How do i give my son a House the "right" way?

[Martha]

Pretty much sorta kinda.

 

[Caoineag]

I think there was a time when it was illegal for lawyers to offer medicaid "planning" advice. Is that still the case?

In theory but not in enforcement. There is a lot more to it than just it is or it isn't but the end result is there are attorneys that help people "plan" for medicaid.

If your state does beneficiary deeds, you might want to look at that.

I would still recommend an estate planning attorney. If you are worried about being nickeled and dimed to death, look for an attorney that does flat fees (usually initial consultation is free so they can figure how complicated your case is).

My disclaimer, I do NOT offer legal advice of any sort.

 

[Milton]

There is a big difference in my mind between saying you could ditch the assets and you should ditch the assets. This lawyer recommended the latter.

A decent lawyer is not afraid to make specific recommendations. Merely listing options in a wishy-washy sort of way is inadequate legal advice.

 

[Enuff2Eat]

Does lawyer actual understand the difference between Moral and Legal?? oh well, i guess i can ask the same question about politicians..

 

[Milton]

Morality is extremely subjective. The law is (relatively) objective.

Lawyers are supposed to be dispassionate professionals. Their individual ideas of morality should not be (explicitly or implicitly) imposed upon their clients, who must remain free to make their own decisions. The same holds true for physicians, BTW.

 

[travelover]

A decent lawyer is not afraid to make specific recommendations. Merely listing options in a wishy-washy sort of way is inadequate legal advice.

"Sure there was a witness, but he might be convinced not to testify..."

 

[Milton]

I give up.

Obviously you hate lawyers and believe they are all immoral cheats and liars. You're entitled to your [-]bias[/-] opinion.

I can only suggest that in the future, you never again seek legal advice. That will save both you and the lawyer from an unhappy relationship.

 

[Martha]

Interestingly, though many people dislike lawyers in the abstract, they usually like their own lawyer. It is not just the quality of advice, it is a relationship.

 

[REWahoo]

Interestingly, though many people dislike lawyers in the abstract, they usually like their own lawyer. It is not just the quality of advice, it is a relationship.

Yep. He/she may be a SOB, but they're my SOB!

 

[travelover]

I give up.

Obviously you hate lawyers and believe they are all immoral cheats and liars. You're entitled to your [-]bias[/-] opinion.

I can only suggest that in the future, you never again seek legal advice. That will save both you and the lawyer from an unhappy relationship.

I don't hate lawyers. I do think that people that try to stash their money so they can push their nursing home costs onto the taxpayers are ethically challenged.

Although from what I've seen of Medicaid nursing homes, they will get their just reward in the end.

 

[retiringby50]

A few thoughts... next week I will be paying estimated taxes on a house that I "inherited" and sold... over $41K because I was given 1/2 of it before my dad passed away. I'm an only child. The house was owned jointly by my mom and dad, but mom died about 15 years ago. Before she died, she made him promise to give her 1/2 of the house to me. As an added protection, a few years later, I added my name on the deed as joint tenant. My dad was in his early 80's at the time. Although in good health, he had a way of threatening to do things... "you didn't go to the grocery store for me like I asked; you're going to inherit everything, you know. You should at least listen to me!" or "You're just waiting for me to die! I should give the house to someone else!" Then he got remarried! And later divorced! You get the picture. I knew it was not a wise financial decision but did it anyway "just in case." My dad had gotten married again in hopes of having a male heir.

To the OP, I know plenty people who have given away everything so that their assets wouldn't go to the nursing home... I personally wouldn't do that because of the trust issue... if my child squanders my money, I'm truly left with $3,000 to my name (or whatever the limit is!). No matter how well you raise them, you just can never be sure. Also, the government-chosen nursing homes aren't the best (there's a reason why they're the cheaper ones). I'd rather ensure my last days are in a nice place, somewhere I chose ahead of time if possible...

 

[rs0460a]

Then he got remarried! And later divorced! You get the picture...

Since you bring up the subject, I had a similar situation.

My parents were divorced after 25+ years of marriage (surprised it lasted that long ).

Both remarried. Of course, you know where the "inheritance proceeds" went to (hint - the "second family").

