We live in CT. My parents own (no mortgage) a too big, old home worth app$300,000, (original cost $26,000 in 1967). They have an income, including SS, of about $2,500 per month. Parents are both in their 80's with failing health/mobility. My husband and I want to build an in-law suite in my home, which we also fully own. My parents will pay for it completely with money from the sale of their home, hopefully with about $150,000 to "bank". We intend to provide in-home care up to the last possible point of both their lives. What should be "their" and "our" biggest financial consideration concerning protecting our estates/ensuring both parties have enough money to do this as long as possible. PS -have researched a bit and awaiting our appt with elder lawyer/want to be somewhat prepared.

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You are doing the right thing to consult an elder law attorney about the financial aspects of this move. Please consider carefully the fact that it's likely you need to hire respite caregivers in the form on in-home care since the time is apt to come when you will want a vacation, or just some nights out. Also address the aspect of privacy for your parents and you.
When it comes to the financial part, just make sure the attorney knows Medicare laws well. Your parents have sufficient assets that they aren't likely to need this care, but you still want to know how it would all be handled if they needed years of paid care that you can't now imagine. Cover all bases.
Good luck,
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I have had clients that did something quite similar to your plan. The key is for your parents not to overpay you for their interest in your house. If the in-law suite is really only valued at $100,000, but they pay you $150,000, they have just made a $50,000 gift to you and your husband, which can cause a certain period of disqualification from receiving Medicaid should either of your parents need to apply for Medicaid within the next 5 years.

It may be possible for your parents to purchase a greater interest in the house, so that they can shelter more of their money. This would be a type of joint interest. This can require a complicated calculation to set the interests of the parties in the deed, which the attorney will have to do.

You also need to plan for what happens to their interest in the house after their deaths. In many states, so long as a jointly owned residence passes by law automatically to the surviving joint owners (i.e., avoids probate), the state cannot make a claim against it after the deceased joint owner dies, to recoup the state's Medicaid payments. Other states allow such recoupment against the property even after the death of the Medicaid recipient/former joint owner. I believe that Connecticut may have very recently changed its laws to expand its "estate recovery" laws to permit this, so you will certainly want to check this out with your elder law attorney.

Since you said you plan to provide care to your parents, you should also ask your attorney about the possibility of him/her drawing up a Personal Care Agreement. Some states permit an advance payment for lifetime care, others limit payments only to ongoing care (i.e., must bill monthly). The advantage of such a contract, in either case, is that it permits your parents to transfer money to you without it being deemed a penalty-causing gift. Of course, their payments to you would be taxable income, so be sure to check with your accountant about the various reporting requirements for this.

P.S.--In the answer above by Carol, I believe she meant the "Medicaid"--not "Medicare"--laws, since Medicare does not look at one's financial means to pay but Medicaid does.
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