usufruct terminated?

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  • #3600

    keith777
    Participant

    If a man dies, has no spouse or kids but 2 siblings and 2 surviving parents. Had a house that was paid off. According to Louisiana civil law, the property goes to the siblings as naked owners and the surviving parents have usufruct. If both parties agree to sell the property with the money going to the siblings, then 3 years down the line the parents go on medicaid – can medicaid bring up the fact that the surviving parents had usufruct but chose to sell (and not give money or ask for money back)?
    Isn’t usufruct terminated once the property is sold if both parties agreed on selling?

  • #3601

    keith777
    Participant

    can a usufruct be terminated if all parties agree?

  • #3602

    Lex
    Keymaster

    You have two questions, the easy one first:

    1) Yes, a usufruct can terminate if the parties agree. It is probable that a usufructuary can terminate his or her usufruct unilaterally.

    2) Medicaid is sort of a world of it’s own. First, a usufruct can follow to the proceeds of a sale depending on the terms of the usufruct. In any event, if the parties agreed to distribute the money it could be considered a gift of the usufruct value at that point. Usufruct value is based on actuarial tables and we usually get the usufruct value from the old Louisiana inheritance tax form that has all the calculations for this.

    There is no telling what way this would go in the eyes of the Medicaid folks. Regardless, there is a five year look-back period that would make the issue moot once that period goes by. Depending on the age of the parents, if the value of the usufruct was not that much then it is entirely possible that the value would be “spent down” during the look-back period. For example, if the value was $20,000 and the cost of care would have been $2,000 per month, then Medicaid could look at the “gift” having been spent down after 10 months.

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