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I wasn't sure how to ask that question briefly, and I know I need to talk to a lawyer, but we have been holding off in case we decide to move. Right now I am with my dad in CA. His house is part of a trust that has 3 beneficiaries named. I am a cotrustee. We were hoping to move my dad back to OR, where I just came from and my husband is employed, but now that we are learning more about insurance, Medi-Cal, etc. we are undecided...

My dad is far enough along with dementia that he can not live alone, so it could easily be established I am here taking care of him to keep him out of a facility. I was reading about how he can transfer the house to me after 2 years and exempt it from being a lookback asset. But I am wondering if he would not be able to do so since the house is part of the trust. If he is incapacitated by then, then what? I am POA, so could I transfer it to my name after 2 years? Just for the record, I would plan to split the money with my brother and sister when I sell it, and I think (hope) they would trust me to do so.

Which brings up another question.... If a house does get transferred to a child after 2 years, is there any obligation to live in it for a set amount of time?

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frustrated2 - You're right. There is no tax liability when house is inherited. When a house is "gifted" to someone however (as somebody brought up the "gift tax" further above), the gift tax is the responsibility of the person who made the gift, and has to be reported on a form to the IRS, but they don't have to pay any of that tax until the amount of the gifting they do goes over a certain amount ($5,340,000 in 2014), which is a lot, so most people will never have to pay a penny of gift tax, though the gift tax form must be filed with the IRS. Many people are confused about the gift tax. Do a Google search on it to learn more. That's why in my case, I'm waiting for the time when the trust has to be dispersed after mom dies, to deal with the house. If siblings end up getting a piece of the house, they will simply gift it to me, as they don't want the financial responsibility of caring for a portion of the house in the first place.
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POA can sign anything on behalf of the person who assigned it to them. Therefore it is not a small thing to just hand over POA to anyone. There can easily be legal ramifications if someone acts in other than the designator's best interest but that's a lot messier than not having them screw things up in the first place. I'd see what can be done to rescind POA, which is hard if it was appointed when a person was lucid and no longer is, but an attorney would be needed ASAP to stop the bleeding. As for capital gains, most certainly the best way to 'get' the house would be to inherit it. My MIL put all three - herself, my husband and his brother (and one time, their dad who passed away in 2006) on the deed. My husband didn't want her to do that but BIL is an ignoramus hard head and MIL had a bad experience back in the 40's that caused her to get it in her mind that this would 'protect' everybody. The house was sold when she went into a nursing home and she paid no capital gains because it was her primary residence but we had a big tax bill as did the BIL. Had we just inherited the house there would have been no tax liability.
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I agree with you and big tax will be huge and that what my brother did and taxes went up.
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California has "filial responsibility laws" so they may come after the Trust as well as his estate. I live in NY where new law has declared open season on Trusts. Do NOT dissolve the Trust, you will have bigger problems with the IRS than you will with Medi-Cal. Do NOT transfer the property to your name, it would trigger a HUGE gift tax and more IRS problems.
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I thought same thing you cannot change any beneficiary at all that is again the law. You just controlling the money and what person want. You better check more into it for it be trouble.
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gee whiz, I wouldn't think that someone with the POA would be able to re-assign the Trust agreement. I'm not an attorney but isn't it sort of illegal for any POA to set things up purely for their own benefit? yes you did say you would share the house with the siblings.....but legally if what the "expert" says is true, you would legally not have to do that. which makes me wonder if that can be so. I thought that a POA was specifically prohibited from changing beneficiary designations (I've been reading up on this, for a similar situation involving financial accounts with beneficiary designations).
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I made a separate written agreement with my siblings stating to the effect that if they are to receive any share(s) of the house as the trust / will is being settled, that they are to immediately gift their shares over to me as a gift for my many years of caregiving duties. They all agreed, and all signed in front of a notary. We will have to see how it plays out in the end.
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thanks for all the replies. i guess i just need to be patient and wait for his test results to come in so we can make an informed decision about moving. his dementia is not bad enough at this point that he would not be able to change the trust. he is very aware of decisions in the moment and can comprehend the big picture if broken down slowly. he just forgets what he talked about by later that day. so i guess he is still in the beginning stages, but you never know how fast it will progress.
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Agree - consult lawyer in state you are coming from and going to - all are different.
But as I understand - only the person who established the trust (your father in this case) can change the trust (if it is a revocable trust).
regardless of who the trustees are - they have to abide by the terms of the trust.
(beneficiary status only comes into play when owner of trust is gone.)
If trust owner needs to sell house to pay ltc or other care - then trustee (or co-trustee if there is one) and father (co-trustee) is incompetent then remaining trustee could sell house and deposit money into account to pay trustees expenses in ltc, etc.
If trying to hold onto as protected asset under "caregiver" status - you will need lawyer. I would think Medicaid would try to get repayment when he passes and depending on how long he remains in ltc - 2 years of caregiving somewhere in the past vs how many years he is in ltc?? Don't know how court would decide how much caregiver would be entitled to - doubt if it would be total value of asset (house) - depends on where you live. If he now has dementia don't think any lawyer would convey property to him much less allow you to sell property (acting as trustee) other than to pay for his ltc expenses.
Beneficiaries would only get what's left of proceeds after he passes.
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The house would need to be transferred from your father directly to you, as caregiver, in order for the caregiver exception to apply. That means the house would have to come out of trust and into your dad's sole name. Then he (or someone acting on his behalf under a durable power of attorney [DPOA]) could deed it to you. However, the DPOA would have to include the power to make such a gift.
As for your other question, the child receiving the house under the caregiver exception does not need to continue living in the house. The test is that the child have cared for the parent and resided with the parent in the parent's house for at least the two-year period immediately before the parent enters a nursing home, and that such care allowed the parent to delay needing to enter a nursing home.
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Yes, short answer is that you absolutely do need to talk to a lawyer. Each state is different. My husband and I have a revocable trust and the house (real estate) does fall into the trust. As I said, what we have is a 'revocable trust', which is the most common. The main reason we did this was to keep everything out of probate. but your trust basically serves as you 'will' (not counting the pour over will, which is for personal items not including real property that you wish to have go to certain people - anything BUT real estate). We designated who got what, which could be the case with a house. It is not necessary that every beneficiary gets equal parts. So it really depends on how this was drawn up by your parent(s). As for 'divesting' your dad of his assets to protect them for an heir and so that Medicaid is not hindered, that is not ok. A home can be exempt when applying for Medicaid 'if the intention' of the person is to someday go back to the home to live. Obviously that isn't hard to make a case for, i.e., possibly a relative would live with that person and care for them in the home rather than a ltc facility. Anything is a possibility. However, that home, after the person's death, may need to be sold to pay for the 'debt' owed because of using Medicaid. Medicaid is for indigent people. Not for people who are 'savvy' with hiding assets or using them up or diverting them in other than straightforward ways. This is not an accusation, but if your dad has a trust, it probably means he has substantial assets (at least as compared to someone who has nothing). And look back is usually a lot longer than two years, so if you do something that seems in any way 'squirrel-ly' he may be denied payment of care and medical bills at a time when he needs them NOW. Believe me, we know how expensive ltc can be; my mil just passed away at 93 after five years in one. She ended up living pretty much the same 'lifestyle' as people in the same facility who didn't have two dimes to rub together and she had two pensions, social security, money in the bank and a few stocks and other assets. She ended up using most of her money to take care of herself (fil died 8 years ago and he was also in ltc for about a year prior to his death). Their home was sold shortly before she moved into the nursing home along with it's contents. My husband and I were in favor of NOT selling it because it is a 'protected asset' as far as going into a nursing home is concerned and also, just in case she would want to ever return to it and could be cared for there. But had she run out of money the home would have needed to go at some point if she 'owed' due to benefits received from Medicaid. Every state is different but the basics are the same.
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Not Legal or tax Advice; none of my posts are:

