So my mom is going to pass soon and has no life insurance. Our idea is to have her move in with my sister and sign the house over to me and I will get a loan out against the house to pay off the siblings and put aside money for the funeral meanwhile I fix it up and rent it out. Any advice on how to make this happen?
We really want to get it done before she dies so we already have $ for her funeral.
Thanks.
I had 2 elder law attorneys give me bogus advice.
I believe that the lady bird transfer is for a live in caregiver and with mom having been in a facility that changes everything.
You guys are obviously going to do what you want, but you should back check all your information before you proceed.
Quite frankly, it's situations like this that are draining the system and your MIL benefitted from taxpayers and her assets should pay as much of that back as possible. You may need the system one day only to find there is no help available. Just saying.
You can give extra to the gov if you want. Or they can roll back the new tax breaks on wealthy people passing down their mansions and so forth.
Since this property will not be your "primary residence", but instead an Investment Property, this is a whole different ballgame. Please check with an Estate attorney. A LadyBird deed may or may not be possible.
If a LadyBird deed is not in the picture and Mom signs over a Quit Claim Deed, since you plan to use said property as an Investment Property, the IRS rules are different. More paperwork to turn in at tax time.
When you do sell the house later down the road, the basis used to figure Capital Gain will be the house value back in 1995 when your Mom inherited the house.
To keep from paying higher Capital Gain taxes right away for Investment Properties when you eventually sell, you can use what is called a 1031 rollover which means you need to put the profits into another Investment Property. I know, this is getting quite squirrely, as a 1031 is very complex.
Thus, get all your ducks in a row. You have a lot of questions to ask the experts before you do anything.
I would also like to point out for potential readers that there is no lein placed on any property from Medicare in MI until after death and probate court. So a ladybird deed still works until they change the law there.
I would contact her social worker at Medicaid and ask them. They can help direct you and keep things legal. It is the best way to go, because they will find out everything anyway.
Wonder if I can apply for undue hardship prior to her passing?.. We really need some $ put aside for her funeral expenses.
One major draw back of placing the house in your name now is that any profits made on the house when the time comes to sell, the basis for capital gain income tax will go all the way back to when your Mom first bought the house.
If you inherit the house after Mom passes, then the capital gain income basis will only go back to the date of when you inherited the house. That can be a huge difference if Mom had purchased the house many decades ago.
And if Medicaid is involved in any way, shape or form, and if Mom is in a nursing home where Medicaid is paying for her care or had been caring for her care, then Medicaid is the first one to stand in line to be reimbursed for Mom's care from the equity in her house.
She inherited the house in 95 already paid off. So again how does that effect your advice?
How can I prevent Medicaid from taking her house? She has no other assets and it is probably only valued at 85k in its current state. I'm sure there is an exempt amount of assets before they try to garnish?
You dont want to transfer anything until you've consulted a CERTIFIED eldercare attorney.
Who did the Medicaid application?
I thought I read if a home is worth half of average homes in the city they don't take it... anyone know about that?