Questions from a client of mine

[Bette]

Originally Posted by L00k4ward

Not clear what you mean on a”portability of real estate taxes” - selling one home and buying another within 2 years?

I could be misinterpreting you, but you know that law is gone for many years now?

You cant avoid paying capital gains by buying your next home

Now you just get $500K capital gains exclusion every 2 years for a couple or $250K per single person if the house was the permanent residence..


Another caution is about creating a certain types trust - if she thinks she needs Medicaid in the future - having house in revocable trust could actually disqualify the husband from using Medicaid nursing home.

Spendthrift trust is totally different trust she may need to provide for husband if she is incapacitated or gone.

In addition quite a few important financial details depend what state she is in.
Different states allow different amounts of assets to be kept by a spouse, etc.

If she expect to outlive him and no children to benefit maybe they should buy a less expensive home, so she wouldn’t need mortgage and it could help her avoid paying her capital gains when she has to sell and move to assisted living herself eventually as she only could exclude $250K in capital gains?

Not that it is a big issue for her, she may not care..

Anyway, my advice is to spend money she has now to buy a comfy home if that is what she really really wants.

Better yet - keep renting and spend the rest on travel, cruising, fine dining, or some things they both enjoy - as soon they may not be able to or at minimum he won’t be able to enjoy.

Being her mortgage broker goes against this sound advice - so you have conflict of interests. Hope you won’t abuse her trust.

You mean well but your knowledge could be insufficient, wrong, confusing and perhaps not in her best interests

She needs professional help, not well meaning? mortgages professional who is looking for a client and attempting to solicit advice from the internet.

She is nearly 70 - with an afflicted husband - what mortgage or “homesteading”? It is ridiculous - she will never get decent doctors, assistance in some rural locations for him; not even nearby nursing homes which may or may not accept him

Renting is better for her. She can have better access to doctors and daycare for her husband if she needs a break from caregiving and other services for him- not go into the woods

That should be your advice to her if you are honest and not praying on elderly

First of all, not pressuring her at all. She wants to buy a home - if she had her way, it would be in the mountains somewhere but that would not be good for him (future) so she IS thinking of her husband and the help she will need - eventually.

She is still working and plans to continue.

She has been living with family but it was only supposed to be for 6 months. It's been way longer and she is anxious to find their own home.

She is NOT moving to a rural area. The areas she is looking at are close to medical and she has visited many times - his family as well.

She could pay cash for the home; truly no conflict. It's just this particular home came back on the market with a reduced price and it could go quickly. She looked at it back in May 2023; then it went under contract in June 2023.

If she is charged anything for the loan, it's so small. She's a past client and we would always look for her best interest.

I've steered her towards the elder care attorney route but I know she has a lot of items already done.
She has a financial advisor also.

Thanks for the responses. Trust me, on my end, no pressure. I've spent more time helping her with preapprovals than I will make on the deal.

To honor our past relationship, her fee will be discounted greatly.

[galaxyhi]

Bette,

Some background in my family:

My mother had Primary Progressive Multiple Sclerosis...the most debilitating form of MS.
I was just 9 when she basically lost her ability to walk, but with help and going slowly, shed manage a bit. By the time I was 13, she was permanently in a wheelchair, and before I graduated high school at 17, she was an effective total quadriplegic, having to be hand fed.
At age 9 as the eldest child, I had to take over all the "housewife duties" she used to do, take care of her solely until dad came home from work, have dinner on the table when he did, and still go to school.
Including personal care, including that time of the month.

Even after graduation, I stayed at home, and between my 2 jobs, my fathers lunch hour, my younger brothers schedule, we managed for someone to check on/assist mother leaving her alone for no more than 1.5 hours.

Dad took an early retirement plan, and only then was I comfortable moving out..and I not only did so lock, stock and barrel, but moved far away to another state for better job opportunities.

So, now that you understand I do know about 24/7 care of an individual family member, here is what my father did:
So my brother and I could 'have our own lives without the burden of caring for mother' (his words) he set up a Family Trust, which would see mother was taken care of IF he passed before she did.
As he had had prostate cancer (resolved, in remission, survivor for decades now), that gave him even more impetus to do so.

Your friend SERIOUSLY, and QUICKLY needs to look into that with an Elder attorney who may be, or in addition consult with an Elder Trust attorney/firm.
Whatever the consultation fee/s is/are, it may be well worth it.

