My elderly parents have recently moved in with my husband and me. They plan to sell their house. What should they do with the proceeds?

They should pay their fair share but, how do you figure that they are losing their money if it go towards their care?

That's what the money is for, their care. So do the right thing and don't try to commit fraud by hiding it.

Use it to pay for Assisted Living or Independent Living.

They can’t gift you any money if they will need Medicaid in the next 5 years and honestly going on Medicaid should not be their goal if they have money. What they can do is use the money to live off of and that includes paying you room & board and contributing the household expense.

They will be two additional people in your home and of course the household expenses will increase.

They should be paying for legitimate living expenses.

Speak to an elder attorney if you want professional advice about how to budget and spend their money for their needs.

More or lessing repeating what has already been said: their money is to be used for their care and housing. Keep records, receipts.

Call your tax accountant. Capital gains taxes are a non issue, as a rule, unless there is more than $500k in profit to be realized from the sale of the primary home for 55 year olds and over. They should contribute to your household expenses if living with you, and you should save receipts and seek legal advice for amounts that would be fair.

Medicaid does a 5 year look back to make sure your mortgage isn't being paid off so your parents can get free long term care sooner. The government frowns on things like that, and so do us taxpayers.

The goal should be getting your parents the highest level of care possible with the sweat equity they've earned. That's the purpose of it. Medicaid is a last resort after all of their savings have honestly been used up, not squirreled away for "inheritances".

For their care and living expenses only. But, however that is worked out, it must be a formal contract. Get the assistance of an elder law attorney that will draft one that's on compliance with state law.

No, you cannot pay down your mortgage then have taxpayers foot the bill for their care when they need it.

there is a right way and a wrong way to do most things. It matters. Seek the advice of a certified legal attorney. Get over any altruistic idea of not being paid rent or for your time. You have given up your life in order to prop their lives up. No disrespect meant. Just the hard truth.

In my opinion, I think the money from the sale would be better used for Independent or Assisted living. You love and care about your parents. But after awhile, people feel the need for their own space. You and hubby, and your parents should have your own space.

Sounds like yall need the advice of a certified eldercare attorney. Have you and your husband really talked and understand all your privacy will be gone,
i would look into IL/AL for them. The proceeds from the sale of their home would be used to fund their care, not anything else.

First a warning. The sale of the home WILL generate an increase in their Medicare cost for a year (it's a 2 year lookback, so if sold this year, it will impact their Medicare in 2022.) Mom's condo had been set up in a Life Estate well before we had to sell it after moving her to MC. While selling this had other issues, it did reduce HER share, but it still jacked up her Medicare cost for 2020 (sold in 2018.) There's really nothing to be done, but it does need to be noted, for you and others. Don't be surprised, like I was! Could be some tax implications too.

My recommendation would be to set up a trust fund. Hopefully you already have POAs, wills, medical directives, etc, but if not and they are still competent, do it all at once, with an elder law atty. While they *could* give you up to the IRS max each year, tax free, it WILL incur penalties if they ever need Medicaid. If there are other family members, esp siblings, this could also cause problems. While you're doing all the other paperwork, have a care plan done up as well. They should contribute something while living with you. Being there will increase your costs (NOT the mortgage), such as utils and food. They will also require care as time goes on. Do note that if they pay you for care, you will have to claim that as income. Work with the atty on how best to address this.

While I didn't understand the whole "plan" at the time, eventually the atty told me that when mom moves to NH, let him know, we'd file for Medicaid. For me, nope. If she has the funds, they will pay for the place she is in. He had been telling me not to run the trust distributions needed to cover the cost through her account, BUT I didn't want it going through mine either, jacking up my income, incurring cap gains, etc on ME! It wasn't until later that I realized what the end goal was and why he said that. I didn't listen and continued to feed it through her acct (her pension and SS covered about 1/2 the cost.)

I would STILL recommend a trust fund - you don't have to use it as a "shelter" to protect the assets for inheritance. It serves several purposes, mainly to protect the assets from most nefarious no-do-gooders trying to get their hands on it now, or having mom and pop think it's a good idea to buy silly expensive things or giving it to family. I had it set up, and to this day I'm amazed. Despite having to take a substantial amount out each month to cover the balance of the MC, the 2 year chart shows the balance is about the same 2 years ago as it is now! This insured mom would have great care at the place she was in for a long long time!

Choose the right trustees for managing it. We had all 3 of us on it, as trustees and beneficiaries, but the other two have been absent through most of this journey. All left to for me to manage. Even though it's in a trust, you CAN and SHOULD still use the funds to pay for their needs. Living with you, I would think their regular income would suffice, leaving the trust to grow until they might need a facility or in-home help.

The other nice thing about a trust is once they pass, this does NOT have to go through probate. I do, unfortunately, have to set up a probate for mom's estate, but only because of the refund and interest on the MC deposit, plus some stimulus money she was shorted last time. That's all under the minimum for doing "easy" probate. The trust doesn't go through the court.

Check out several Elder Law attys. Many will do a limited free consult, so you can ask questions and get an estimate for the "package." Draw up all your Qs before the consult and take notes. Compare and go with the one that seems best (not always the cheapest!)

Why shouldn’t they use the proceeds of the house sale to pay for their care? Isn’t that what you do with an investment? Why should taxpayers foot the bill for their upkeep is they have the money? The deal with Medicaid is that once you have used up all your funds THEN you might qualify. I suggest you talk to a lawyer or Medicaid worker to get a better understanding of this.

If they are living with you now, you should draw up a contract spelling out how much money they are expected to contribute to the household expenses, exactly what duties you are doing and what you are being paid for doing it. That can then be used, if needed, to show Medicaid where their money went.

Also, if one spouse needs institutional care their assets, in Ohio, can only be about $2000 but the other spouse can retain a larger amount ($25,000 or so) to cover their expenses in addition to their home if it is still lived in by that spouse. if that person moves out then the home is sold and some of the funds are repaid to Medicaid.

Medicaid is a government benefit for indigent people, not a right for people with assets.