I learned at an early age not to count on relatives to "fund" your life. Go your own way, make your own (financial) life, and you never will be disappointed.

Good advice to myself. I followed it, and am better off financially than if I would have counted on any inheritance .

- Ron

 

[ChrisC]

I don't hate lawyers. I do think that people that try to stash their money so they can push their nursing home costs onto the taxpayers are ethically challenged.

Although from what I've seen of Medicaid nursing homes, they will get their just reward in the end.

This is an interesting thread to me as a lawyer, with a mother in a nursing home, having retained an elder care lawyer to help probate my father's dormant estate, having my mother's modest savings exhausted by nursing home bills, and having had to deal with Medicaid, directly and with the assistance of our elder care lawyer.

If you think Medicaid will permit anyone to play a shell game with assets or asset transfers, permit you to keep assets that might be used to pay for nursing home care, or won't slap a lien on a recipient's primary residence at probate of the recipient's estate to recoup nursing home costs that Medicaid paid -- you're badly mistaken.

Sure, there are cases of outright fraud involving the willful hiding of assets and hidden transfers, but the Government generally will require you to be penniless before you receive Medicaid assistance and the most exacting and prudent "Medicaid planning" won't prevent the Government from getting exactly what it wants from an applicant or recipient. Generally, transfers of assets made by an applicant within 5 years of the date an applicant files for assistance will be 'recaptured' by Medicaid in determining eligibility.

Your lawyer simply appeared to advise you about making transfers before an application were made to Medicaid, which would have been taken into account by Medicaid if within the "look-back" period, which used to be 3 years but is now 5 years. This is advice which is hardly unethical or immoral -- he was just stating what the rules permit.

BTW, skilled nursing facilities do not generally discriminate between Medicaid or non-Medicaid recipients, at least that's been my experience in NYC. The highest rated skilled nursing facility in the entire State of New York primarily has lots of Medicaid patients.

Regarding the original post about the transfer of a piece of real estate, others have pointed out the stepped-up basis that occurs through inheritance of the property -- I believe that this can also be achieved transferring the property (deeding it over) but retaining a life estate in the property.

 

[travelover]

...............
Your lawyer simply appeared to advise you about making transfers before an application were made to Medicaid, which would have been taken into account by Medicaid if within the "look-back" period, which used to be 3 years but is now 5 years. This is advice which is hardly unethical or immoral -- he was just stating what the rules permit. ..................

The interface with the lawyer that I referred to was about 15 years ago, prior to current laws about look-back (which were passed to stop this practice). He was clearly advising to pass on the small estate to other family members immediately, so Medicaid would pay for the nursing home expenses. You may not consider this advice unethical or immoral, but I do.

Re the quality of Medicaid nursing homes, my anecdotal experience is that if you get into a good one with private pay you may stay on via Medicaid once your funds run out. If you try to enter one on Medicaid, you may well be refused. Again, just my observation.

 

[Martha]

The big issue with the 5 year look back is that people who might have received assets might not have them anymore.

Regarding the original post about the transfer of a piece of real estate, others have pointed out the stepped-up basis that occurs through inheritance of the property -- I believe that this can also be achieved transferring the property (deeding it over) but retaining a life estate in the property.

Yeah, I think so too. Maybe a joint tenancy as well. I wonder how the life estate would play out when you are transferring rental property. The life estate holder would be the one to lease the property out and collect the rents, which might not work for the OP. I don't know how the depreciation would be affected.

 

[Nords]

...and frankly, I think there are different levels of homes and going in as an indigent might not be the most desirable just so your kids can squander your hard earned money....

Although from what I've seen of Medicaid nursing homes, they will get their just reward in the end.

I suspect that the family dynamics have a big influence on the way this plays out. It's also too chancy to leave the result up to the Medicaid program and the home-care staff. Who wants to go through a search for a new facility every few years?!?

Deeding away the house, no matter how well one expects that to work out, means that you've effectively abdicated control of it. Good luck with that. Even the most trusted kid can be divorced, sued, bankrupt, unexpectedly dies, or (for the best of reasons!) puts their personal list of priorities over yours. Sure, there are legal maneuvers to guard against these catastrophes-- is that really worth the putative tax savings?

