Coops and Elderly

Jackson: They can rent an apartment in a lux rental building.
Much better for them than a co-op.

The role of Captain Obvious has been played tonight by Unstable Mabel.

this elderly couple has to reinvest proceeds of their home into another home...ie an apartment.....they arent interested in renting.....are we saying coops would accept them due to age?

Why?

Makes no tax sense that they have to reinvest money from a sale unless they sold an investment property and are buying another investment property. Even then, at their age it makes no sense. Maybe more info.

It sounds like they're following old tax law. It changed several (or more) years ago to allow a $500K/couple exemption from capital gains, with no provision in any event for exemption via rollover to a new primary residence.

But maybe it's their preference, to ensure that they will never have to move again due to arbitrary decision of landlord. I would probably do the same thing at that age.

I see no reason why, all other things being equal, a coop board wouldn't want 80+ year olds.

The coop should love them. Flip tax cometh again...sooner than later.

kylewest - its more about life estate trust planning and needing to invest it in a 'home' vs just having 'cash' lying around...which isnt a 'protected' asset.

I'm still not sure I understand. A revocable living trust can accommodate cash assets, I believe. It still makes little sense to me. But as a coop owner and with board experience of one type or another spanning 20 years, I've never encountered "agism" in the application process. It is 95% about the $$$$.

Nothing more business-savvy than giving a 30-year mortgage to an 85-year old, I always say.

Kyle...im not an expert so that is possible but for some reason i believe the cash from the sale of a home might not be protected - ie from medicaid in case you need to go to a nursing home, etc.....but i could be wrong....but thanks for answering my question regarding 'agism...good to know!

It depends on what "financially stable" means. If I were a board member, I would want to see a high percentage down purchase and significant cash reserves, not to balance the age of the purchaser but to balance their probable lack of current salary.

ali r.
DG Neary Realty

JacksonHole, I'm also not an expert, but I think you're basically right in that a primary-residence home [will this be a cash purchase, by the way?] is protected immediately, while trusts/gifts have a five-year lookback (formerly three), and if it was done more recently than that, Medicaid can [somehow] get paid back for nursing home care. So those tricks are better set up much earlier than one's 80s.

Actually they all have a 5 yr look back period......the home was setup and is protected but i believe if its transferred to CASH it is not....again, not an expert and not sure.....

Yes, it's late in the day if you're looking to "protect" or "preserve" your parents' assets while foisting the cost of their care upon the rest of us.

The trust or other entity that now owns the house can just as easily own cash. Makes no difference.

NWT, I had typed out commentary on that aspect, and then decided to remove it.

But basically I'm of two minds: is it that our healthcare system is fucked-up, and bizarrely excludes end-of-life medical care (true nursing homes) from the Medicare system that was designed to smooth out the costs of all other institutional-based care?

Or is it more a matter of "you can't take it with you", and why shouldn't your medical costs be recouped rather than left to your adult children after your death?

If the latter approach is taken, though, a radical change is needed in how we exempt massive amounts of money from so-called "estate" taxes (where a much more universal system of inheritance tax is appropriate).

And why is it more right to allow someone who was clued-in enough when in his 50s, and not someone who only figured it out in his 80s? In both cases, the purpose is strictly to foist costs on everyone else, to the benefit of undeserving adult heirs [no offense, JacksonHole].

Here's the deal: if they are living in a home they own and one of them goes into a nursing home with Medicaid paying, that home is a protected asset as long as the other spouse remains there, until that spouse's death, when Medicaid swoops in to recover its costs. If the 2nd spouse also winds up in a nursing home, Medicaid swoops in right away. No 'protecting' the coop, even if it's jointly owned with kids. If they buy and have a kid they trust entirely, it should be a condo in the name of the kid only; if one of the spouses is able to remain in the home for 5 years before moving to a nursing home, then is the condo protected.

The only possible reason I can see that they would "have to reinvest" in a residence is, as mentioned above, for Medicaid purposes. The home is typically excluded for purposes of determining eligibility for Medicaid (I believe up to $750,000) when a spouse is also living there.

Sorry-- post crossed with mom's....I will add also the home may still be protected if an adult child was living in the home and caring for the parent for the two year period immediately prior to the parent entering the nursing home under the “primary caregiver” rule.

Interesting, mom ... I wonder how quickly a sale is forced, and what happens if the last spouse makes sufficient recovery in the nursing home (it's not a hospice, after all) to check out.

thanks.....my question was more geared towards coop boards and acceptance of the elderly..i knew most of the asset protection stuff but interesting to hear others read on it...thanks

So as to the board's acceptance, cash or financed?

alanhart, I felt bad and Matt-like as soon as I hit Reply. More like of four minds about it, especially since I've got the same kind of planning looming for my own parents.

E.g., I tell them "don't worry about us, bounce the last check, if you can figure out how", but deep down I want them to take advantage of every societal benefit they can finagle.

it would be CASH

Approved!

and we are talking 1 bedroom....

Jackson: Follow the advice of kylewest.
Good luck and be happy to have both parents still around in their 80's.

im very grateful to have both parents.....and kyle's advice unfortuantely doesnt apply....once the house is sold....the cash is not protected unless reinvested in a home......thats my understanding...

I'm no expert here. Maybe someone else knows: if the home is properly already in a revocable trust, and the home is sold by the trust and the parties go on to rent, can the money from the home sale be put into the trust and made safe from the medicaid collectors? That is, if a home is already in a trust for whatever the requisite period is, can the trust swap the asset for cash without creating any potential liabilities?

i have an email out to my attorney......also, i believe there are several types of trusts...so, that can influence as well..

No, the revocable trust does not create any creditor protection...especially from Medicaid

Depends on the co op board Legally they are not allowed to discriminate, however, they do not have to give a reason for a turn down. I have over the years worked with very qualified elderly people with adequate income ,paying all cash. In most cases the Board has passed them., in 2 cases they did not. (One went on to be passed with open arms by a different board)

Right, it should be irrevocable, which makes sense, and probably lots of other conditions.

If the trustees (JacksonHole and his brother) sell the house, the cash goes into an account in their name as trustees, and can then be used to pay rent on behalf of the beneficiaries, buy something else for them, etc. (Unless the trust has some wacky terms as to what it can own.)

There's some good stuff at http://www.elderlawanswers.com/Elder_Info/Elder_Article.asp?id=701

i believe that potentially if you sell the home now and put the cash say in a bank, the 5 year lookback period probably begins again vs buying another home which would 'auto' protect it...no wonder elder attys make so much money..!@

Thank you all. I did on line poking and see that a revocable trust is to avoid estate taxes and probate, and not to protect an estate from medicaid. An IRREVOCABLE trust is what is needed I guess. And that's a much more complicated ball of wax.

I'd approve them in a NY minute.
My coop loves the flip tax!
What's wrong with old folks...considering that It might be us someday