OT - Need ideas for transferring parents assets.

[Tycer]

Nancy and I are about to place her parents in homes. One assisted living and one 24 hour locked nursing.

They have never transferred their assets to anyone to prepare for the blood-letting of managed care costs.

What ways have you found to transfer different assets?

[brucew44guns]

Just guessing, but looks like one of you kids should have Power of Attorney, to be able to rake up their assets into one pile----(house, cash, investments) and then pay bills out of that pot. An attorney could help with this, and the cost shouldn't be too much. I wouldn't want anyone forking over a big sum of worth to a care facility just to let them eat away at it as they wished. Any balances of wealth would be your business, not theirs.

[BenT]

Your might be too late based on state laws. Some can go back up to 5 years to claim transfered assets. I assume your not talking cash. If your talking property. You can try a living trust which puts property into a trust , where siblings take part ownership, but the parent still has legal contol of what happens with the property until death. At which time it is just a regular trust which can be dissolved and assets sold off.

[Ysabel Kid]

Our family set up an LLC, where my mother and each of her children are members. She transferred a lot of her assets into it. The intent was to shelter her assets as best she could. After seeing her father's assets wiped out after a ten-year losing battle with Alzheimers, leaving her mother with little to cover her own requirements, she was determined to not let this happen to her. Mom's remarried, and her husband is a dozen years her senior - so this is a real potential issue. I'm not sure about all the details - I just signed the LLC documents when presented to me. As I told my Mom, I'd go along with this if everyone agreed that this was still her money to use as she pleases/needs (I was/am worried that a couple of my siblings may see this differently, thinking the assets belong to them now). She did use the services of a lawyer and accountant - well worth the investment. Hope this helps.

[BwanaDave]

First off you need to talk to an attorney in the state they reside in. Look for someone that focuses on eldercare and estate planning. There are things that can be done to help but there can be issues about transfers done to avoid creditors.

Assuming there are no fraudulent transfer issues a common method is to form an limited partnership and have with three partners. The managing partner owns 1% the parents own 98% as a limited partner and the other limited partner (possibly a trust) would have the remaining 1%. Once this structure is set up the parents put their assets in the partnership and then sell their partnership interest to the other limited partner. Because the assets are inside of a partnership they are worth less than they would be outside of the partnership. Because of this the partnership interest can be sold at a discount, often 40% off, what the assets inside the partnership are worth on their own. The reason they are worth less is the lack of control, only the managing partner has control. The managing partner can be an LLC owned by the family. The managing partner's interest could be sold to the remaining limited partner at a future date but caution should be used so the whole plan isn't considered a step transaction. The remaining limited partner funds their purchase of the 98% interest by a promissory note to the parents on very favorable terms. The IRS publishes the minimum rate at which a loan can be made on a given date for a given period. These rates are very very low. What the above does is avoid estate or gift taxes on up to 40% of the value of the assets. The note itself is actually worth much less than its face value due to the long term and low interest rate. Obviously there has to be a certain amount of assets to make the above worth while. I have worked on such transactions to transfer as little as 1.5 mil in real estate to over 100 mil. The above is just an example of a tool available that most people are unaware of. You really need to talk to a good attorney who works in this field to get specific advice that fits your situation.

Dave

[Pisgah]

Speak to an attorney. But from a federal law perspective, you are 5 years too late.

[Old Time Hunter]

Wow, somebody must be peering into my life! My Father just called yesterday and requested that I get my siblings together to discuss financial and health assistance of both him and my mother. Unfortunately, my parents nest egg has been desimated by the economy and their funds have shrunk to 30% of what they were only 18 months ago. Don't get me wrong, they still have a few hundred k and a debt free home along with SS and pensions for income, but my Mother is in the beginning stages of Alzhiemer's and my Father, even though he is mentally sharp, needs help physically. After looking into "assisted" living facilities, the organizations want to take everything they worked for all their lives. Including "family" land that has been in our family for over 150 years. My Father has asked to look for ways to defend against total financial liquidation. I was told by others to have him "gift" their cash/investments to us children, along with making the property a "et al" amongst the entire family, then they can keep their home and have a part time care giver monitor them on a weekly schedule. Does this make any sense?

[Old Ironsights]

Nancy and I are about to place her parents in homes. One assisted living and one 24 hour locked nursing.

They have never transferred their assets to anyone to prepare for the blood-letting of managed care costs.

What ways have you found to transfer different assets?

It's tough to do without getting creamed by Geitner & BoBo.

Assuming you have a few years to work with...

Have your 'rents individually write each person in your family a PERSONAL check for $10,000.

That is the maximum "gift" any individual can recieve from another individual without incurring tax liabilities.

You can peel off a fair chunk of cash in a hurry that way if you pay attention.

The rest is tougher.

[BenT]

Parents can gift up to $10k a year per child. So get their property assessed. I went through this with the family farm. If there is 4 siblings each with a spouse your parents can gift $80K to them in one year total. So with realestate prices down he might be able to gift half of his propert y this year and half next. Or set up a living trust like I metioned above. Get ahead of the storm on this one.

[Gun Smith]

Some things not mentioned above are very important and need to be addressed. Your parents need to have a Last will and Testament, a Living Will, and Durable Power of Attorney in place before they move to a facility. You will be the one in these documents (LW,DPA) to be responsible for any extraordinary care required. If they do not have these in place any medical facility can take their care decisions away from you. You all need to get together now and consider what your parents want now in the way of extraordinary care instead of decisions made by a hospital or doctor in the future. Any good attorney can prepare these for you at a very reasonable cost.

[Tycer]

Some things not mentioned above are very important and need to be addressed. Your parents need to have a Last will and Testament, a Living Will, and Durable Power of Attorney in place before they move to a facility. You will be the one in these documents (LW,DPA) to be responsible for any extraordinary care required. If they do not have these in place any medical facility can take their care decisions away from you. You all need to get together now and consider what your parents want now in the way of extraordinary care instead of decisions made by a hospital or doctor in the future. Any good attorney can prepare these for you at a very reasonable cost.

Thanks. Those were all done back in '96. Nancy is poa.

[Hobie]

Nancy and I are about to place her parents in homes. One assisted living and one 24 hour locked nursing.

They have never transferred their assets to anyone to prepare for the blood-letting of managed care costs.

What ways have you found to transfer different assets?

It's tough to do without getting creamed by Geitner & BoBo.

Assuming you have a few years to work with...

Have your 'rents individually write each person in your family a PERSONAL check for $10,000.

That is the maximum "gift" any individual can recieve from another individual without incurring tax liabilities.
You can peel off a fair chunk of cash in a hurry that way if you pay attention.

The rest is tougher.

The max is $13,000 as of this year. It has been $12,000 for at least a couple of years.

The family trust likely won't shield the assets BUT it provides estate benefits AND the manager of the trust insulates one sibling from accusations by other siblings. The trust would pay the institutions for the care and the pharmacy (usually in some sort of partnership with the institution).

These things change as often as the folks in DC (or your state capitol) change socks. The suggestion of a local expert/lawyer is a good one.

[Don McDowell]

Check with the locals, but here and in Colorado, if the assets weren't distributed or locked in an llc or similar 5 years ago, its too late. Your folks will have to pay until its all gone and then medicare will take over.