My parents are 79 and Dad is in advanced stages of Parkinson's but is being treated at home with caregivers and hospice. Mom has had a mini-stroke and her health is declining. They have assets such as stock and cash as well as the home which is paid for. My question is this. If she deeds the family home over to one of the kids, after 5 years, if they are either gone or paying down to eventual medicare, can we use the home to rent it out to secure our inheritance? Does that make sense?

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If the parents sign the title over to the kids this could have major tax consequences. The cost basis of the house will be what the parents paid for it. If the children inherited the house the cost basis of the house will be what it was worth at the time of the parent's death.
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Wow, that is awesome information igloo! Thanks so much, I really appreciate your time and effort.
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Well it is good you are thinking about all this now. Dealing with your parents home really - to me - depends on your or your siblings ability to have deep enough pockets to pay for everything on the home & legal costs and a pretty good sense of humor. Also you need to understand the difference between MediCARE & MedicAID. There are several good articles on this site on all this.

As I've lost my crystal ball, I can't tell you if dad or mom will be able to still be at home in Summer of 2020. That is how long they would need to be at home private paying or Medicare paying for whatever BEFORE they could apply for Medicaid without a transfer penalty for gifting the house to you this month (April, 2015).
If they run out of $ between now and summer 2020, the gifting of the home to you or your siblings will cause of transfer penalty by Medicaid. For real property, there is just no way around Medicaid not finding out about the transfer as the local tax assessor ownership details on the property dovetails to the state's system and it will show up. Transfer penalties are very sticky to deal with and hard to have in your favor unless there is substantial details and documentation on the property that is all legal. The fact that your folks also have stocks and investments, will likely have their Medicaid application sent to a secondary level for a more forensic review. 1 transfer penalty item seems to red-flag that things are being done for Medicaid asset avoidance.

Really before you go and do anything, you are best scheduling an appointment with an elder law attorney for your folks. Personally as it sounds like your folks are not real mobile easily, I'd get all their info together (all banking details, info on their stocks - speak with their FA to get current details; their awards letters fromSS and retirement; the last tax assessor statement on the house - this likely was sent out in Oct/Nov for payment due in January). ALso do a face sheet on your parents - date of birth and info on their marriages and divorces and birth dates of all kids (even those deceased or from a prior marriage). If your the POA, you take all this to the first appointment. I'd have a sibling or in-law go as well just so everybody in the family can be more kum-ba-ya on all this.

Medicaid is set up to provide for those who are "at-need" medically & financially. For financial, that means they are impoverished with about 2K of assets and about 2,100 in monthly income. But each state runs it's Medicaid program uniquely, so what the $ amount is in TX will be different than for NY. Your parents home is an exempt asset for their lifetime for Medicaid but can be subject to MERP - estate recovery after death. Just how MERP is done will be very much interdependent on your states laws for probate and property rights. Really if they have a home, you'll end up needing good legal whether now in the planning stages or later on when going through probate. Best is to have legal done now and set up for later.

Also I'd take a hard look at the costs & value on the home. Can your parents afford the home in the future; could you afford to pay for all on the home? If you are expecting siblings to participate in all this, are they good on their word? and from now till forever?

If the home value is quite high, the transfer penalty involved could be huge. Penalties are set by # of days ineligible based on your states Medicaid reimbursement rate. So a 200K home transfer for TX, means a penalty of 1,290 days. Yes, that's right a penalty period of 3.5 years! 3.5 years in which Medicaid will not pay at all. The issue with penalties is that often, the parent is at the point that they just flat need to be in a NH and family has to sign off on a contract for payment to have momma stay in the NH. At 8K on the average cost for 1 month in a NH, that is a lot of money.

Really find out clearly from elder law as to what options may be possible. Often by the time they are at need, there is no "saving for an inheritance" option.
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