King George, VA asked in Estate Planning, Tax Law and Elder Law for Virginia

Q: My parents live with us and agreed to either pay on our remaining mortgage or pay us rent. What should they do?

This year my husband and I sold our house and bought another single-story house with the plan to move my parents in with us. My parents now live with us. They plan to sell their house that now sits empty. My parents have agreed to either give us money towards our remaining mortgage or pay us rent. We would prefer to pay down our mortgage. What are the benefits either way? If they give us a lump sum towards our mortgage, can this be considered buying into their new care situation or is this considered a gift? We do not want to cause a problem with the Medicare 5 year lookback.

1 Lawyer Answer
Karen L. Rowell
Karen L. Rowell
  • Estate Planning Lawyer
  • Harrisonburg, VA
  • Licensed in Virginia

A: A lump sum would definitely raise red flags as a gift and would have to be justified, documented and argued. Reasonable rent is easy to justify and document. It would be good to have a written lease and have them pay you rent, you can always apply it toward extra principal payments on your mortgage loan. Alternately, they could purchase a life estate in the home if you are set on a lump sum, in a documented real estate transaction with values based on the Medicaid life estate annuity tables.

Nina Whitehurst agrees with this answer

1 user found this answer helpful

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.