For many families in Indiana their family farm serves not only as the most valuable asset they have, but as a strong connection to their heritage. The desire to keep this asset within the family is one of the most important estate planning goals. The challenges and expenses of paying for necessary long-term nursing care requires sophisticated planning strategies to ensure the security of this unique asset.
Typical annual expenses for individuals residing in a nursing home can easily exceed $80,000, a high price to pay for a family already going through so many changes. For families that want to protect their family farm from the increasing costs of long-term care, one of the most effective planning strategies is the use of a Limited Liability Company (LLC).
The LLC is created and fully owned by those who will inherit the farm ground. Mom and Dad deed the property to the LLC, while retaining a “life estate” interest. This retained life estate interest means that nothing changes during the life of Mom and Dad, they will continue to receive all the income and pay all the expenses associated with the property. The LLC becomes an operating entity for the farm after both parents have passed away.
After the remainder interest is transferred to the LLC, the current Medicaid rules dictate that a sixty-month period of Medicaid ineligibility will begin. If circumstances change during this period, the LLC can return the farm to Mom and Dad and eliminate any penalty caused by the transfer. After the sixty months have passed, the family farm is exempt from Medicaid Estate Recovery. The children can be sure they will inherit the farm with favorable tax implications upon Mom and Dad’s passing.
The LLC provides several benefits for the family outside of the nursing home protection, including liability protections and buy-out provisions. With the assistance of your Farm Elder Law Attorney at the Schwarz Law Office, Indiana families can rest easy knowing that their family farm can remain within the family for generations to come.#
If you have questions or concerns please contact our Farm Elder Law attorney, Natalie Boocher; she is ready and able to help you tackle these delicate issues.