Can we create an irrevocable trust for parent with Alzheimer's since we have a durable power of attorney?

“has 175k in equity”..... based on what?
I’d really, like heavily, suggest you get the house inspected and then appraised to see what it’s value is AND what it’s replacement cost actually is. And done before ever doing a Trust/LLC / rental/ whatever.

if that 175k is from tax assessor/ collector bill, could be off as that’s based on property recently sold in the area. If dads house is old, with decades of delayed maintenance (which often is the case), not renovated or seriously updated, it’s not gonna fit the comparables. It’s not 175k. Renters- even low income ones - expect kitchen & bathrooms current. Doesn’t have to be granite countertops & rainfall shower heads, but updated & must be up to code. Imho you need to accurately find out if it could be worth lots less. If it’s not up to current code, renting may not be a good idea.

Right now Zillow has Duluth with median home price $270k; 456 are for sale with average listing of $389k. These are figures very VERY far away from 175k. House is at least 100k off average, that’s a pretty big gap. If the appraisal has it coming in lower, that’s huge diff.

Dave Ramsay has median national home price in US at 315k.

Renting may be only all low end / low income tenants. If house has lots of issues, expect a constant litany of things 24/7 that you need to repair, replace, whatever. Unless you have experience with this, renting lower value properties needs a uniquely different skill set. You might be best off having property management co. deal with everything rental.

And you will need all new insurance as it no longer can be under dads old homeowners policy. This could be expensive. Insurance may want to see the appraisal too.
There will be tax implications on renting. So plan for that. Rent has to be reported & properly dealt with.

Please give some thought if dads neighbors would be very against renters, if so it can make things difficult. If neighbors been looking out for quiet widowed 1 car owning dad & his place for years, having a big family with kids & cars & pets renting, well expect complaints.

Managing rentals isn’t easy.

Joleah, I assume you know that an LLC is a business entity, and more than likely rent would be considered business income.    Even with a Trust, rent probably would considered as business income.    Are you prepared to deal with these aspects, including dealing with the tax issues of income property?  The insurance and likely higher liability costs of insurance?  

If you created an LLC, who would be the partners?   You and your husband?  And if so, what would be the benefit of an income entity holding title to and managing the property?

As to creating a Trust for your FIL, this is definitely (as others noted) a question for an estate planning or certified elder law attorney.    There may be other tax issues to address, and you need to know them all up front.

However, I don't believe that you can create a Trust on behalf of someone else, but you can create a trust FOR someone else.    This might not be possible if your husband isn't a joint tenant and named on the Deed, but this is an issue of which I'm uncertain.  Legal counsel is needed, and may even suggest an alternative.

You might also discuss whether a Living Trust would suffice; I'm sure you're aware that an Irrevocable Trust is exactly that, unless there are provisions of which I'm unaware that allow change.

You should also raise that issue, as well as the tax implications, with an attorney. 

I recall one situation in which an estate planning attorney for whom I was working created a Trust for a man's mother, but I don't recall who signed.  

If your husband is named as sole beneficiary in the Will, he'll automatically inherit the house, even if he's not titled jointly with your father.      If the deed is in fact titled jointly, with your husband having survivorship rights, the house will pass to him, outside of probate proceedings.  

However, I'm wondering if the rental aspect and probate delay are primarily why you feel you need some protection?  Or are you also thinking that a renter might create some problem that interfered with inheritance?   

It might be feasible to put a clause in the rental agreement that it terminates within x or y months after death.    That would probably address that issue.   If the renter refuses to move, whether or not the lease is through a trust, you'll have to take eviction actions anyway.

Are there any other assets that would have to be probated?  Financial accounts or assets?    If not, and they automatically transfer to your husband, then you shouldn't need to be concerned about Probate.

Joleah, you are right, it is better to avoid Medicaid if possible. No one really knows what the future holds for an ill senior and it very well could be that he ends up on Medicaid. Hopefully, he never needs the level of care that destroys finances. However, he may and you want to handle the finances as though you knew he would eventually.

I think that you really need to talk to an attorney about setting this all up. Honestly, there are pitfalls that posters here are trying to help you avoid. Because everyone here has been in your shoes to one degree or another, they have dealt with the fallout of having good intentions and going a foul of the laws unintentionally.

I think keeping the house and using the rent received for care is a brilliant idea, but you have to set it up properly and what is in the will doesn't come in to consideration until your FIL dies,so it isn't as simple as he gets it anyway.

Like said, if your FIL wanted to protect his house, he should have done it a long time ago. POAs have limits. Actually, in my opinion, husband trying to put the house in a trust is a conflict of interest because he is the one who will profit in the end.

As suggested, I would run this by a lawyer. You may have Medicaid in his future. What you do now could effect his eligibility in the future. Get a lawyer who knows the Medicaid rules.

You really need to consult with a certified elder law attorney, there are laws governing trusts and LLCs and you want to make sure that you are not creating a legal nightmare. These vary jurisdiction to jurisdiction, it is cheaper to do it right from the start.

What is in a will doesn't mean squat until a person dies. Being DPOA has a fudiciary responsibility and part of that is that you can not personally benefit from your decisions. Any of the choices you named involve changing the deed and title of the house, that could be a problem. These are just a couple of reasons why you should consult an attorney. www.nelf.org is the place to find a certified elder law attorney in your area. They deal with these issues every single day, so they will know how all of this works and how it will affect FIL for his lifetime and potential assistance needed.

(They may refer you to a different attorney to set up an LLC. You should check into what is required to be completely legal and protected if you set this up. General liability insurance for a house in an LLC is not inexpensive. )

If the house is deeded solely in his name and you say he’s not competent to sign legal documents you won’t be able to avoid probate at the time of his death. There would have been ways to avoid this, but now that he’s not competent it’s too late for that. Please consult an attorney on the rest of your questions, it’s worth the cost to get solid advice

I am not an expert, and I’m sure someone will correct me if I’ve got it wrong, but my understanding is: if your POA covers financial issues, not just medical, you can do all of the transactions you described. You are, in essence, acting in your LO behalf, because they can’t do so any longer. The only thing you cannot do is spend that money on yourself, unless you are reimbursing yourself for a expense, and if that is the case, be prepared to show terrific documentation to justify it-receipts,etc.

In other words, you have to be acting in your LO’s best interest at all time. As I recently learned, being POA comes with a heavy responsibility and can entail a LOT of paperwork. When in doubt, document your actions in a journal and make copies of everything!

I strongly suggest you consult an attorney who specializes in elder law before you do anything.

Best of luck to you.