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if i am poa for my dad with alzheimers as mom passed to protect estate and house what do i do with deed and can i do living trust. how do we deed house since mom passed to protect from being taxed high and going in probate and is living trust legal now in his condition or how do we protect estate
Ralph Robbins, Aug 1, 2011
Ralph S. Robbins, CFP© is a fully licensed Certified Financial Planning Practitioner specializing in Eldercare Financial Planning. He works everyday helping families in crisis find creative ways to fund long-term care expenses and deal with family financial issues.
Let's take it easy here for moment. I appreciate the advice to seek an attorney's input put let's face it, lawyers are expensive.So before we go running for counsel, why not read the documents first? Unfortunately, your questions is quite confusing. Is there a living trust in place currently or are you looking to create one to avoid probate? (Keep in mind that in some states real property is not permitted in a living trust).How is the house deeded now?Are you saying that she was sole owner and passed away as sole owner?If that is the case it is too late to do anything. If there is no joint tenancy on the deed or if the deed is not titled to a living trust in a state where such an arrangement will indeed avoid probate, then it will pass via her will and be subject to probate.There really should not been any tax consequences unless she was a multimillionaire and therefore subject to Estate and Gift tax.Real property is subject to capital gains taxes, not income tax, and the beneficiary will actually receive a "step up" in cost basis to the current value of the property. This means first, there is no capital gain tax due when the property passes, and second, that when the beneficiary sells the property, they will only pay capital gain tax on the difference between the selling price and the value at mother's death.If Dad is inheriting the property then any planning should be done in conjunction with my thoughts below.If you are concerned about Dad's estate, and again taxes will only be an issue if he is a multimillionaire subject to Estate and Gift Tax, then read your POA carefully to see if it gives you the power to create trusts. If it does, then yes you can create a living trust.The question I would ask is why do you want to do this?A living (revocable) trust does not offer any protection against income tax, capital gain tax, or Estate and Gift Tax. Because the trust is "revocable", the grantor, here presumably Dad, is considered to have retained full control of the assets titled in the trust and therefore all taxes due continue to accrue to him personally.If Dad has Alzheimer's his care is going to get very expensive. If the plan is to pay privately for the duration of his care then you have the power to handle his financial affairs and that is all you need.If you plan on seeking public benefits to assist with the cost of his care, either now or in the future, then you may want to implement some immediate strategies or at least pre-plan so that his funds will be available to augment public benefits.Here again, lawyers can be great, but expensive, resources. Look around in your are for non-insurance agent, fee for service Medicaid planners who will charge you a very reasonable fee for consultation.It is not very often that one actually needs an attorney, and the resulting, expense, to have this work done well.Now wasn't that less expensive then running to a lawyer???
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cmagnum
Give a Hug
Jul 30, 2011
I'm sorry to hear your mother died and that your dad is in such sad shape. I'm glad you have POA for your dad. I assume that is at least durable POA and possibly medical POA as well. Did your mother have a will? Was both your mom's and dad's name on the deed? Does your dad have a will?
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jeannegibbs
You need to see a lawyer who is experienced in elder law and/or estate planning. What are his other assets besides the house? Will be be able to afford the care he needs now and additional care if he needs it? You really need a lawyer to help you deal with these responsibilities. The expense of the lawyer should be paid for out of your father's funds, since you are acting POA on his behalf.
Aug 1, 2011
Thanks for your perspective, Ralph. The advice I was given way back when, was to consult a lawyer. I did. It is good to know that there are alternatives.
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