Author Topic: House sale to trust?  (Read 597 times)

Rollin

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House sale to trust?
« on: January 14, 2018, 08:16:56 PM »
I'm looking into options for my MIL on the sale of her home. She can no longer maintain this big old thing and the acreage. She has a $54,000 HELOC to pay off and the place is worth about $200,000. She'd like as much of her estate as possible to go a grandchild when she passes, but doesn't want to give it in a lump sum. Also, she knows that there could be a day when she needs a nursing home and wondered how putting the proceeds in a trust would impact that should they need to cease her assets for payment.


Two options:

1. Standard mortgage, pay off the HELOC (of course), place the rest in a trust, and take a monthly income to help pay month to month expenses. Once she passes, the arrangement would continue, but instead be directed to the grandchild.

2. She holds the mortgage, taking $40k down, adding $14K to pay off the HELOC, and takes the monthly payments as income to help pay month to month expenses. Once she passes, the arrangement would continue, but instead go to the grandchild.

Secondarily, if she can use a trust in this fashion, is there a way to keep this safely invested so as to not loose value to inflation?

Finances_With_Purpose

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Re: House sale to trust?
« Reply #1 on: January 14, 2018, 08:41:01 PM »
You need some complicated advice.  The investing piece is more simple.  At safest, she could go into CDs, etc. just to save it against inflation.  But safety won't provide her much/any reliable income. 

You need an attorney re: the trust bit, especially one who knows Medicare/Medicaid rules.  If she needs extended nursing home care, Medicaid may be necessary to pay for it: they'll either require her to burn through all that money or they have clawback provisions where they come after assets within X years (5 I believe) of when she went into nursing care.  They can get at trusts, I believe.  Government would end up with all of it probably. 

Safest way re: all that is for her to simply give it outright, if she trusts you and you're in a good way, and you then use it for her as though it were hers.  But again, check with a lawyer, as I don't know how well that works and/or if/how that would work legally. 

Short answer: this isn't that simple (thanks to government rules, etc.). 

Rollin

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Re: House sale to trust?
« Reply #2 on: January 15, 2018, 05:15:43 AM »
FWP thank you for the response. I was suspecting that the trust would not work within the 5 year period. I may be able to contact a eldercare attorney while I'm here and work this out. I know this is getting away from the Real Estate and Landlording forum, but maybe she can start gifting the grandchild now for use later with grandma. Problem is that I don't think the grandchild is responsible enough for that.

GizmoTX

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Re: House sale to trust?
« Reply #3 on: January 15, 2018, 11:02:08 AM »
See if there's a CCRC (continuing care retirement community) in a convenient area. When my MIL was in the same situation as yours (age 90), SIL found a CCRC 10 minutes from SIL's house (instead of the 3 hour RT commute she had been doing several times per week to assist her mom). This offered independent living in either a duplex or in an apartment building, with the ability to move to an assisted living building on site if ever necessary. The big gotcha for a CCRC is that a senior (age 55+) has to move into one while still capable of independent living. CCRC's require a buy-in amount -- the sale of MIL's house funded this, with extra left over to be invested. The CCRC also required a modest monthly fee for housekeeping & a dinner plan, which makes sure the residents get checked on regularly, get nutrition, & social interaction. The social activity, including a physical fitness center, crafts, & field trips, was a big bonus for MIL, who had become a hermit in her money pit house. When MIL passed away, the CCRC refunded her heirs 90% of the buy-in amount, largely preserving her estate. If she had run out of money for the monthly fee, she could have tapped the buy-in amount. My BIL managed her cash & investments; she still had access to a limited checking account for incidentals. The place even had a beauty salon, bank branch, library, computer room, & small grocery.

Finances_With_Purpose

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Re: House sale to trust?
« Reply #4 on: January 15, 2018, 07:18:00 PM »
FWP thank you for the response. I was suspecting that the trust would not work within the 5 year period. I may be able to contact a eldercare attorney while I'm here and work this out. I know this is getting away from the Real Estate and Landlording forum, but maybe she can start gifting the grandchild now for use later with grandma. Problem is that I don't think the grandchild is responsible enough for that.

No problem.  Then yeah, that kind of kills my suggestions. 

Rollin

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Re: House sale to trust?
« Reply #5 on: January 16, 2018, 05:11:13 AM »
See if there's a CCRC (continuing care retirement community)

That is what I as hoping to find up here in NY, but so far no luck, and I have inquired wit a few people. Today I will contact the county office on aging to see if they know of any. I was told the licensing in NY does allow them. I think that would be a great option. I did not realize that the estate might get refunded based on earlier death.

What I have been seeing is a "Continuum of Care" facility, whereby the tenant has access to physical therapy and skilled nursing, but from a company that has staff on-site. It is a reduced rate (negotiated) and the costs are lower because there is not drive time involved (that is, for PT in her home now). The facility is month-to-month rent ($2,000 and up for a studio apartment) as opposed tp a buy in. Maybe it is the same thing (almost)? I'll know more today, as I am touring three places. They all wanted me to come to lunch! One place calls what they have "Advanced Assisted Living" and that is in addition to simple independent living.

Thank you.

Another thought on her situation is selling the house to a neighbor (they are interested) and her holding the mortgage. Of course we'd not need a RE agent and could save fees, but I wonder about that clawback provision should she ever need Medicaid for long term care (that she cannot pay for). I'll inquire with an attorney, but the payments would go on for many years after her death (she is 80) and to her grandchild. Anyone have familiarity with this scenario?
« Last Edit: January 16, 2018, 05:24:51 AM by Rollin »