Combining assets with parents; are there any legal pitfalls?

Suggest that your parents talk with an Elder Law Attorney in your state who also has expertise in residential real estate closings.

Ask the Attorney about options for managing the proceeds from sale of their home.

Depending on the current health of your parents (which sets up a timeline for possible need for a nursing home admission and Medicaid in the future) the Attorney may suggest that your parents buy a Life Estate interest in the new home you are buying.

Other Medicaid regulations to consider include the Caregiver Child exception for home transfers, which would exempt a transfer of the house if your parents owned the house and their adult child had lived in the house and cared for the parent needing Medicaid for 2 years before a nursing home admission.

Also consider a Caregiver Contract which would pay you for care, with reimbursement to you that is exempt from Medicaid transfer penalties.

Many other factors can fit into good Estate Planning and Elder Care Planning, since you have the foresight to anticipate future needs. If the Elder Law Attorney represents your parents in the sale and purchase closings, he or she will be able to coordinate everything for your family and help to optimize your resources.

John L Roberts suggestions are great. I understand what you are saying though about needing funds from both home sales to afford something all can be comfortable in. When my parents came to this situation we did something a little different. My husband and I were able to purchase a property and it was completely in our name. My parents paid us rent which we were able to use toward payments and expenses for the property. When the time came that they needed other housing ( Dad died and Mom went to a memory care facility) we didn't have our assets comingled so there wasn't any issues. We were able to sell the property without having to have Mother's OK.

Yes.  See an Elder Lawyer to inform you and set up whatever you may need, especially if your mom can still sign.  He/she will know your state laws as well as federal.  Good luck.  It is quite a journey.

devans175, I agree with all the writers prior that it would be highly recommended that you make an appointment to see an "Elder Law Attorney".

Co-mingling your assets with that of one's parents could create a landmine of issues, especially if and when that parent(s) might need Medicaid later down the road.

If your parents give you money to help pay for the house, that could be viewed as "gifting". It may be better if your folks paid you "rent". Again, this is something an Elder Care Attorney could explain to the steps to take.

With your Mom having Alzheimer's, you need to see into the very near future that she will need a village to take care of her. I had to do that with my Mom as it would have been impossible for Dad, nor I, or even professional caregivers to take care of her at home. Mom was moved to long-term-care, and even through she was meer 90 lbs, it took 2 Staff members to safely transfer her, as she could no longer stand or walk.

A different sort of pitfall, but a devastating one that happened in our family, no dementia involved.

Dad died, 'the youngest kids' convinced Mum to sell her beautiful condo and use the proceeds to help them buy a beautiful home with a suite for Mum. Sounds good right?

3 years later 'the kids' marriage was on the rocks, they divorced and the house had to be sold. Opps, Mum's name was not on the title ('I trust the kids'). She got nothing from the sale of the house, She wound up living the rest of her life in a low income apartment. Apparently the kids had convinced her to use a lot of her retirement savings to buy new furniture etc for the house.

DO NOT MINGLE ASSETS unless you are so wealthy that Medicaid will never be a consideration.  Trying to untangle mingled assets is a humongous mess.  Protect your sanity.

Even if medicaid is never needed there still may come a day when one or both of your parents need a higher level of care and the ability to use all their assets to pay for it, or for that matter they may choose to move to a more senior friendly location. Both scenarios could get complicated if their major asset is a co-owned house.

You shouldn't comingle your income if you feel Medicaid may be needed someday. The sale of their home, market value, should be put aside for their eventual care. Being co-owners may not be wise either. Maybe you can charge them rent to offset the cost of a bigger house.

You need a lawyer. One versed in Medicaid for a while. Members always suggest Eldercare lawyers but have been given wrong info concerning joint bank accts.

Yes. Many. Get legal advice.

Bad idea. Parents' assets should remain in their names only until they die. POA can be appointed. My brother tried this crap. He, too, went through a divorce. Ex-wife got house and mom got booted to a rented mobile home. By the time I got POA, her assets had gone from $500,000 to her Medicare check and one small piece of land (worth about $25,000).