Raiding my retirement to help parent to CCRC??

[albireo13]

Hi,
This just has popped up and is a source of stress. My elderly parents need to move from their house to assisted living. We've helped line up a CCRC near us and have been planning to move them by end of the year.
The problem is most of their assets are in an Irrevocable Trust, including the house. These assets are needed to fund the CCRC. The problem is that we just heard from our lawyer, who reviewed the trust. He claims that the terms of the trust prevent the use of these assets in funding the CCRC!!
We're looking int options, and other opinions, one being to dissolve the trust.
This may take some time to resolve.
In the meantime, it puts the move into the CCRC in jeopardy.

One thought I had was to dip into my IRA and take an IRA loan out to help them. Then, once the house is sold down the road I get reimbursed and pay off the IRA loan.

I am very uncomfortable doing this but, we are running out of ideas.

Thoughts? Suggestions??

Thx,
Rob

 

[Souschef]

I would get a second opinion on the use of trust assets. Without examining the terms of the trust I could not comment.

 

[pb4uski]

+1

 

[97guns]

As long as they are in sound mind, they can make any changes they want to the trust, my mom has done several addendum to her trust, they can take the property out of the trust and do whatever with it, sell or rent it

 

[albireo13]

Thanks. Yes, we are having another lawyer review the Trust for a second opinion.
I'm confident that we can ultimately get the assets out of the trust but, may take a bit of time and they could miss their closing window at the CCRC. The CCRC is holding a unit for them for the closing. There is a waiting list for opening there so, if they miss out, it would not be a good thing.

We're (me and siblings) are contacting the CCRC to see if they can work with us on this.

 

[pb4uski]

IIRC my mom's trust is pretty open as long as the proceeds are used for the benefit of the beneficiary (which is mom).

 

[97guns]

I wouldn’t hesitate to borrow against the IRA, the asset is there and your reimbursement is sure. It will take a good month or two, they would have to re title the deed and register through the county clerk

 

[YakGrl]

Also please make sure to document all financial moves during this time, as possible Medicaid 5 year look back may be in the future.

 

[ncbill]

As long as they are in sound mind, they can make any changes they want to the trust, my mom has done several addendum to her trust, they can take the property out of the trust and do whatever with it, sell or rent it

Not if their assets are truly in an irrevocable (as opposed to revocable) trust.

I hope the OP meant the latter, since that would simplify things greatly.

 

[albireo13]

No, it's an irrevocable trust. Thus the complications.

 

[Sunset]

Was it your parents that set up this trust ? or are they beneficiaries of this trust set up by someone else (grandparent) ?

 

[albireo13]

No, my parents set up this trust.

 

[bingybear]

I would bet the trust was set up to protect the assets from medicaid. I would bet the CCRC is out. You may need to find a assisted/nursing facility with whatever assets are outside the trust. If no assets outside the trust, then you may be looking for a medicaid facility.

I'm not sure what you meant about an IRA loan. I don't think you can borrow against them like a 401k. Maybe it can be used as collateral for a loan, don't know. I'm kind of loan adverse.

At first glance this looks like either your parents desires are different than yours in terms of elder care. Otherwise it may be estate planning gone bad. Do your parents remember what they were thinking with the estate planning (trust)? I would try to figure out what the intentions were with the plan and what the trusts dictate.

This just reminds me that we need to update our documents. Not to be terse, but this thread may be a good learning experience for all of us.

good luck

 

[Scuba]

I would be very hesitant to take the funds out of my IRA. Hopefully an attorney can help you and your parents work through this. Maybe the CCRC will defer the entrance fee payment for 90 days if your parents can pay a small deposit plus monthly fees?

 

[Mdlerth]

Not to be terse, but this thread may be a good learning experience for all of us.

+1 I definitely need to update my own documentation.

I find this an intriguing thread because it deals with a complicated real-life conflict. I suspect the OP's situation does not have a resolution that rests in law or accounting. Most likely what OP decides will be heavily influenced by emotion, hope and gut-feel. It's going to be instructive to see what he does.

 

[Teacher Terry]

I would not do it. Can they stay in their home and have live in help? I also wonder what the intent was when they set this up. This sounds like a big mess.

 

[PandaBear]

Where we live, there are elder care attorneys who specialize in "irrevocable trusts" that are specifically designed to keep money from Medicaid. Since my Dh and I are in the process of getting a trust, I have wondered quite a bit about it.

 

[albireo13]

Yes, I believe their original intent was to protect assets from Medicaid.
Unfortunately, they had made no plans for their own continuing elder care.

They are now at the point where they should not be alone in the old house and are needing assisted living.
My siblings and I all live out of state so it is hard to be there for them 24/7.
Having them move in with one of us is not an option.

 

[bingybear]

Where we live, there are elder care attorneys who specialize in "irrevocable trusts" that are specifically designed to keep money from Medicaid. Since my Dh and I are in the process of getting a trust, I have wondered quite a bit about it.

+1
there is probably nothing wrong with what the lawyers are setting up and I bet the clients likely love it. But do they understand the side effects that go along with these irrevocable trusts?

Anytime you set up an irrevocable trust of one that can become irrevocable, you have to really understand the full cycle effects.
We have see with DMIL that some things she would like to change can't be changed because the way the trusts were written.

 

[spncity]

Before you lend...

If you and your siblings are equal beneficiaries of the irrevocable trust - you may wish to have them sign paperwork that any money you lend to the parents will be paid back out of their shares of the trust. Have an attorney's advice.

Or, if the siblings can all lend/give equal amounts to the parents, then it doesn't matter as much.

 

[foxfirev5]

After watching her DM and Aunt both deplete their assets in a CCRC and living to 100 years, my DM inquired about these trusts. When it was explained that this money would not go to the greedy nursing homes and not deplete her assets she simply replied " That's just wrong. I've always been taught you pay your bills".

Admirable on her part, but I'm guessing she'll be moving in with us at some point.

 

[45th Birthday]

I would definitely speak with the CCRC as soon as possible. I would bet they have familiarity with this situation or similar and might help arrange a bridge loan until the house is sold.

 

[jj]

I don't believe you can take loans from an IRA in the same way that you can from a 401k. The best would be using the money temporarily while making a 60 day transfer, but this would be risky as if it didn't all work out you would have to pay incomes taxes on the whole balance removed.

https://www.thebalance.com/ira-loan-options-315561

 

[pb4uski]

I don't believe you can take loans from an IRA in the same way that you can from a 401k. The best would be using the money temporarily while making a 60 day transfer, but this would be risky as if it didn't all work out you would have to pay incomes taxes on the whole balance removed.

https://www.thebalance.com/ira-loan-options-315561

+1 you can't borrow money from your IRA other than the 60 day transfer provision. If you can't replace the money in 60 days then it is a taxable event and if you are under 59 1/2 you incur the 10% penalty as well.

You might be able to borrow on your house. I doubt that the parents could borrow on their house since it is in the irrevocable trust.

 

[socca]

• who is the trustee of the irrevocable trust?

• if the trust document is reasonably well-written, you should be able to carefully read the document to find out what the trustee's options are regarding the trust assets - no need to depend upon a lawyer, although getting an opinion can't hurt

• if you (and siblings, if any) are beneficiaries of the trust, the trustee may be able to distribute assets to you. You, in turn, can gift those assets back to your parents. Yes, you'll have to file a gift tax return, but no tax should be due unless you're throwing around a boatload of money.

• your parents should have filed a gift tax return when they gifted assets to their irrevocable trust. You do have a copy of this, right?

Disclaimer: I'm not a pro so these comments are worth what you paid for them.