, other than their home, as long as they own less than one hundred percent of the property. In other words, they can own other property as long as it’s set up as tenants as a common interest.

Thus, a property that normally would count against an individual is exempt if an owner gives as little as one percent of the property to a loved one.

The avoidance of probate, because of the right of survivorship, will also allow you to avoid the Medicaid Estate Recovery. Thus, you can keep the property, qualify for benefits, and the property remains protected from being taken.

Brenton S. Begley

Attorney at Law

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