Mil, dementia and asset liquidation

[SonofCohoes]

My mil is staying with us for a few months but she’s usually with my sil 8 months a year and spends 4 in az with my other sil. A family problem being dealt with, not with her, has needed my sil to focus on another issue.

She’s previously had some memory issues. We haven’t seen my mil in almost a year due to Covid and the decline in memory is quite noticeable. My sil’s have provided great care but being with her everyday the decline may not be as noticeable.Has anybody else had to deal with this and if so was liquidating assets before the affected individual can’t sign their name discussed?

She has a building lot In FL and a camp on a lake in upstate NY. My bil wants to buy the camp and we’ve had a reasonable offer on the lot from a builder. I’m thinking we should get rid of those now before things get any worse.


Thoughts?

 

[gauss]

Not really. My tactics were :
1) got my mother a prescription for Aricept
2) Arranged some visits with a Geriatric Nurse and
3) Had her execute a financial power of attorney so that I could take care of all of her financial matters. This was after she complained about having trouble doing this.

She was always fairly conservatively invested, so I thought it would be fine to leave things how they are as far as investments go.

Fortunately her SS and pension cover her living expenses at a senior facility ~ 2 miles away -- at least for now.

It looks like your MIL's assets are more illiquid then ours so every case is different.

-gauss

 

[SonofCohoes]

Not really. My tactics were :
1) got my mother a prescription for Aricept
2) Arranged some visits with a Geriatric Nurse and
3) Had her execute a financial power of attorney so that I could take care of all of her financial matters. This was after she complained about having trouble doing this.

She was always fairly conservatively invested, so I thought it would be fine to leave things how they are as far as investments go.

Fortunately her SS and pension cover her living expenses at a senior facility ~ 2 miles away -- at least for now.

It looks like your MIL's assets are more illiquid then ours so every case is different.

-gauss

She's been taking that med for a couple of years. My sil made a promise that she’d never see the inside of a nursing home which right now I’m sure we’re all pretty happy about. POA is in place, her other investments are sound but with her condition these two in particular are just unnecessary IMHO. The lot will never be developed by her and she’d have an open invitation to the camp if bil purchases. Just make things less complicated down the road. She doesn’t need the money, she doesn’t spend what she gets monthly now.

 

[Golden sunsets]

Sorry to say this, but advancing dementia can happen very quickly and the disorientation that follows may make it nearly impossible for your sil to manage. The good news though is that when the transition to a memory care facility becomes necessary, she will not recall your sil's promise.

 

[pb4uski]

You should be able to use the POA to sell the properties. She can even create a power of attorney for someone to act specifically to sell the properties.

But I'm not sure if selling now is a good idea. The downside could be taxes... do you have any idea what her basis is in the properties and what the taxable gain and tax would be if she sells? It might be that the capital gains tax would be nil if her taxable income is under the 0% preferenced tax bracket of $40k taxable income for a single in 2020... that would equate to $54,050 of income after considering the standard deduction for over 65.

If the properties are sold after she passes then they would get a stepped-up basis and any tax on the gain could be avoided. If you don't think DMIL will be around long, you might get things lined up by granting the buyers an option to buy the properties upon DMIL's passing.

 

[SonofCohoes]

You should be able to use the POA to sell the properties. She can even create a power of attorney for someone to act specifically to sell the properties.

But I'm not sure if selling now is a good idea. The downside could be taxes... do you have any idea what her basis is in the properties and what the taxable gain and tax would be if she sells? If the properties are sold after she passes then they would get a stepped-up basis and any tax on the gain could be avoided. If you don't think DMIL will be around long, you might get things lined up by granting the buyers an option to buy the properties upon DMIL's passing.

Taxes are my only draw back. On one hand we know what the tax implications are this year. If there’s a regime change there will be a lot more questions. One of those deal with who you know scenarios.

These are not large sums of money. A 14k gain on the camp and 25k gain on the property.
With being able to defer her RMD this year I think it might be beneficial also.

 

[pb4uski]

Could you do the $25k and no RMD this year and the $14k next year and still slip under $54k of total income each year? If so, then easy decision.

Otherwise, looks like the tax on those gains would be ~$6k plus state income taxes, if any... then you'll have to assess if it is woth paying $6k for the convenience of having the sales "done".

