Wait a minute, is it as promised?
On July 1, 2013, the Virginia General Assembly passed the same legislation that California’s legislators just passed which they claimed was “a new, non-probate method for conveying real property upon death through a revocable transfer upon death deed."
Far from new, this method of transferring your home to your loved ones is modeled on the Uniform Law Commissions’ “Uniform Real Property Transfer on Death Act” enacted by 14 states. Like most ideas however, no matter how well intentioned, is not a one size fits all strategy. The California bill, authored by Assemblyman Mike Gatto, was touted as “a simple way for people to transfer their home (or one-to-four-unit investment properties) upon their death – without having to pay for a living trust or having it all sorted out in probate court.” That would be true if probate were all we needed to worry about when it comes to estate planning but unfortunately, it’s just not that simple.
The law is intended to benefit most those senior citizens of modest means whose estate consists primarily (or even exclusively) of the family home. What the bill overlooks is long term care planning for these seniors. After all, saving the legacy you’ve worked a life time to acquire is not good public policy. The problem for a senior with a need for long term care is that the deed is not effective until you die. The Medicaid requirement is that you must first spend-down the equity in your home before you qualify for that program. There is a better estate plan for those who want to successfully transfer their home to their loved ones without loss of equity due to a long term care need while avoiding probate and eliminating capital gains taxes for the inheritor. Call us for your complimentary elder law consultation at 757-259-0707.
Reference: San Diego Times-Union (January 18, 2016) "State ushers in refreshingly modest law"