Being Added as a Co- Owner of my Parents' House?
The example I gave was for NJ.Oh, and the monthly allowance is 35 not 30 dollars.
Well, $35 vs $30 makes a huge difference! Not!
My takeaway from this is that we are a seriously backward country when it comes to medical coverage especially for our elderly. Yikes!
We have gotten well off track here. The real issue is how assets can be controlled and distributed by one sibling, but still owned by the other, if I have it right. The parents want both children to inherit. I really don't know the answer, but I am curious. Please share what you are willing to share after you have something in place, and good luck. I don't envy you.
Actually, at least the elderly have Medicare, but long-term care coverage is definitely deficient.
In general, we are THE most backward first world country (and behind a lot of third world contries also) when it comes to healthcare for the masses. (Yes, we have some pretty high-tech medicine, but much of it is only available to relatively few of us. BTW, is there such a thing as a "second world" country?)
FilmCarp said:
We have gotten well off track here. The real issue is how assets can be controlled and distributed by one sibling, but still owned by the other, if I have it right. The parents want both children to inherit. I really don't know the answer, but I am curious. Please share what you are willing to share after you have something in place, and good luck. I don't envy you.
No, actually. That is not the issue. They have no interest in making sure that the assets are left to 2 siblings equally. There is no intent to let second sibling ever own anything. All assests will pass to first sibling fully, legally and 100%. Outside of the legal will , I understand my parents intent and wishes but it is up to me 100% to do as I see fit.
The issue right now is 1) protecting the assets from financial devastation if long-term care was ever needed so that the assets could still provide some help to survivors. And 2) making the assets as easily accessible as possible to first sibling so that she wouldn't have to wait for probate or other legal hurdles to inherit.
And thesecond world was the Soviet Block. The term is obsolete
Chill, Max. They've got a lawyer and I will contact my own regarding the house issue. Some other good suggestions and food for thought here which is why I asked. Thanks!
@marylago yes, you are right medicare is for the elderly and medicaid is for the poor, but sadly, medicare doesn't pay for nursing home care. At 11k or more per month, many of our elderly do not have the means to pay for their care long term and have to eventually rely on medicaid. In order to get medicaid, they have to use up or spend down all their assets. Also almost all of any of their income must go to their care. Especially for a generation that grew up during the great depression and worked hard their entire lives, this can be a very bitter pill to swallow.
@conanrob, you don't have to do anything. Check with your lawyer and make sure that it won't impact you, but I am doubtful that it will. The only way it would have impacted my brothers and I is if we had sold the house before mom died, we would have had to pay capital gains tax. The lawyers tell me now that she has passed, we don't need to do this.
Since your mom is concerned about this, you have an opening to have these conversations. I thought my mom had it all taken care of and had done a good job of estate planning. Then once she was so ill, I found out she had not protected as much as she had hoped. You don't have to do anything, but if your mom is making these plans, and you are able to be involved, it could be a big help to all of you in the future for you to ask some of these hard questions and also know the answers to the questions. For example you say they have good insurance. My mom had great medical insurance for acute illnesses. This did not pay for nursing home care. Will your parents' medical insurance pay for nursing home care if the time should come?
I am not trying to be bossy, just hoping someone else can be helped by my experiece. having to figure all this out at an emotionally devastating time was no something I would wish on anyone.
marylago said:
Isn't Medicaid for people that have no financial means, and Medicare for older folk? http://www.medicaremadeclear.com/about/medicare-vs-medicaid/
It's a separate issue. MediCARE does not pay for nursing homes. Thus, an elderly person could end up relieving himself of his entire life savings -- even a million dollars or more -- to pay for long-term care. This is what people are trying to avoid by signing their assets over to their children so that the elderly person would be eligible for MediCAID in the event long-term care is needed.
