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As has been acknowledged there are three or more threads here.

1. Best way for the older couple to protect their estate as they get older. The ability to not have the state collect all their assets if they need care is one way to put it. (estate planning advice from a professional as the subject is more complex then it seems).

2. The actual happiness of a couple moving to a new location to be closer to their daughter while being remote from their present friends and environment. (rent for 6 months to see if people like the new arrangement).

3. The rules concerning rental property and what happens if you rent to a family member (market rent levels or the IRS will not consider it a rental).

I think it would be best to take it slow and to get help from advisors outside the family. It gives people some time to get used to the changes and the advice is not seen as coming from a family member with history.

The rental property issues are the easiest to deal with and are very clearly set out in the IRS rules. The estate planning issues are also pretty reasonable if the individuals involved can make decisions they are happy with. The 'where will I be happy' is the most complex and might even change as time moves forward.

I have seen very good results from professional advice on living trusts and tax planning. Greatly reduced arguments and questions of 'what did Mom, etc really want to have happen?'.

Good luck!


PS. I have been through this multiple times now and each time it was different as the chemistry of the individuals really does add complexity to the mix. I am expecting another couple of passes at it (remarried and new in-laws who are dealing with their parents on both sides including one in a foreign country).
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