I say this because she's trying to separate herself and be sure SHE'S taken care of, but what happens if SHE predeceases him? How is he taken care of then?
I get she wants to be sure she's ok, but it assumes she outlives him, or that she has backup if he goes into memory care.

My FIL...well we tried to get him to do that after MIL passed. But he refused. We tried to get him to make his house a life estate, but he refused.
By the time Drs at the hospital sent him to a nursing home for rehab and review, his personal Dr had already declared him incompetent, and notified the state DMV he was no longer safe to drive.
The nursing home tested and evaluated, and with the dimentia diagnosis, they told him he could not leave the facility.
As he refused to give power of attorney to my spouse, (let alone me!), The nursing home filed a court petition and an attorney was appointed on his behalf, and a social worker assigned up his case.
We asked the social worker about a Trust for him, but the allowable (seized) fees for the attorney and DSS left him $50k shy of having enough required minimum assets ($500k) to establish the trust (at least in our state).

We did receive a small inheritance in the form of two old whole life insurance policies and the sale of his house (by the time we acquired the right for spouse to sell it, it was winter (no one wants to buy/move in the frozen winter) and the high peak of market long gone for that area, we didn't get much. Especially after hired help, roll off dumpster fees etc to clear out 55 years of living in the house, and it's dated decore and needed updates to code didn't do us any favors).
Everything else went to the nursing home.

These are two familial cases I was intimately involved in

Spouse and I have moved to a more southern warmer location, and are contemplating a trust for ourselves.
My elderly father has the family trust you go to me only, and we may wait, and if possible, convert my family's trust to a new trust with our added assets to cover us when the time comes.

I'm 60, spouse 64, and my father will be 90 soon. Although in fairly good health, it is comforting to me to know that if nothing else, my father is also taken care of through the Family Trust, or that it will pass all or in part, to me.

This is something that ALL of us need yo be thinking about.
Your friend has had a preview of things to come, so she needs up plan accordingly.
Most of us DON'T get a preview with which yo make/carry out plans in advance.

So your best bet is to tell her to consult an Elder Attorney and Trust advocate.

*(Living Revocable Trust allows hef to change the trust when changes occur. I'd recommend that to her...NOTan Irrevocable Trust!!!

It's nice of you to be such a good friend in her time of trial and need! (Clapping hands!)

Best

[TheShadow]

Originally Posted by Bette

She has done a lot of the legwork; has their wills all set up, POA's, etc.

One of the reasons for the move is to be closer to HIS side of the family for help when she needs it.
She's a good person looking ahead for him.

I believe she already set up a trust - long ago but she has relatives she will leave the home to.

I've called 3 attorneys today for her that I know and had to leave messages. One of the homes she wanted just came back on the market after it fell through and now reduced 25K so she wants to know NOW.

Thanks for the response.

My husband has known her husband for 30 years; I've known her for about 10 years.
Married about 25 years.

If she needs to make an offer for the house, she should do that, and she'll have plenty of time before the closing to get her answers about titling the house. And those answers absolutely should come from an elder care attorney in the state where she is buying the home.

[Lillie767]

The portability of real estate taxes refers to the portability of Homestead provision in Florida that allows a person selling a home to keep their Homestead and SOH from the previous residence. If you have been in a house for a long time, this could be worth a lot of money.

If your friends continued to live in their prior residence at any time during 2021, they have until December 31, 2023 to claim Homestead. [Could be January 1, 2024, but that is a legal holiday so I'm not sure how that works. See a lawyer.]


"If you are moving from a previous Florida homestead to a new homestead in Florida, you may be able to transfer, or “port,” all or part of your homestead assessment difference.

If you are eligible, portability allows most Florida homestead owners to transfer their SOH benefit from their old homestead to a new homestead, lowering the tax assessment and, consequently, the taxes for the new homestead.

To transfer the SOH benefit, you must establish a homestead exemption for the new home within three years of January 1 of the year you abandoned the old homestead (not three years after the sale)."

https://floridarevenue.com/property/Documents/pt112.pdf



There are restrictions on the Change in Ownership, so if the new residence is titled differently that the prior residence, SOH and Homestead may not be transferable, subject to some exceptions.