11 Dec Will I get the Senior Freeze if I have a life estate for my home?

Q. Does a person remain eligible for the Senior Freeze if she conveys her house to her children, but keeps a life estate reservation on the property?
— Senior

A. The key here is who remains the owner of the property.

Let’s take a step back.

The Senior Freeze program is somewhat of a misnomer, said Richard I. Miller, co-chair of the NJ Elder Law Center at Mandelbaum Salsburg in Roseland.

That’s because the benefit does not actually “freeze” property taxes, he said.

Instead, the program reimburses eligible individuals for any property tax increases incurred once an individual qualifies for the benefit.

“An eligible individual receives the difference between the property tax amount in the first year of eligibility — the “base year” — and the current year’s property tax amount, presuming it is higher,” he said.

An individual must have two consecutive years of eligibility before applying and satisfy the following requirements:

· The applicant or his/her spouse are at least 65 or receiving Social Security disability benefits;

· The applicant lived in New Jersey continuously since Dec. 31, 2007, or earlier, as a homeowner or renter;

· The applicant owned and lived in his/her home since Dec. 14, 2014 or earlier (and still owns and lives in the home);

· The applicant has paid the full amount of the property taxes due; and

· The applicant meets the income limit (currently $89,013).

Miller said the Senior Freeze program does not apply to vacation homes, second homes, rental properties, or properties that consist of more than four units.

He said it’s not unusual for seniors to transfer a home to a trust for a variety of purposes including, but not limited to, government benefit planning.

“Conveying one’s residence entirely may disqualify an applicant from the Senior Freeze program,” he said. “An applicant, however, is considered the owner of the property if he/she retains a life estate in the property. This right must be reflected in the deed or other controlling document memorializing the applicant’s right to occupy the subject property.”

While the retention of a life estate will enable an applicant to qualify for the Senior Freeze program provided the other eligibility qualifications are met, it could create collateral issues that jeopardize qualification for government benefits if the property is sold, Miller said.

For this reason, he said, it is important to consult a certified elder law attorney before transferring real estate or making substantial gifts.

Email your questions to .

This story was originally published on Dec. 11, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.