Or even worse, your beneficiary puts your best interests over your preferences. ("Sorry about this, Dad, but we know it's best for you.")
If you want to have more money in your pocket, then buy a small-cap value stock or a basket of commodities. If you want to screw the govt out of tax money then donate to charity and take a tax deduction. The financial result may be about the same, but you won't be homeless in the bargain.

Although in good health, he had a way of threatening to do things... "you didn't go to the grocery store for me like I asked; you're going to inherit everything, you know. You should at least listen to me!" or "You're just waiting for me to die! I should give the house to someone else!" Then he got remarried! And later divorced! You get the picture. I knew it was not a wise financial decision but did it anyway "just in case." My dad had gotten married again in hopes of having a male heir.

Having been in this relationship dynamic for a couple decades, including nearly six years of landlording for my PILs tenancy, I would advise against mingling family & funds. I used to think it was a good idea when based on mutual trust and familial respect, but now I'm dead-set against it. You'll be left with one or the other-- and perhaps neither-- but never both. Even Mother Theresa & Mr. Rogers would bicker between themselves over this type of relationship.

In our case one step at a time, with the best of intentions, we all willingly ended up in a relationship that shifted from a basis of family & grandkids to one that was based upon money and emotional blackmail. No dysfunctional explosions ensued-- however the festering issues (formerly avoided by distance) quietly poisoned not only the intergenerational ohana but also our own spousal and child-raising relationships. They taught their only grandkid a lot, perhaps more than they intended. Maybe the PILs even stressed their own marriage by their actions, although I ain't takin' the blame for that. The PIL's eventual decision to restore the 5000 miles between us (by this point no longer for everyone's benefit but for their own selfish reasons) was a huge relief. Even 10 months later my spouse and I nudge each other and say "Hey, it's ___day and we don't have to _____ with them!" or "Golly, we just did ___, we didn't have to coordinate with them, and we still have the rest of the day to do whatever we want!" and "Gosh, we don't have to explain to a teenager what Grandma & Grandpa meant by that remark!!"

BTW PILs selling their home into a rising market and then buying back into that market six years later downsized them from a 4BR single-family home on an acre lot to a 2BR condo in a complex-- and cost them at least another $350K to inflation and missed appreciation. It cost spouse and I nearly six figures in below-market rent for what turned out to be not exactly the world's best tenants after all. (Even today I'm still pissed off about the last 10 months of sweat equity that I've poured into that house and its yardwork.) And of course the damage to family relationships-- priceless!!

Bless them for being the kind of people they are, I hope my PILs die with millions. My spouse hopes that they give it all to her brother and his spouse so that they can ER too. We really hope that PILs don't inflict it on their only grandchild (not that we have any influence on the decision), and if for some surprising reason my spouse inherits someday then she's gonna think long & hard about charity or 529s for future generations before she gives it to our kid. We don't need, let alone want, that kind of money in our lives.

But if you insist that you wanna do something nice for your kids/grandkids-- write them a check and kiss it goodbye. Much better and much cheaper, both fiscally and emotionally.

 

[ChrisC]

The interface with the lawyer that I referred to was about 15 years ago, prior to current laws about look-back (which were passed to stop this practice). He was clearly advising to pass on the small estate to other family members immediately, so Medicaid would pay for the nursing home expenses. You may not consider this advice unethical or immoral, but I do.

Re the quality of Medicaid nursing homes, my anecdotal experience is that if you get into a good one with private pay you may stay on via Medicaid once your funds run out. If you try to enter one on Medicaid, you may well be refused. Again, just my observation.

Yes, I would not consider his advice unethical or immoral if the practice he recommended was one that was permitted by existing rules, back then. I think we've debated this issue before so I'll refrain from additional comment.

Re the quality of Medicaid nursing homes: the conventional wisdom has been to get the best skilled nursing home while you're privately paying and and let Medicaid take over when you run out of funds -- and yes, the nursing home would be hard pressed to kick you out. If a nursing home discriminates in admitting medicaid recipents, it is exposing itself to potential licensure problems as well as a violation of several Federal and State anti-discrimination provisions.