Proceeds from mom's house

[Anonymous]

Mom in in her 80s, she will move in with a sibling within the next year. She has money ($400k+) for future medical care. Her house is worth about $500k. We'll take a hit on capital gains, around $20k. Does it make sense to invest the proceeds in her name; or divvy and gift most of it to her adult children?

I want to keep the money in her accounts, but not sure that makes the most sense for taxes, etc.

[Anonymous]

It's her money; keep it in her name.

[Anonymous]

Definitely do not give it to the kids. It's still your mom's money. Invest it in something very low risk like SGOV. Or go to Bogleheads.org and get more specific advice there.

[Anonymous]

Anonymous wrote:It's her money; keep it in her name.

Exactly. Plus there's a five year look back period for Medicaid.

[Anonymous]

Omg do not divvy up her money while she's still alive.

Go see an accountant and an estate attorney.

[Anonymous]

You need to look up "step up basis". You want her estate to generate all the gains so you don't have to pay any taxes.

[Anonymous]

Anonymous wrote:You need to look up "step up basis". You want her estate to generate all the gains so you don't have to pay any taxes.

We decided to sell and eat the "step up basis"/ pay the capital gains since the house is old and difficult to maintain. None of us wants to renovate or deal with property mgmt/rental.

[Anonymous]

No, she may need it for care. There is a five year hold back for Medicaid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You need to look up "step up basis". You want her estate to generate all the gains so you don't have to pay any taxes.

We decided to sell and eat the "step up basis"/ pay the capital gains since the house is old and difficult to maintain. None of us wants to renovate or deal with property mgmt/rental.

That doesn't eat the basis! You put the money into an investment account to generate gains while she's still alive. Those gains then benefit from step up basis.

[Anonymous]

Anonymous wrote:It's her money; keep it in her name.

This! You can't give away her money - she might still need it for assisted living. $900k isn't that much money for end-of-life care. Do you have power of attorney over her assets? If so, you should be acting as a fiduciary, not as a beneficiary.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You need to look up "step up basis". You want her estate to generate all the gains so you don't have to pay any taxes.

We decided to sell and eat the "step up basis"/ pay the capital gains since the house is old and difficult to maintain. None of us wants to renovate or deal with property mgmt/rental.

Are you the OP?

[Anonymous]

If you divide the house proceeds and your mom ends up needing care in the next 5 years, you will have to pay that amount for her care. MediCAID has a 5 year look back period in which they "claw back" any monies distributed during that period.

[Anonymous]

Anonymous wrote:Mom in in her 80s, she will move in with a sibling within the next year. She has money ($400k+) for future medical care. Her house is worth about $500k. We'll take a hit on capital gains, around $20k. Does it make sense to invest the proceeds in her name; or divvy and gift most of it to her adult children?

I want to keep the money in her accounts, but not sure that makes the most sense for taxes, etc.

Mg mom has burned through $400k over the last two years. Memory care plus a one-on-one caregiver. She could last another few years. $400k may not be enough for future care needs. Keep the money in her name.

[Anonymous]

Why would she pay any capital gains on the sale? Did the house go up over $500k in value?

[Anonymous]

Anonymous wrote:No, she may need it for care. There is a five year hold back for Medicaid.

This. She may end up needing it or she may not.