MY HOME--SHOULD I GIVE IT AWAY?

Many elderly citizens live in fear they will have to go to a nursing home and they will lose everything they have—depriving them of the opportunity to leave some of what they have worked hard for all their lives to their children.  Their fear is unfounded if they can overcome another fear, that is talking to a lawyer who concentrates on elder law issues.

I generally advise my clients not to consider giving away their home until and unless they are in the nursing home.  Under most circumstances, the children will be able to receive a portion of a parent’s assets, even after a parent enters a nursing home.

The reasons you should not give away your home include:

• What happens if one of your children, who you have given the home to, gets in financial trouble?  His or her creditors may see that your house is sold to obtain his or her share of the proceeds.

• What happens if one of your children gets divorced?

• You may want to sell your home and use the proceeds for an apartment or an assisted living facility.

• You may have higher insurance costs as a tenant and you may lose the homestead property tax deduction because you no longer own your home.

• You can sell your home and avoid paying capital gains tax on any appreciation because it is the sale of your principal residence.  This is not true for your children.

• If one of your children has lived with you for two years before you go into a nursing home, you may be able to give your home to that without creating a period of ineligibility for Medicaid.

• A gift of your home usually creates a period of time that you are not eligible for Medicaid.  Under the new rules, the penalty may begin at any time during the next five years.  You will probably have to file a gift tax return to report this gift to the IRS.  Please remember “Home, Sweet Home” means just that

Please seek advice before making such an important decision.

Keith P. Huffman
Member National Academy of
Elder Law Attorneys

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