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Author: YewGuise Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127715  
Subject: Re: A house I don't want Date: 4/20/2011 9:46 AM
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Buy a house as an investment to rent out or buy a house in which SIL intends to live?
Also, will the deal be all cash or will there me a mortgage, even one with a relatively low LTV?
Seems to me that if it is for cash with FIL's money, FIL would need to be on title (either directly or indirectly), BWDIK?


To rent out (to SIL's son, which opens another can of worms), but not as an investment. The purpose is to make FIL Medicaid-eligible while protecting some of the inheritance. Apparently all of FIL's assets will have to be used for his nursing home care before Medicaid kicks in; however, real estate is exempt. SIL's lawyer assures her that real estate is a perfectly legal loophole in FL. However, I seem to recall that even if Medicaid pays for a nursing home while allowing the patient to keep his houses, then after patient and spouse are both dead, Medicaid could require a house sale in order to get repaid. (But I could be mistaken.)

All cash. $200k cash of FIL's $250k savings will be used to buy the house (sale price plus closing costs will total about $200k).

As DH said later, "If the house would really be protected from Medicaid, why put our names on it at all? Why not just put it in Dad's name?" In which case, kids would inherit with a stepped-up basis. My suspicion is that SIL is trying to do some do-it-yourself estate planning to piggy-back on the lawyer's Medicaid-eligibility planning. However, if SIL's purpose it to keep the house out of probate, seems to me a trust would be a better vehicle, and that the lawyer would know that. But SIL hasn't said anything about a trust.
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