The two options for investing in a child's house the parent(s) will live in are (i) a life estate in the child's house, and (ii) a percentage interest. Depending on the value of the house, the age of the parent, the amount of money needed to be protected, and of course the state regulations, one may be better than the other. Under the recent federal law changes, if the parent purchases a life estate in the child's home, the parent must live there at least a year in order for such a purchase not to be deemed a gift to the child. No such rule applies to the purchase of a joint interest.
By the way, a "life estate" means the parent is purchasing the right to live in the house for the rest of his/her life. Upon the parent's death, that right disappears, leaving the entire house back in the name of the child, with no probate required.
Yes, Gabriel, that is very interesting, I will certainly bring this up with our lawyer. One of the things I am trying to do is shelter as much of their assets as possible. It looks like they will need to sell the house they are moving out of and this may be the answer for what to do with some of that money they will get for selling.
I agree with Carol. Also, as an alternative, and this may not work in your situation, sometimes parents can purchase an interest in a child's home in exchange for a larg lump sum. The advantage of this is that it quickly reduces the "countable" assets for Medicaid eligibility purposes, and is not a disqualifying gift to the child.
As long as the parents live in the child's house, their interest will be exempt from Medicaid disqualification. Further, depending on your state's laws, it may even be possible to structure the deed so that upon the death of the surviving parent the parents' interest in the house passes to the child, again, avoiding estate recovery for any Medicaid payments the state may have made on behalf of the parents.
Others may have suggestions, but I would think this has to be based on the care you give and prices where you live. If Medicaid suggested this, they should have a ballpark figure.
Otherwise, make a detailed list of what you do for them and what living elsewhere would cost and see what that comes to. I'd check with an estate attorney on this as you are dealing with Medicaid and rules are strict. You will want to be on solid ground, legally. Carol
By the way, a "life estate" means the parent is purchasing the right to live in the house for the rest of his/her life. Upon the parent's death, that right disappears, leaving the entire house back in the name of the child, with no probate required.
Carol
As long as the parents live in the child's house, their interest will be exempt from Medicaid disqualification. Further, depending on your state's laws, it may even be possible to structure the deed so that upon the death of the surviving parent the parents' interest in the house passes to the child, again, avoiding estate recovery for any Medicaid payments the state may have made on behalf of the parents.
Otherwise, make a detailed list of what you do for them and what living elsewhere would cost and see what that comes to. I'd check with an estate attorney on this as you are dealing with Medicaid and rules are strict. You will want to be on solid ground, legally.
Carol