I have an elderly parent who is on a list to move into a senior living community. The house she currently lives in is in a great neighborhood and would be a great rental property. I have 2 other siblings and want to get the house out of our Mother's name before she passes, but not sure of the best approach to take in order for it to be fair and equitable for all parties. Any advice on how to handle this situation would be much appreciated.

Martin Q. Blank said:

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I would not sell the house or get it out of her name due to capital gains tax. Once she dies, there will be a step up in basis.

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This is true, assuming her capital gain would exceed $250,000. In 28 years as a CPA, I have never had a client have so much appreciation in their home to pay cap gains on the sale of their homes... but if it is going to happen it will happen in this market. Also, if the mother is a widow, she would (probably) have received a step-up basis when dad passed.

I don't think there's enough info here to really provide sound advice. The best approach in these situations depends on a lot of factors, such as:

Age of Parent
Current health (which sounds like it is great)
Financial Status, e.g., do they have

• Large amount of liquid assets
• Other properties
• Long-term Care Insurance
• Pension or other regular income

If selling the house, what is your parent's tax exposure.

Nonetheless, you need to have a plan to cover situations where your parent's health takes an unexpected turn. In-home healthcare assistance is expensive but usually manageable. Assisted Living in facility is even more expensive. Nursing care is ridiculously expensive. The latter two expenses can wipe-out a lifetime's worth of savings very quickly.

Long Term Care policies vary greatly, but in general are only designed to cover expenses equivalent to about 5 years of nursing care. Once that money runs out, there is no more.

The worst thing that could happen, from a financial standpoint, is that your parent's health get so bad that you are left with no choice other than to place them in skilled nursing care facility which causes them to burn through all their liquid assets. Before they can receive Medicaid coverage, they will be required to liquidate and expend all assets EXCEPT for their primary residence and a vehicle. So, liquidating the house now will remove that protection.

Keeping the house now will also be a problem if it is left vacant, as the house will likely deteriorate and insuring an empty house = $$$$. So there is no easy answer without know more about your parent's finances.

If all of this is making your head spin, you might consider getting some advice from a professional advisor who specializes in such things. Many times, you can find a social worker who will help you navigate this maze free of charge.

One additional note… if your parent is still lucid, this is a great time to make sure all of their legal affairs are in order (Wills, POAs, Medical Directives, etc.) and make a list of all their financial accounts (checking, savings, brokerage, insurance, etc).

Given dudes and other tax/Medicare info I agree that selling it might not be best, whatever you do, be transparent and do it writing with all stakeholders mom + heirs. Mom and other heirs may not want to talk about it, but that's not a recipe for success. Everyone needs to be on one team and you need to work together

If you want to continue a relationship with your siblings after Mom passes stay out of it. No matter what you do someone will be upset about something.
I always encourage anyone to buy rental properties but don't ever get involved with family especially dealing with inheritance.
Jmho