My siblings need to take over ownership of our elderly parent’s home. She needs to move to senior housing. I have the Power of Attorney. The home is paid for and we wish to sell it and use a portion of sale to help pay for her care. We also wish to use a portion to purchase investment property. Should we form a LLC or should it be in one person’s name?
Suggest you consult an eldercare attorney to discuss the financial impacts of your proposed actions, especially if you may expect your mother to need skilled nursing home care in the future that you might want Medicaid to pay for.
I would recommend that all of your mother’s significant assets be placed in an irrevocable trust. Sell the house in your mother’s name to preserve the capital gains exclusion on the sale of a primary residence, then contribute the proceeds of the sale to the trust.
Personal property can be disposed of in accordance with your mother’s directions.
Set up the trust to use the income and assets to pay for your mother’s living expenses. Invest from within the trust. At your mother’s death, the trust assets transfer to the beneficiaries of the trust at their stepped up basis.
Thanks for the quick reply,
What about the ownership of investment property? Who would be the owners of the property if we invest from within the trust? I want all 3 of us to be owners but still protected like a LLC. Two of us are married and want our spouses/kids shielded from any liabilities of the property.
The trustee of the trust is the legal owner of the investment property on behalf of the trust and all income from the property accrues to the trust. Your mother is the primary beneficiary of the trust while she is alive. At her death, you and your siblings (as secondary beneficiaries) inherit the trust.
The language of the trust may specify that the trust is to be liquidated and the assets distributed among the beneficiaries at a specific time or upon a certain event, whichever is sooner.