Can a parent gift proceeds from their house sale to their children to buy a home?


My father lives in assisted living and wants to sell his home. He has long-term care insurance and other investments which will likely cover his needs. He would like to give the money of the sale of his house to us now, before his death so that we can buy a home. What are the tax implications for him? Us? What are the options if he buys another home for us to live in or we co-own a house? Title options?

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My understanding is that unless the gifts total over $5 million in the lifetime, there is no federal gift tax, however anything over something like $14,000 (not sure of this year's number) does need to be *reported* on the tax return. State gift taxes may apply, however.
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I would head all of the advice above. If he does go ahead and gift the money to you, he will encounter a gifting tax for the amount of money above the gift limit for that year. Thus, this sort of large gift could become costly in his tax return. I would advise against doing this.
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Muneca, Barb above is right, set up an appointment with an Elder Law Attorney. This can become quite maze. Since we don't have a crystal ball to see the future, it is better to play it safe. I can truly understand why your Dad would want you to have the money now, so that he can see you enjoy it with a new home.

If an elder is generally healthy for their age and is living in senior living, one doesn't know how long they would be living there. I know in the back of my mind I was concerned that my Dad, who was 94 at the time, would use up all his funds if he was lucky enough to live to be 100. There was always Medicaid to think about, and how to deal with Dad's funds. My thought was this was Dad's money and all of it should go for his care.

Medicaid [which is different from Medicare] will look back 5 years to see what Dad did with his assets and funds. If for some reason Dad uses up all of his liquid cash, and Medicaid sees that Dad handed over the house equity to you and your siblings upon the sale, a red flag will go up. Same with if Dad buys you a house. If you co-own a house, then Medicaid can place a lien on half of the equity in the house. Upon Dad's passing, you either have to pay that half of equity to Medicaid or sell the house to pay back Medicaid.

See how complex all of this can be.
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Run, don't walk, to an edlercare attorney who is certified and who understands Medicaid in your state.

There are gift tax implications. Long term care insurance usually has a TERM, i.e, it will pay out for a certain number of months/years. If dad is 85, if he lives to be 100, will he be able to private pay a nursing home 12-15 K a month for several years?

Never think that Medicaid is not going to come into the picture unless you are generationally wealthy
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