Q: What concerns should I have when adding a senior parent to the deed of a home?
in the process of purchasing a new home. Mom is putting the down payment down, gifting to me. Condition is, she wants to be on the deed of the home so as to say, when she passes, her portion of the home will be willed to me and I will have majority ownership of the home. What issues might I run into as she hits retirement, begins to accept Medicare and SSI should I be unable to take care of her and her medical finances as she enters her senior years, do I run a risk of losing the home altogether that I have been paying the mortgage on? Could a lien be place on the home and/or used as an asset to pay off any outstanding balances?
A: You can have a lot of concerns you mentioned which could be a problem, but an attorney would need much more information to give you the answers you need. Thus I suggest if this is important to you, to set up a consultation with an attorney to discuss these possible problems. Expect the attorney to charge you for his time and advise.
You and your mother need to arrive at complete clarity about what you are doing. A lot of problems arise when inconsistent positions are taken. For example, your mother acquiring an interest in the home is inconsistent with saying she is "gifting" the money. It is one or the other (usually), not both.
If she is purchasing a percentage interest in the home, then you need to be clear on what percent she is purchasing, and that should be properly reflected in the way the deed is drafted, and you should have a co-ownership agreement, in writing, between the two of you. You should also be aware that her ownership of a percentage interest in a home may or may not be a disqualifying asset if/when she applied for SSI or Medicaid in the future, especially if she does not live in the home. It might also be subject to Medicaid estate recovery after she passes.
If she is making an outright gift, she needs to understand the tax ramifications of that and that she cannot take it back or leave it to someone in her will and that it might cause her to incur a penalty period in the future if she applies for government benefits such as Medicaid.
And there are other issues. The bottom line is this is not a do-it-yourself project. You EACH should hire an attorney to help you document this correctly.
A: A very easy solution that will eliminate many concerns for both you and your mother. Instead of being placed on the deed. She is given a mortgage in the face amount of the money she is lending you to buy the home. The mortgage has a safe harbor rate of interest payable once yearly, just the day before Xmas. She gives you a letter each year forgiving the interest payment as a holiday gift. In her will, she forgives the debt. She is protected in that she must be paid in full if you decide to sell the home, and if relationships deteriorates, she can not give you the annual gift letter but demand payment of the interest
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