Posted by Frank Chin on June 12, 2007 at 14:37:27:
Stephan:
Reminds me of my dad. I told him about what my mom in law did, but his answer was “if you have to pay high taxes after I die, it’s not my problem any more”.
Anyway, two years ago, he had a major operation for pancreatic cancer, fortunately detected early. Spent two months in the hospital, then, rehab at a nursing facility. As up as he was on getting “medigap” insurance supplementing his medicare, he was caught unawares that it did not cover nursing facilities beyound 60 days, at which point, if one pays personally, it comes to $300/day.
With that wakeup call, he now got himself covered for rehab. But it was a wakeup call for us too, as we’ve into rehab insurance in our health plans, as well as “long term care” insurance. I’m sure you looked into these issues.
My mother is in poor health and she wants to transfer her condo and vacant land to my name. What is the best way to do this? Quit claim deed? What about the title?
I have durable power of Attorney as well. Can I do this myself? If not, who should I go to for help? A title company? An RE Attorney?
BTW, I have an S-Corporation. Is it best to transfer the properties into that?
Posted by John Merchant on June 18, 2007 at 08:17:13:
If Mom does deed you the property now, and there are other “would be” heirs, I’d guess there’s a very good chance they’d be getting together soon and looking into whether to sue you.
What for?
For applying undue duress and pressure on your poor old Mother who really wasn’t in good mental health, and really didn’t have the legal capacity to deed you her property…and asking the court to UNDO the deed to you plus making you pay attorneys fees, court costs and other damages for having taken unfair advantage of her.
How to avoid?
Have Mom talk to her lawyer now and have that lawyer do the deed…then nobody can accuse you of anything as it was all overseen by her own lawyer.
The other side of receiving the property through an estate is there may be estate taxes due. Even if gifted, there may be gift taxes due. As a general rule, it is not a good idea to put real estate to be held long term into a corporation.
If the properties have appreciated since she acquired them, it is better to inherit them than to receive them by gift. If you take them by gift, you step into her shoes (in terms of tax basis). But if you inherit the properties at her death, the basis in the properties will be the DOD value. This can be a small issue, or a HUGE one. I don’t know your situation. With that said, the step-up at death rule “goes away” for 365 days commencing 1/1/2011. its a quirk in the law created in the 2001 tax bill, which expires at the end of 2011.
If you mom still has her mental faculties in tact, capacity, DO NOT use the POA to transfer the properties to yourself. Have her do it herself. That way, you don;t have to explain why you used a POA to benefit yourself, perhaops to the detriment of siblings or other would-be heirs/beneficiaires.
The house is free and clear. Being the taxes are very low since it hasn’t been assessed since the 70’s, is there a way to avoid re-assessment? Would a warrantee deed initiate a new acessment? Is there a better way?
I was more doing it to make her eligible for Medicaid. She’s going to need expensive long term care. The corporation thing is not a necessity. Was just wondering if it was better protection if creditors followed the equity trail.
my understanding is that a change of ownership is what triggers re-assesment (or a request by the owner if the value’s declined) adding a name to title and deleating a name from title do not. so the parents need to stay on for some period of time to avoid the reassessment.
this can only be accomplished from parent to child or child to parent; adopted children aren’t eligible and it can’t skip a generation
I was under the impression that you cannot transfer property out of her name within 2 years of going on medicaid! If I am wrong, let me know…my dad just had a heart transplant and wants to go on medicaid, but has too much in assets to qualify. All the best, Mike
Re: Mother want to transfer property. - Posted by Frank Chin
Posted by Frank Chin on June 12, 2007 at 12:58:58:
Stephan:
What you’re trying is a common occurance, though laws had been tightened a lot lately, and as others have mentioned, a lookback period.
Best time to do it is early on, when mom is in good health. My “mom in law” has a fairly good pension, savings, so about 10 to 15 years ago, she gifted some RE assets, so there is no question it is NOT to escape Medicaid.
She’s been in and out of hospitals lately, but not nursing home bound yet. Fortunately estate planning took place years before.
Stephen; John being a CPA can probably give you more specifics on the rules on Medicaid eligibility but the law has a “look back” rule. Medicaid “looks back” a couple or so years to see if the member or heirs have purposely tried to “impoverish themselves” in order to become Medicaid eligible.
To put it a bit more coarsely: Why should the rest of us help a welfare cheat? I know you won’t like being called that but think it through OBJECTIVELY, not as a child who sees his inheritance being spent to support his ancestor.
I’m a bit passionate about this subject and don’t mean to insult you. But if you’re like most people in this country I’m certain there are “certain classes” that you’ve felt were “taking advantage of the system”.
I’ve been trying to get her to do estate planning since my father was murdered in '89. She’s very resistant to new ideas, so now I’m stuck with the task after the fact.
I understand what your saying. I’m only considering it as an option. I believe as you do, but not to the point where I will allow myself and my mother to become an actual welfare case. Which is what will happen in a pretty short time if I take no action.
I prefer to focus my passions against those who are getting rich from all this rather than resenting, “certain classes.”
My goal is to make myself and her bullet proof, so that I don’t have to take the medicaid route.