I guess my confusion is do what ? If my parents told me they had no long term care insurance or they had great long term care insurance, my action is the same- nothing. They have the insurance they have, they have saved what they have - what exactly would I or they "do" at this point? They have few assets and little disposable cash so other than doing the best with the savings they have , continuing to save as they have, and what they are trying to do now ( protect the main asset) there isn't any action here that I see unless I am missing something.
conandrob240 said:
I have no clue what any if this Medicaid stuff means not do I hope to ever have to. We aren't at that point in any way ( thank God).
Well, as I understand it, this "Medicaid stuff" is one of the things your parents are planning for. They do not want their main asset -- the house -- to be used to pay for nursing home expenses. Thus, they must divest themselves of it at least five years before they might need a nursing home. In addition, they want you to be the sole owner after their deaths. They do not want your sister to inherit any part of the house. Your parents are, in addition, trusting you to spend part of the proceeds of the house for the needs of your sister's children.
As for you question about what happens to your deceased parent's assets if you predecease your husband -- they become part of your estate and pas to your husband. They are no longer your parents' assets, so your sister does not have any claim to them.
conandrob240 said:
I guess my confusion is do what ? If my parents told me they had no long term care insurance or they had great long term care insurance, my action is the same- nothing. They have the insurance they have, they have saved what they have - what exactly would I or they "do" at this point? They have few assets and little disposable cash so other than doing the best with the savings they have , continuing to save as they have, and what they are trying to do now ( protect the main asset) there isn't any action here that I see unless I am missing something.
Their only asset is their house. Let's say your dad (g-d forbid) dies next year. Your mom decides to sell the house, the proceeds of which are $200k, and downsize to a one-bedroom condo in Long Beach, LI that costs $75k. What's she going to do with the remaining $125k? If she does not want it to all go to pay for long-term care eventually (because she wants you to spend it on your sister's kids), then she has to gift that money to you at least five years before the future event of going into long-term care. Then, having no assets, she will qualify for Medicaid. Oh, and that one-bedroom condo in Long Beach would have to be in your name too.
That's the basics. So what you have to do now is have this conversation with them.
Okay, so I will have that conversation. "Hey Mom if dad dies next year and you want to move to a smaller place leaving you with cash, you need to start to gift it away each year if you don't want it to count as an "asset" for Medicaid. Yes, dear- that's exactly what I am already trying to do so I know.
Seriously, though- it sounds like we have already had a lot of the conversations you are suggesting. I know exactly what my mother wants done with her money. She knows exactly what she wants done with her money. My dad is in alignment and knows exactly what he wants done with the money. I know exactly what they want in terms of medical care (meaning end of life issues) and I know where/how they want to be buried. They created a will that allows them to deliver the $ into the hands of the person they want to do their bidding. I understand that it is my role to follow their wishes. They understand that they want to protect their assets (however modest) from the government in case of any future uncovered medical needs like long-term care. They are doing what they need/want to do to protect those assets. If there were additional assets in the future, they know they need to think about divesting of them. I am already (for many years) co-owners on all of their savings/banking accounts with the exception of their retirement fund where that wasn't possible (or desired- can't remember which but there was a reason I am not included on that).
I realize (and they realize) their plan involves my husband in my death and he actually knows exactly what they want done as well. But, to the valid points here, I should also have a will so that he doesn't have to be the owner of this burden. My will can revert any of my parents $/assets back to my family in the form of a trust for my nephews and niece if I pre-decease my husband. I will definitely talk to a lawyer about that part. But, from my parents' perspective, I think we have a good handle on this.
conandrob240 said:
I know exactly what my mother wants done with her money. She knows exactly what she wants done with her money. My dad is in alignment and knows exactly what he wants done with the money. . . .But, from my parents' perspective, I think we have a good handle on this.
Okay, then. You're all set.
shoshannah said:
conandrob240 said:
I know exactly what my mother wants done with her money. She knows exactly what she wants done with her money. My dad is in alignment and knows exactly what he wants done with the money. . . .But, from my parents' perspective, I think we have a good handle on this.
