Yes, that can be done, but you don't want to do it too soon. You can give the kids the house and keep a life tenancy in your home. However, when you do this, you give up your right to sell or mortgage, you'd need your kids permission if you want to take out a home equity loan, etc. If you need cash and want a reverse mortgage, that likely would be more difficult if not impossible if the house is signed over to the kids. If one of your kids gets into a messy divorce, their share of the house is THEIR asset. Lots to consider.

With the above in mind, my sister who is an attorney, generally advises folks to wait until they are older before signing off the house completely, but you have to keep in mind, Medicare/Medicaid has changed the rules of "lookback" to make it more difficult to give away those assets. If a long term illness sneaks up on you, and you are single, the house could be gone. People have to decide what is best for their personal situation.

The message to the young folks, save your money and don't count on your parents to "fund your retirement" they may have a difficult enough time funding theirs.

 

My youngest had a tuition paid college (by me) and still managed to run up $40k in loans for living expenses . . . yep, she lived good in modern fancy apartments, took her time, and enjoyed herself. Now, as a teacher her income isn't high so on a net income basis she fits the description to a "T". Even though she and her husband are in debt with school loans and car loans and are crying they can't afford a house I recently gave them some money but insisted it go into a long term retirement savings plan. I am sure that was not what they wanted to hear but someday I hope they will appreciate it.

 

Actually, this figure alone is pretty scary, because people in this age group don't have that many more years to accrue more net worth on which they can retire. These days, $250K just won't last very long, especially compared to the longer life spans we now enjoy. And because half the group is below$250K (by definition of "median"), it's a train wreck waiting to happen. HPH

 

Lainey, you are exactly right on the "lookback" status. Many have tried to keep the long term care institutions from accumulating their homes for payment and would sign their homes over to their heirs at the last minute-but now I think the law says the estate must be signed over for as much as 5 years prior to the need of long term care.

 

The 5 year lookback pertains to Medicaid qualification. If you want to scare yourself sometime, read the 1993 Medicaid recovery legislation and what they can do to you and your surviving spouse. Each county's Family Services is the confiscator and most trusts will not save you.

Lainey is spot on regarding how all your money can disappear very quickly, if you require nursing care. I know two previous millionaires who lost it all and are now Medicaid qualified. A good friend's parents blew 900k to nursing homes in 6 years and ended up Medicaid qualified before they died.

Yes, you can sign over your property to your children, but consider gifting laws and that ultimate estate tax limits do apply to the former.

I have read numerous times, that the seniors own/control 70% of all discretionary spending in this country.

 

Before we all complain too mightily about the state's ability to take our houses to pay for nursing homes, let's not forget that the alternative is that the state must pay those costs. That means current tax payers are paying those costs instead of the elderly who are incurring the costs. It is that type of cost transfer from the older generation to the younger generation that is adding to the wealth gap that is the subject of this thread.

 

Good point, Bill. Nothing is free. Somebody pays.

 

i dunno if that's true.....

my generation (mid-30's, 2nd generation immigrants) is MILES ahead of our parents in terms of outright wealth at similar stations in life. and there is an obvious reason for that....they came to NA and had to establish themselves, while we had no such burden.

this applies to most (if not all of) of my social circle....

 

I have found that when I substitute my personal experience for contradictory national data, I am almost always wrong, but your experience may differ.

Many people think they have a greater worth due to all the things they own. When you deduct the liabilities, you may find that you have a negative net worth. In simplistic terms, a person with a million dollars worth of toys, no free cash and a million dollars of debt has less net worth than a person with $10 in hand and nothing else. The person with $10 may seem to have a lot less net worth based on appearances.

Further, a true net worth analysis compares your current worth to that of others at the same moment in time. Comparing your worth today with your parent's worth at the same age, while interesting, isn't the point and can be difficult to adjust for inflation, etc. And just because your parents may have been quite poor doesn't mean they were representative of the population.

 

Indeed, that is a good point not lost on me, Bill. But, it is what they can do to the SURVIVING (not-in-nursing-home) spouse's net worth, trusts, and their pension that I consider heavy handed. Often, that surviving spouse no longer has the monthly income to maintain the house they get to keep, and they then have to enter the same nursing home/attended care system, enabling the state to ultimately get the rest of the property.

Another matter is fairness. The average nursing home cost in this country is 4-5k a month. Via Medicaid eligibility status acquisition, the state gets to confiscate via lookback at the above rate. Whereas, once you have no net worth and do qualify for Medicaid, the state will pay for your keep. However, you just try and find out what Medicaid pays for your lasting care; it aint anywhere near that stinking 4-5k a month. The government knows who has the assets and they can just keep passing laws to seperate seniors from it. It's easy to think "that won't happen to me", but I know a bunch of smart and relatively wealthy geriatrics who either already have or are in the process of losing it ALL. Please prove me wrong about this.

Approximately 1 1/2 -2 years ago, AARP magazine in bold 1/2 inch print and bold color stated that 84% or 87% (I can't remember which one) of ALL seniors have a net worth of less than $250.00 DOLLARS at the time of their death. I'm not kidding. I suggest you make yourself as smart as possible on the subject. Spend it, give it away, or lose it!