Q: Can we buy our parents house for less than market value and not have a future reprisals?
We want to sell our house, buy my parents house at a lesser than market value, so we can move into the basement and give them the extra care they need. Will the state be able to come back on us and demand the rest of the money in the future? My parents are all for this and named the price he wanted to sell at.
A: There could be some implications for taxes and possibly Medicaid. Your parents should retain an attorney who specializes in helping seniors to review their situation, explain their options, and advise them so they can decide how best to proceed. They can use the Find a Lawyer tab to retain a local estate planning attorney to advise them.
A:
In short, yes. When applying for Medicaid in Ohio there is currently a 5 year lookback period. They are reviewing for any gifts and will impose a penalty period for uncompensated, or undercompensated transfers. Purchasing your parent's house for less than fair market value will be considered a gift for Medicaid eligibility purposes.
If you are moving in to help provide care for your parents you may be able to execute a caregiver agreement to obtain funds and assets from them without a penalty. Medicaid is very strict on these however and I recommend you speak with a qualified elder law attorney to more thoroughly discuss your options.
A: Yes. The difference between the market value and the price you pay is considered a gift. If your parents need to go into a nursing home less than 5 years after the date that they made the gift to you, and if they want Medicaid to pay for it, then they may be disqualified for a period of time. You should definitely talk to an estate planning attorney prior to doing this.
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