Or it might be that some of the gain is at 0% and some at 15% so in between $0 and $6k.

 

[SonofCohoes]

Sorry to say this, but advancing dementia can happen very quickly and the disorientation that follows may make it nearly impossible for your sil to manage. The good news though is that when the transition to a memory care facility becomes necessary, she will not recall your sil's promise.

Ive been pondering this scenario, but with these folks, a promise is a promise.

 

[SonofCohoes]

Could you do the $25k and no RMD this year and the $14k next year and still slip under $54k of total income each year? If so, then easy decision.

Otherwise, looks like the tax on those gains would be ~$6k plus state income taxes, if any... then you'll have to assess if it is woth paying $6k for the convenience of having the sales "done".

Or it might be that some of the gain is at 0% and some at 15% so in between $0 and $6k.

I’ll have to check with sil as I have no idea of her income.
Great advice thanks

 

[PaunchyPirate]

I'm not expert on this, but I'll toss it out for consideration anyway. Since it sounds like a family member might be looking to buy the camp, you probably need to take steps to make certain the sale is done at market value -- i.e. get a neutral appraisal first. If there is ever any need for future financial assistance for your mil's care from the state (i.e. Medicaid), you may need to prove that the sale of the asset wasn't done in order to hide her asset from the state.

 

[SonofCohoes]

I'm not expert on this, but I'll toss it out for consideration anyway. Since it sounds like a family member might be looking to buy the camp, you probably need to take steps to make certain the sale is done at market value -- i.e. get a neutral appraisal first. If there is ever any need for future financial assistance for your mil's care from the state (i.e. Medicaid), you may need to prove that the sale of the asset wasn't done in order to hide her asset from the state.

Thanks I have a call into my accountant now.

 

[SonofCohoes]

Could you do the $25k and no RMD this year and the $14k next year and still slip under $54k of total income each year? If so, then easy decision.

Otherwise, looks like the tax on those gains would be ~$6k plus state income taxes, if any... then you'll have to assess if it is woth paying $6k for the convenience of having the sales "done".

Or it might be that some of the gain is at 0% and some at 15% so in between $0 and $6k.

After a quick conversation with sil she’d wouldn’t be able to stay under 54.

 

[SonofCohoes]

I think we have it straightened out.

Thanks everyone.

 

[pb4uski]

Just curious, what was the resolution?

 

[SonofCohoes]

Just curious, what was the resolution?

We’re selling the Fl property this year, foregoing RMD in 2020 and gifting the camp to bil and sil in 21.

 

[Bamaman]

Sorry to say this, but advancing dementia can happen very quickly and the disorientation that follows may make it nearly impossible for your sil to manage. The good news though is that when the transition to a memory care facility becomes necessary, she will not recall your sil's promise.

I agree with the above. This is a real world scenario.

Best thing about getting rid of real estate is that you can most often avoid having to go through probate if the rest of her assets are simple. And real estate right now is selling well.

 

[street]

We’re selling the Fl property this year, foregoing RMD in 2020 and gifting the camp to bil and sil in 21.

Just wondering what the law says about 5 year look back on gifting land/homes and or money if a need to go on Medicaid??

 

[Amethyst]

It is actually a rather impractical promise for most people to make, no matter how they empathize, and want to believe it's possible to keep.

People with dementia, if they live long enough, eventually require round-the-clock monitoring and care for every little thing, much like an infant (except they can get into even more trouble than an infant could). They need a full-time caregiving staff, and unless a family member knows this is going to be possible, the patient is going to have to go to a facility.

My sil made a promise that she’d never see the inside of a nursing home .

 

[Dash man]

We’re selling the Fl property this year, foregoing RMD in 2020 and gifting the camp to bil and sil in 21.

The gifting could be a problem if there is any chance of her needing Medicaid for memory care. We have two family members in memory care now and we tried to keep them at home as long as we could. It keeps you from having any kind of personal life. They require 24/7 care. Often they need help for simple tasks. They will often escape when you aren’t watching them. They’ve been known to go outside without any clothing on. If they find car keys they may try driving. Keep them out of the kitchen!! You’ll eventually have to change diapers, clean up messes on the floors, in their bed or elsewhere in the home. You will need to watch their medication closely to ensure they only take what their supposed to. They may not know who you are some days and say awful things. They can get mean. They often hide their not knowing or understanding things by lying. Attempting suicide is not unusual.
The professionals in a good home are far more prepared to deal with caring for these folks.

