aging alzhiemer home owner

[fmbilleci]

What is the name of your state? California. My father-in-law, a widower, has alzhiemers and is living in his own home with help from my wife and I. He is well in his 80's and will probably need to go to a long term assisted care home very soon. If we sell the home for him, is there some tax law exempting a person with alzhiemers from paying the full tax on the sale of the house?

 

[Charles11]

is there some tax law exempting a person with alzhiemers from paying the full tax on the sale of the house?

Not that I'm aware of. This question would be best addressed to an estate planner especially if the party is going to need long term care.

Aside from that he would have a 250,000 exemption from gain on the sale presuming he has lived at the house for 2 of the last 5 years. The gain is the amount received net of selling expenses that exceeds his basis in the home. Basis is what he paid for the house plus capital improvements. If he had a wife his basis will be stepped up beyond that. Did he?

He may not have as big a tax burden as you might think.

Consult the estate/tax professionals BEFORE doing anything!!

Chas

 

[fmbilleci]

aging alzhiemers home owner

Thanks for response Charles11 Our dad was maried 49 years (same women!)

 

[BlondiePB]

fmbilleci,
FYI, if your father-in-law goes to an Assisted Living Facility (ALF) and requires assistance with more than two activiites of daily living (i.e. help dressing, help showering), 100% of the cost of the ALF is deductible on his taxes. Or, if FIL is declared incompetent by the court, all the cost of the ALF is tax deductible. Nursing homes are 100% deductible, but ALF's are much better for elders if they can be placed there.

Our dad was maried 49 years (same women!)

Good for dad. How many women was he married to? (just kidding)

 

[Charles11]

Thanks for response Charles11 Our dad was maried 49 years (same women!)

No problem. 49 years is pretty remarkable.

The reason I asked about a wife was:

When a spouse inherits a deceased spouse's half of the property they do so with a basis that is equal to the market value of the inherited HALF at that point in time.

So if the property was worth 400,000 at the time the wife passed the surviving spouse's basis would be 200,000 for the inherited half PLUS half of the original basis. Eg. if the house cost 30,000 initially his basis would be 200,000 plus the 15,000 = 215,000 so when he then uses his 250,000 exemption there would be no federal income tax due on the sale.

Now having said that, in community property states (like California) the ENTIRE basis can be stepped up to market value (in the example above, increased to the full 400,000) on the date of a spouse passing depending on how the title was held. This should be investigated if the house value is high enough to get a benefit from this.

The money spent on an estate planner/tax adviser now is worth every penny. It is a lot easier to get powers of attorney, health care directives etc now while Dad is competent to execute them than having to deal with a guardianship that would involve having a lawyer and going to court. Although it is hard to do, try as delicately as possible to have Dad express to you his final wishes so you will know in case it comes to a point he won't be able to adequately express them.

Good luck with everything.

Charles

 

[BlondiePB]

It is a lot easier to get powers of attorney, health care directives etc now while Dad is competent to execute them than having to deal with a guardianship that would involve having a lawyer and going to court. Although it is hard to do, try as delicately as possible to have Dad express to you his final wishes so you will know in case it comes to a point he won't be able to adequately express them.

Charles, the poster's FIL already has alzheimers; therefore, the FIL cannot sign valid POA or any other estate papers, including a health care directive, because the FIL is incompetent. If there was no POA, etc. signed by the FIL prior to the Alzheimers, then fmbilleci or another family member must petition to be the FIL's conservator (CA is conservator rather than guardian) and Health Care Surrogate/Proxy.

Most incompetents can express their final wishes, which is very important. Once final wishes are known, it is important for the fiduciary to make and pay for pre-arrangements.

 

[fmbilleci]

alzhiemers home owner

Blondie PB
THANK YOU FOR YOUR RESPONSE..More to the story about FIL. My wife does have full POA and she handles all of his matters. The POA was filed, notarized and recorded in the county in which we live. A living trust was also drawn up at the same time. I was under impression that a real estate transaction was ok if needed. This all happend a couple of years ago while he was still in sound mind and could write.

 

[Charles11]

Charles, the poster's FIL already has alzheimers; therefore, the FIL cannot sign valid POA or any other estate papers, including a health care directive, because the FIL is incompetent. If there was no POA, etc. signed by the FIL prior to the Alzheimers, then fmbilleci or another family member must petition to be the FIL's conservator (CA is conservator rather than guardian) and Health Care Surrogate/Proxy.

An initial diagnosis of alzheimers is not a concurrent legal finding of incompetence. Therefore you cannot unequivocally state "...the FIL cannot sign a valid POA". If what you propose was accurate no one who was diagnosed with alzheimers or other progressive dementing illness could ever execute a POA or other legally binding document which they can and do after early diagnosis and prior to becoming incompetent.

http://www.theribbon.com/issues/vol1issue04.asp

Most experts in the legal aspects of Alzheimer's disease recommend durable powers of attorney as the easiest, most efficient, and cheapest approach to a caregiver's assumption of control of the affected individual's legal and financial affairs. However, the person creating the durable power of attorney document must be competent at the time the durable power of attorney documents are signed, so they must be drafted fairly soon after the Alzheimer's diagnosis.

Chas

 

[BlondiePB]

An initial diagnosis of alzheimers is not a concurrent legal finding of incompetence. Therefore you cannot unequivocally state "...the FIL cannot sign a valid POA". If what you propose was accurate no one who was diagnosed with alzheimers or other progressive dementing illness could ever execute a POA or other legally binding document which they can and do after early diagnosis and prior to becoming incompetent.

http://www.theribbon.com/issues/vol1issue04.asp



Chas

If you read some of the posts in Wills & Trusts, Probate, and Elder Law sections, not only will you read lots of horror stories, you will read that the attorneys that post on this forum (such as IAAL, BB, JETX; HG) also state the same "a person with alzheimers/dementia cannot sign a POA".

 

[BlondiePB]

Blondie PB
THANK YOU FOR YOUR RESPONSE..More to the story about FIL. My wife does have full POA and she handles all of his matters. The POA was filed, notarized and recorded in the county in which we live. A living trust was also drawn up at the same time. I was under impression that a real estate transaction was ok if needed. This all happend a couple of years ago while he was still in sound mind and could write.

Great and you are very welcome. As long as the assests are being sold to care for dad, everything is just fine. If the house is in the trust and your wife is also the trustee, she must sign as the documents as trustee rather than POA. Not knowing if dad has other heirs, just make sure that your wife accounts for every penny of dad's assests. Should there be any squabbling by other heirs when dad passes, she needs to be able to account for all dad's money and assests to a judge.

Just telling you this to protect you and your wife as there's lots of horror stories with squabbling heirs. Take Charles advice regarding the tax stuff. I don't deal with that -- just the affairs of incompetents and making sure they are taken care of and filing their income tax returns.