Jun 02, 2014
By Rick Law, Estate Planning Attorney for Seniors and Boomers in Chicagoland.
One common mistake we see is when the home of the senior is transferred to an adult child or children. This occurs sometimes when the parent suddenly becomes ill and the children panic. They transfer the home in an attempt to protect the home from the high cost of healthcare. We hear statements like, “Dad didn’t want the nursing home to take the house.”
This results in several problems. First, the senior parent is no longer the homeowner, and therefore this may affect the real estate taxes. The senior can lose their senior exemption, homestead exemption, and even a senior freeze if they have one.
And, the transfer of the home is a huge problem if the family needs to file for Medicaid assistance for Mom or Dad’s long-term care. If the home is worth $150,000, the senior can be ineligible for Medicaid assistance for nearly 3 years.
Finally, if the home is sold, the adult child could be facing capital gains tax.
Even though he/she received the home as a “gift,” taxes will have to be paid on any amount over the price that the senior originally paid for the home. In many cases, we are looking at homes that the parent has owned for 50 years and paid about $15,000 for – and now it is worth 10 times that. The children would pay federal and state capital gains taxes on $135,000 in this scenario.
We generally have to “undo” what has been done in haste and without much forethought and little or no knowledge of Medicaid.
Too many families needlessly lose everything they have. Don’t let that be you. If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now, because when you’re out of money, you’re out of options!
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney for the past 3 years by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.
“We would be lost without Law Elder Law! We walked in their doors over a year ago feeling lost and confused. With a father/father-in-law suffering from Alzheimer’s, we were overwhelmed by the Medicaid process, selling his home, protecting the assets he worked for his entire life, and finding him a memory-care facility that we could trust as his new home.
Law Elder Law helped with all of it! From the minute we walked out of our first meeting, we knew we (and he) were in good hands. We could not have possibly navigated all that had to be done without their expertise.”
A.M., Client of Law Hesselbaum and Law Elder Law