Protecting the Cottage

Are you lucky enough to own that special place, whether it’s a camper in Maine or a house on the Cape, where you, your children and your grandchildren can go to enjoy some time away together during our all-too-brief New England summers? If so, you most likely would like to leave that vacation home to your family to enjoy for generations to come, without worrying about having to sell it  in order to qualify for MassHealth, either because you need nursing home care or because you need a lot of care at home in order stay out of a nursing home.

If you are married and you need to qualify for MassHealth, you can usually transfer your assets to your spouse. Since your home is not a countable asset, it will be safe.  If your spouse has more than the allowable maximum (now $126,420) in other assets, your spouse can simply use the extra assets to buy an annuity.  Unlike your main residence, a vacation home may be considered a countable asset, and therefore would need to be sold with the proceeds used to buy that annuity. Of course, if you and your family love that vacation home, that sale is exactly what you are trying to avoid.

Your vacation home, then, is the one asset you’d need to protect ahead of time. Typically, you would do that by conveying a so-called “remainder interest” in that home to your children, or to one or more of them as trustee of an irrevocable trust for their benefit.  You would retain a “life estate” in the property, allowing you control of the home while you are still alive.  Five years after you have transferred this reminder interest, it will no longer be countable or lienable if you later need to qualify for MassHealth.  By taking this precaution, you are also avoiding probate.  At the moment of your death, your life estate will expire, leaving your children (or the trust for their benefit) as the owner of the summer home without going through the probate process.  Also, when you die, the tax basis of the property will jump to its date of death value, so that if your children do end up needing to sell the summer home, any capital gains tax will be eliminated or reduced substantially.

So while your kids are visiting this summer, talk with them about protecting this family treasure. You may also want to talk with your lawyer about it. In the meantime, kick back and enjoy the summer!

If you need more information on this, you can contact me at (508) 860-1470 or You can also view my 10-minute Q&A Fireside Chats on Frank and Mary’s YouTube Channel, and find more in-depth commentary on legal issues on Mirick O’Connell’s Trusts and Estates blog, “Getting All Your ‘Docs’ in a Row.”


About Arthur Bergeron

Art has been practicing law in Massachusetts for over 30 years. He focuses his practice on elder law, estate planning, probate and trust administration, and land use matters. Art counsels senior citizens and their loved ones regarding elder law and special needs planning, asset protection and Medicaid planning. He works with individuals in all areas of estate planning, including wills, trusts, durable powers of attorney, health care proxies and living wills.
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