What is the name of your state?What is the name of your state?CO
My mother in law bought a condo "in town" approx. 10 months ago, moved in 8 months ago, because she can no longer drive due to macular degeneration.
She paid cash for the condo and owns the other house free and clear.
We started fixing her house in the mountains to put on the market but she did not seem too anxious to sell and we did not press her to make any decision since she said she was kind of depressed living in the condo. She seemed to be thinking about moving back to the house and then finally decided that due to her health problems (heart disease) it would not be a good idea. At Christmas sister in law began questioning if we wanted the house in the mountains and my husband said we always had hoped to buy out the other heirs when mom passes. A couple of weeks later MIL calls and asks if we want to live in the house for one year, pay expenses and then "something can be worked out" if we want to buy it. We began planning to sell our house and work out details of moving then MIL calls last week and says she is thinking we can't afford the house and she doesn't know how to "work it out so it is fair" for others. We could not qualify for a loan for full market value and she was worried if she gifted us that amount it would not work out. I said the only way I knew was she would have to carry a note and it would go into the estate and we would owe SIL and grandchildren the amount of the note. SIL blew up and told mom that she was to let us have the house and not worry about it, we would work it out. We met with mom and asked her what she really wanted and turns out she is mostly concerned about leaving something for the estate and being fair, she does not feel she needs the money at this point in time but is going in the hole a little bit from expenses for both properties. We decided that the only way to achieve what she wants is to leave the house in her living trust and my husband and I take over the expenses, give her a lump sum each year to pay as needed. We thought that eventually we might convince her to live in the house with us if necessary because she doesn't really like the condo and would be happier there. She is 99% mentally competent and says she does not want to live with anyone, but that could change and SIL's house is too small and our current home has stairs that would not be safe for her.
Now for my questions: MIL has medicare, a good supplemental (from Father in law's pension) and a long term care policy, SS and pension income. Is it still likely that she might end up on medicaid and having to sell the house to pay for long term care even though she seems to have planned well? Could we sell the condo and move her back to the house and would that matter if it was her primary home? I was planning on using proceeds from sale of my house to upgrade/update her house, would there be any way to recover any of that if we have to sell? If she sells at current value her capital gains would exceed the $250k exemption, should we do some kind of contract for deed prior to her being out of the house 36 months or could we move her back for the number of months required to meet the 24 month rule as her primary residence? Capital gains on the condo would be negligable, so she would probably better off paying tax on that and preserving the exemption on the house. Finally, if we make substantial improvements to the house at our expense how would we determine the value if she passes and we are to buy out the other heirs, I believe that they are entitled to any appreciation during the period she holds the property in the living trust, but how do we determine that as opposed to improvements we make at our expense?
I know this is alot of questions, sorry if to lengthy, any help would be greatly appreciated.
My mother in law bought a condo "in town" approx. 10 months ago, moved in 8 months ago, because she can no longer drive due to macular degeneration.
She paid cash for the condo and owns the other house free and clear.
We started fixing her house in the mountains to put on the market but she did not seem too anxious to sell and we did not press her to make any decision since she said she was kind of depressed living in the condo. She seemed to be thinking about moving back to the house and then finally decided that due to her health problems (heart disease) it would not be a good idea. At Christmas sister in law began questioning if we wanted the house in the mountains and my husband said we always had hoped to buy out the other heirs when mom passes. A couple of weeks later MIL calls and asks if we want to live in the house for one year, pay expenses and then "something can be worked out" if we want to buy it. We began planning to sell our house and work out details of moving then MIL calls last week and says she is thinking we can't afford the house and she doesn't know how to "work it out so it is fair" for others. We could not qualify for a loan for full market value and she was worried if she gifted us that amount it would not work out. I said the only way I knew was she would have to carry a note and it would go into the estate and we would owe SIL and grandchildren the amount of the note. SIL blew up and told mom that she was to let us have the house and not worry about it, we would work it out. We met with mom and asked her what she really wanted and turns out she is mostly concerned about leaving something for the estate and being fair, she does not feel she needs the money at this point in time but is going in the hole a little bit from expenses for both properties. We decided that the only way to achieve what she wants is to leave the house in her living trust and my husband and I take over the expenses, give her a lump sum each year to pay as needed. We thought that eventually we might convince her to live in the house with us if necessary because she doesn't really like the condo and would be happier there. She is 99% mentally competent and says she does not want to live with anyone, but that could change and SIL's house is too small and our current home has stairs that would not be safe for her.
Now for my questions: MIL has medicare, a good supplemental (from Father in law's pension) and a long term care policy, SS and pension income. Is it still likely that she might end up on medicaid and having to sell the house to pay for long term care even though she seems to have planned well? Could we sell the condo and move her back to the house and would that matter if it was her primary home? I was planning on using proceeds from sale of my house to upgrade/update her house, would there be any way to recover any of that if we have to sell? If she sells at current value her capital gains would exceed the $250k exemption, should we do some kind of contract for deed prior to her being out of the house 36 months or could we move her back for the number of months required to meet the 24 month rule as her primary residence? Capital gains on the condo would be negligable, so she would probably better off paying tax on that and preserving the exemption on the house. Finally, if we make substantial improvements to the house at our expense how would we determine the value if she passes and we are to buy out the other heirs, I believe that they are entitled to any appreciation during the period she holds the property in the living trust, but how do we determine that as opposed to improvements we make at our expense?
I know this is alot of questions, sorry if to lengthy, any help would be greatly appreciated.