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Dear Mr. Premack: My father left me land and a
house in a Life Estate. He kept the right to live there till his death and
any proceeds the land may incur such as lease money. He is not living on
the property and I want to clear shrubs and trees from the land and use it
for cattle. Can he stop me from using the land? – BM
From your
description, it sounds like your father used a traditional Life Estate
arrangement. Under it, Texas Law says that he retains all control, use and
enjoyment of the property so long as he is alive. Texas Law further states
that at the moment of his death, all those rights are transferred to you
instantly. But so long as he is alive, Texas Law states your rights are
extremely limited: you can veto the sale of the property and you are
entitled to ownership upon his death. You have no right to enter the
property without his consent. You have no right to clear shrubs and trees
without his consent. You have no right to run cattle on the land without
his consent. Thus, your best plan may be to seek his consent, and perhaps
lease the land from him under an agreement that terminates at the moment
of his passing.
Dear Mr. Premack: My parents
left me their property via a Lady Bird Deed, but my sister lives in the
house and has for over a year, and she has not worked in years nor cared
for my parents. I am the only one on the Lady Bird Deed, but I understand
if my mom was receiving Medicaid the state of Texas will go after the
property. The Elder Law Attorney we saw in 2008 told us this would protect
the property from estate recovery. Now I read on-line that the State of
Texas will come after the property to recover Medicaid funds spent on my
mom anyway and the Lady Bird Deed does not protect the property from
having to be sold with the money being returned to the state UNLESS a son
or daughter has been living at the home for over a year with no income. Is
this true? – ADC
A Lady Bird Deed is an expanded form of Life
Estate. Your mother has all the rights that exist under a traditional Life
Estate arrangement as well as the right to sell the property and to cancel
your right to inherit during her lifetime. This arrangement is used under
the Medicaid system to avoid MERP (the Medicaid Estate Recovery Program)
because the arrangement avoids transfer penalties under the Medicaid
rules.
MERP itself has limited legal rights under Texas law. They
may bring a claim to recover money spent by the state on a Medicaid
patient (like your mother), but that claim may only be brought in probate
court after the patient dies when his or her Will is admitted to probate.
The claim is paid from the deceased patient’s remaining assets, which may
require that the house be sold so the claim can be satisfied.
A
Lady Bird Deed transfers title to the house without reference to a Will
and without probate. Thus, the state has no forum in which to bring a
claim, and the deceased patient legally does not own the house after the
moment of death. Whatever you read on-line was incorrect; the State of
Texas still reluctantly honors Lady Bird Deeds as a MERP avoidance
technique because the law limits the State’s options. Your reference to “a
son or daughter” living in the house for over a year with no income is an
inaccurate mash-up of other legal ways to avoid MERP. Check chapter 3 of
my book The Senior Texan Legal Guide (edition 5.1, at amazon.com) for
those exceptions.
Dear Mr. Premack: After nearly
forty years, I am recently divorced. Part of the divorce agreement was
that my (now) ex-husband has to pay support to me. Does that support have
to be included in my income? VF
I would suggest you ask your
accountant, but Federal law states that routine support payments received
pursuant to a divorce decree are taxable to the recipient, and deductible
by the payor. Further, there are Federal tax rules that require the
payments to be in cash or its equivalent, that you and your ex- cannot
reside in the same household, and that you cannot file joint returns. On
the other hand, assets transferred pursuant to the divorce (like bank
account balances or real estate title) are not included in your taxable
income.
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