Buying Grandparents' Home

[kinan]

What is the name of your state? CA

My wife and I are looking to buy a house, and my grandparents would like us to move in with them to help take care of them. They are in their mid-80s.

Is it possible (with their agreement of course) to purchase their home but put something in the contract that they are legally allowed to continue living in the home with us until they die. I want them to feel super comfortable with that decision, but also in case my wife and I die unexpectedly, that they are not kicked out, or something else.

We don't want to inherit the home. They have 5 daughters, including my mom, who will want to benefit from the purchase. My mom would want to donate her portion to us because she will likely live with us anyway. But in this way, her sisters could get their inheritance money now from the home, we can purchase our future home and not have to keep paying rent, my grandparents will have people living with them and taking care of them and will not fear being kicked out of their home either, and they get to see their great-grandchildren grow up with them, which just brings them joy. I grew up with them in that house too, so it's sentimental to all of us.

 

[LdiJ]

What is the name of your state? CA

My wife and I are looking to buy a house, and my grandparents would like us to move in with them to help take care of them. They are in their mid-80s.

Is it possible (with their agreement of course) to purchase their home but put something in the contract that they are legally allowed to continue living in the home with us until they die. I want them to feel super comfortable with that decision, but also in case my wife and I die unexpectedly, that they are not kicked out, or something else.

We don't want to inherit the home. They have 5 daughters, including my mom, who will want to benefit from the purchase. My mom would want to donate her portion to us because she will likely live with us anyway. But in this way, her sisters could get their inheritance money now from the home, we can purchase our future home and not have to keep paying rent, my grandparents will have people living with them and taking care of them and will not fear being kicked out of their home either, and they get to see their great-grandchildren grow up with them, which just brings them joy. I grew up with them in that house too, so it's sentimental to all of us.

That is certainly something that can be done if everyone is in agreement. I would recommend being very respectful in making any changes to the home while your grandparents are still living. It will avoid some potential tension. Also, remember that they are elderly, and don't expect them to babysit your children. They may not be physically up to it.

Also, for tax purposes please note that your grandparents would be gifting your mother and her siblings money. There are gift tax rules in place. Between the two of them they could gift 30k (15k from grandpa, 15k from grandma) to each of their children annually without having to worry about filing any gift tax returns. Since the current lifetime gift tax exclusion is over 11 million, I doubt that they will have to worry about paying any actual gift tax, they will simply have to file the forms if the gift is in excess of the annual exclusion.

 

[PayrollHRGuy]

The method for them to do this is called "life estate".

Here is some info on how it works in CA.

https://www.countyofnapa.org/1135/Life-Estates

 

[zddoodah]

Is it possible (with their agreement of course) to purchase their home but put something in the contract that they are legally allowed to continue living in the home with us until they die.

Your use of "the contract," instead of "a contract" gives me pause because using a definite article makes me wonder what contract you are talking about. That said, it is certainly possible for you to buy their home and for you and them to enter into a contract (or agree to some other mechanism) that gives each of them the right to live in the home until they die.

We don't want to inherit the home. They have 5 daughters, including my mom, who will want to benefit from the purchase.

Your concerns are not a by-product of you inheriting the home. Your grandparents could each make a will that says the interest of the first of them to die passes to the survivor and that, upon the death of the survivor, the home goes to you. They could also make a trust that would accomplish the same result and avoid probate. If wills and/or a trust are created properly, none of their children would have any involvement.

I strongly suggest that you encourage your grandparents to consult with with a local estate planning attorney. It's entirely possible that something other than the sale/purchase transaction is in their and your best interests. You should stay out of the process until and unless they conclude that the sale/purchase transaction is the way to go.

 

[izzie02]

You should also keep in mind what if grandparents need more care than what you can provide and end up in a nursing home. Do they have the money to cover those expenses? If they will not then their assets, the home, will be assessed for Medicaid covering those expenses. They also do a look back, seven years I think, to assets given away and will try to get those assets. You really need to see an estate planning lawyer.

Adding, You hear stories about how grandma was planning on giving home to grandchild who took care of them for years and the pay off will be the home. But then "the state" took the house to cover grandma's nursing home expenses.

 

[PayrollHRGuy]

It is five years but a good point.

 

[adjusterjack]

Kinan, if you buy the house for Fair Market Value (get it appraised), the Medicaid lookback shouldn't be an issue with regard to the house.

However, if your grandparents give away any of the proceeds and then need Medicaid within the next 5 years after giving away the money, it will certainly be an issue with Medicaid.

 

[LdiJ]

Kinan, if you buy the house for Fair Market Value (get it appraised), the Medicaid lookback shouldn't be an issue with regard to the house.

However, if your grandparents give away any of the proceeds and then need Medicaid within the next 5 years after giving away the money, it will certainly be an issue with Medicaid.

But that wouldn't be the OP's problem if the OP paid fair market value for the home.

 

[kinan]

Thanks everyone! This answered a lot of my questions.

LdiJ. I agree! No way they could, or would I expect them, to watch our children. It's more like we're going to be there watching and helping them. They are getting to the age where they could use some daily help and want someone there at night for emergencies. I feel indebted to them for giving me a home to grow up in, while having unstable parents in unstable. I really credit them for the successes I have in life now. I agree with waiting to remodel too. If anything, we planned on keeping them in their current room, the master bedroom, and thought about just adding a bathroom to their room so it's easier and not as crowded feeling, since every seems to have the urge to poop at the same time of the day.

Great points about the Medicaid. We were planning on buying it at fair market value anyway, but something to really keep in mind, especially if they try to cut us a deal. It seems it might be in their best interest if they kept the proceeds and gifted their kids $15K each per year until they die, rather than give them the money now, in case they do need a higher level of care. The daughters have been in disagreement with each other regarding my grandparents selling their home and going into a nursing home. Three daughters want that for them, including the one that lives with them right now, so that they can get the help they need, while two daughters have been convincing them not to, because they want to save up as much money as they can for their inheritance. But they might be open to them selling the house to me, while keeping them there for as long as it is possible. It seems we really should involve an estate lawyer sooner than later.