 

[Buckeye]

The gifting could be a problem if there is any chance of her needing Medicaid for memory care. We have two family members in memory care now and we tried to keep them at home as long as we could. It keeps you from having any kind of personal life. They require 24/7 care. Often they need help for simple tasks. They will often escape when you aren’t watching them. They’ve been known to go outside without any clothing on. If they find car keys they may try driving. Keep them out of the kitchen!! You’ll eventually have to change diapers, clean up messes on the floors, in their bed or elsewhere in the home. You will need to watch their medication closely to ensure they only take what their supposed to. They may not know who you are some days and say awful things. They can get mean. They often hide their not knowing or understanding things by lying. Attempting suicide is not unusual.
The professionals in a good home are far more prepared to deal with caring for these folks.

My stepdaughter's father-in-law kept his wife home far too long. It was cruel. She has thrived in memory care. Still no memory, but she happy otherwise.

 

[rodi]

First - your wife and her siblings need to be 100% on the same page.

And agreeing with others, that the promise to keep her out of a nursing home may not be possible. With dementia, over time, you can lose basic functions like the chew reflex, the ability to toilet oneself, etc. As my MILs dementia has progressed it became impossible to keep her at home. Our clue was when she, literally, threw herself from a moving car because she was disoriented and forgot why she was riding in the car. That was 5 years ago and MIL has been in a memory unit since. Fortunately, BIL lives less than 1/2 a mile away and visits often.

 

[SonofCohoes]

Thank you all for you input. Mil has rather substantial investments and 50k income with pensions and SS. Will her assets last 5 years? I’m not sure but she’s got a head start on that.

I advised years ago about a trust but when the family questioned an attorney regarding such it was shot down, now here we are.

I’m sure the family will have to make some hard decisions in the not too distant future and several of the siblings won’t be happy when all is said and done.

My wife and I aren’t counting on an inheritance but the others are.

Oh and as far as that promise to never see a nursing home, I’m pretty sure she has no recollection of it.

 

[Golden sunsets]

It is actually a rather impractical promise for most people to make, no matter how they empathize, and want to believe it's possible to keep.

People with dementia, if they live long enough, eventually require round-the-clock monitoring and care for every little thing, much like an infant (except they can get into even more trouble than an infant could). They need a full-time caregiving staff, and unless a family member knows this is going to be possible, the patient is going to have to go to a facility.

Unless she dies of something else, like a fall, late stage dementia involves a non verbal patient, mostly immobile, and requiring feeding by others of food that has been ground in a food processor and most patients in that late stage no longer have control over their bodily functions. It's difficult enough for a family member to observe let alone caring for the patient.

I've just gone through this. My sympathies to you and your mil's loved ones.

 

[Amethyst]

It is no wonder that people don't want to be "sent to one of Those Places."

A relative recently returned from a 5-week stay for physical rehab, in a nursing home/rehab center. The place has an excellent reputation; she was treated well, and improved under care; for most of that time, she even had a private room. But she was terribly oppressed by the sights and sounds of the dementia patients, some of whom roamed the halls or could be heard making incoherent noises.

So, yes, while a person still retains enough cognition to know they are in one of Those Places, many of us try to keep them at home, to spare them the general unpleasantness. That is what your family's promise meant, and that is all they should try to achieve.

 

[SonofCohoes]

It is no wonder that people don't want to be "sent to one of Those Places."

A relative recently returned from a 5-week stay for physical rehab, in a nursing home/rehab center. The place has an excellent reputation; she was treated well, and improved under care; for most of that time, she even had a private room. But she was terribly oppressed by the sights and sounds of the dementia patients, some of whom roamed the halls or could be heard making incoherent noises.

So, yes, while a person still retains enough cognition to know they are in one of Those Places, many of us try to keep them at home, to spare them the general unpleasantness. That is what your family's promise meant, and that is all they should try to achieve.

I’m sure they’d concur.