Okay, then. You're all set.
Well, maybe not all set but have covered many of these bases, thanks. The main question/concern was around pros/cons of the house transfer but I am all set with that after speaking to an attorney this morning. The downsides are few and mostly on her end- giving up ownership.
conandrob240 said:The main question/concern was around pros/cons of the house transfer but I am all set with that after speaking to an attorney this morning. The downsides are few and mostly on her end- giving up ownership.
Did your attorney mention anything about capital gains tax consequences on the sale of the property if you are gifted an interest in the home?
Steve, yes. That is the only downside I could see on my end. Since it is not a high value house, I think that part is acceptable to my parents. Any other thoughts on that?
Are you one? The person I just spoke to said he felt, given the circumstances, this was a sound approach. Maybe I need a second opinion? Sounds like it.
Home purchased for $40,000 or so. Value roughly $400000. If I understand, it is as if I bought the 1/2 of the house for $20,000, making me liable for $180,000 in capital gains? So somewhere around. $25-35k? Am I understanding what he said right? As opposed to the govt taking the house worth $400k in event of long- term care need.
No, I'm not an elder law or tax attorney. You really need to get some good advice on this. Even if it is only $25-35k, that'll end up being a pretty decent chunk out of the gains that you/your parents are relying upon. Spend the few hundred dollars to get real advice. The advice (other than to seek advice from a professional) is worth what you're paying for it.
conandrob240 said:
As opposed to the govt taking the house worth $400k in event of long- term care need.
The government does not take anybody's house. The asset is used to pay for the long-term care. Paid to the long-term care provider (nursing home, etc.). Once those assets are spent down, public monies, via Medicaid, are available to pay for the long-term care.
I do understand. Just a way to phrase it. Essentially the house gets used to pay for the long -term care before the government will pay for it.
oneofthegirls said:
mammabear said:
Holy obnoxiousness...
Was there something you meant to add to the conversation?
I think she added exactly what she wanted to.
I live in MW and work for a boutique Elder Law firm in NYC. If you would like to speak to someone here regarding your parents' long term life and estate planning, please feel free to call me on cell 201-926-8787. Don't underestimate the importance of seeking legal counsel from a good elder law attorney before you do anything; mistakes in this area can be emotionally and financially costly. Tara
The not allowing your sister to control anything part is easier....you don't need to be on the deed...you just need power of attorney.
even if being on the deed protects the asset....there is a look back period so people can't just give things away to hide them..if she needs medicaid services in the near future...it essentially invalidates you being on the deed....
I don't know if NJ and NY medicaid rules are the same....but i think its 5 years in NJ now
if she is worried about regular hospital bills and has medicare and is at least 62...she can get a medicare supplement plan....if she can't afford it, she can take out a reverse mortgage to cover the cost.
if the house is willed to you (assuming your mom is mentally able to change a will)....your sister cannot successfully contest that.
I don't know that even 50% of the asset would be protected..consult a lawyer before assuming that.
even if the house is in your name...you could still put it up for collateral/sell it for a nursing home..if need be
mom's property can be in trust under you....and then any inheritance your sister might get could also be held in trust.
if it is her wish that you use the inheritance to care for the grandkids...its better to actually will the money to the grandkids in the form of a trust for them...and not directly to you.
I do realize this can happen and I am sorry it happened to you. One thing that makes this a little different is that both parents are still alive, youngish and healthy.
I am having trouble understanding wharf exactly I am supposed to be doing to prepare for Medicaid gaps? They are the ones doing the planning. I trust they are taking the steps they need to take.
While much of this is "food for thought", it is their business to plan for as they see fit. If I see something I think will hurt it help them, I'll speak up but no one is looking for me to do their long-term planning.
They simply want one of their steps to be adding me to the deed on their house and I wanted to know any pitfalls to this ( for me or for them).