The Benefits of a Parent Moving-in with a Child
Each year, many parents move into a child's home, for various reasons, including: (1) allowing the child to provide care for the parent; (2) saving costs/expenses for the parent and child. There are a variety of good planning measures that can be taken when this happens.
For parents wishing to transfer assets to children, there are a host of opportunities that arise. First, a rental agreement or a caregiver agreement between the parties can be established, allowing for the monthly transfer of funds between parent and child. Over time, significant funds can be transferred safely, with proper advising by an attorney, however there will be income tax consequences to the child. In addition, parent and child can engage in small, monthly gifts below the amount considered by Medicaid's 5-year look-back rule.
A powerful tool often used is having the parent purchase a “life estate” in the child's home, whereby the parent pays the child the actuarial value of the parent's right to use and enjoy the child's home for the remainder of the parent's life. This option can allow for a larger amount of funds to be transferred from parent to child, if that is desired. There are various regulations governing how such transfers may be done, and should be done only under the advice of a knowledgeable elder law attorney.