A trustee or co trustee may also be a beneficiary, the stipulations of the trust must be followed,of course. In a co trustee case, it must be established: if trustee's can act unilaterally or must both act

If one moves in for at least 2 years, and the parent then needs a Medicaid Nursing home, and it can be established that but for the efforts of the 'caregiver', the Medicaid recipient would have been required to move into to the NH to have received at least the kind of care & safety, that the caregiver provided; then upon the recipients passing the house should be exempt from recovery.
A Dr. should be able to confirm, and have been consulted on a regular basis.

It would also be wise to set up a 'or' bank account, & to deposit funds (needed for care) from it , into a second account (from the 'or'), that might say "So & So" care services account, and pay the bills out of that second account, & maintain a journal, of services provided and payments dispersed. for Medicaid gifting protection purposes. It may also serve to protect the caregiver from having to pay taxes on the perceived 'income'
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IN differentstat it is different. Whoever is first on trust gets it and ask them about it. Seem like have god understanding and no wrong. But always get attorney or probate. Remember the first beneficiaries get until something happen.
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Neo, another thing you need to consider is if dad would be eligible for Medicaid in Oregon. Maybe he has unlimited resources and the cost of some sort of assisted living, later on nursing home is not a concern if he were to self pay. Not many are in the group that do not worry about how to pay for care. How will MediCal eligibility transfer to Oregon when his resources are depleted?
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Oops.. sorry the trust is first and foremost for the use of the owner of the trust. Then when they pass, it is distributed.
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A trust is set up to insure a party gets what is set up for them to receive without probate. If you are co trustee then there is nothing in the trust that will pass on to you.
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These are very good questions, I do not know the answers, and am consulting an attorney about the same. You may want to check out the website AVVO to ask thus question to attorneys in your area.
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