I’ve never seen this phenom in local CT real estate sales: Suddenly recent published lists of r.e. sales include a big bunch of $1.00 sales, seems usually to family members. Any idea why? Tax law change? Just curious.
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Couple of reasons to do it Illinois, don't know if the same there.
If you buy for a buck, it's not inherated. There is a two year stipulation on that here.
Also it can be done to keep nursing homes and the state from seizing assets in case of long term in nursing home.
Friends help you move.
Real friends help you move bodies!
Well,if this is a ruse to get US and state to pay for nursing home care by Medicaid by giveaway of asset, it won't work, cause they will look at such and not pay under Medicaid until a couple years after such giveaway ("look back period"). Also, the recipient of such gift, having virtually no tax basis when the house is sold,, will pay a BIG tax to state and Feds on the gain. Maybe there is some other scheme at work on these "sales"?
You are right, but that does not mean that there arn't large number of them being doing.Two reasons - one is to "save the home" for the heirs. The other is to bypass probate. As you mentioned it can cause must extra tax expenses. And it can also there can be all kinds of other complications if the parent needs cash in the future (sell it) or the child has finacial problems.And it does not guarantee that the state does not come after it for Medicaid.But there are many legit reasons for sales to family members. One of the most common is for a divorce.But there are many others. At least in my area, just because it shows a nominal amount on the deed that has no relationship to any actual sales amount.
Maybe there is some other scheme at work on these "sales"?
Here, it's generally just to try to hide the sale price from the general public (or specific individuals).
Doesn't work as you only need to look at the tax paid, know the rate, and you get the actual price. Catch is, you have to look at the recorded deed, not what's published in the paper. Lots of reasons sellers, or buyers, prefer to not disclose the price.PAHS Designer/Builder- Bury it!
The seizure of one's principal residence to settle long term care costs is illegal. Like a bankrupcy, some asets are immune from seizure.
"The seizure of one's principal residence to settle long term care costs is illegal. "That has nothing todo with what it being discussed.It medicaid to get in a nursing home. Medicaid is wellfare and the rules require that you get up most assests.Now there are somelimitations such as if you are co-owner with a spouse. But even then I believe that there can be a lien placed on the home.
Medicaid is wellfare and the rules require that you get up most assests.
True. Just like bankrupcy. Both have exempt assets. The prinicipal residence being one. I believe the premise for the exemption is based upon the individual POSSIBLY returning home one day.
And, anyone giving advice about how to re-register assets so as to avoid their forfiture (to gain medicaid benefits) is also violating federal law. With the exception of certain attorneys. A previous poster also mentioned a lookback period. He's right.
You are right, to a certain extent.This is the first one that I cam across."In Pennsylvania, the current resource limit for a single person is $2,400. Not included in determining whether you cross this threshold are household goods and personal effects, a car, small life insurance policies, and certain amounts set aside for burial. However, the most important exemption is for your house if it was your principal place of residence.In Pennsylvania, you can be eligible for nursing home medical assistance and retain your house provided you (or someone acting on your behalf) express an intent to return to the home. That is, even if there is no chance that you will ever return, the house is exempt as long as you state in writing that you intend to return. The theory is that the house should be there for you just in case you do return home. Therefore, many of those who have their nursing home bill paid by medical assistance still own their own homes. However, even though the house is exempt while you're living, the Welfare Department is waiting. You see, under current law, they now have a claim against your estate for all of the nursing home benefits you received. As such, upon your death, it may be necessary to sell the home to pay back the medical assistance benefits. "I don't remember the wording. But the last time that I saw it I don't think that all the states are that generous. For example I think some states having wording that only if it is medical possible to return home.
Yeah, it's a touchy area.
My years as a CFP had us pay attention to these issues due to some firms leaning on their brokers to sell long term care insurance. There were issues a few years ago about brokers/agents selling a few too many annuities for the purpose of getting out of the medicaid restrictions. Some were disciplined and the laws changed.
But when properly done as part of an overall estate plan and understanding the limitaions, some creative things can be done.
Yes, PLAN, with knowledage professionals can do wonders.I used to participate in the COmpuserve forums long before there was a WWW. Use to see questions from time to time about grandma giving the house to the kids. Now the house needs repairs, grandma does not have the money, none of the kids have the money or willing to give it up. So the house just rots some more.Or grandma gives the house to the kids. Now grandma is getting too old and wants to move into an apartment and live off the proceeds from the sale of the house. The kids are willing to go along. But Jr has two out of wedlock kids with two different wives and Jr has died so now the two minor kids are part owners of the house and their mothers are guardians and won't even speak to each other, much less anyone from grandma's family. Sister in turn was in a DUI accident and lost her job. Found out that she was not making the employee payments to the IRS for the company htat she owns. So the IRS, the person that she hit and half dozen other people have liens on the house.Or grandma gives the house to the good daugther. Grandma dies and daughter is trying to figure out how to reduce the capital gains taxes on the difference between the $250k sales price and the $30k that granda paid for the house in 1970.
The IRS requires that the seller be responsible for the capitol gains if they are still alive. If they gift it, the first $10K is the maximum tax-exempt gift amount but if they sell it for some nominal amount to a relative, they can get around taxes if they follow the IRS guidelines. If someone inherits it, the house is appraised and that becomes their cost basis for the house, which is figured into the estate's total and if the estate exceeds the maximum for inheritance tax exemption, that tax is paid by the heir(s).
"I cut this piece four times and it's still too short."
Primary residence is not taken. Long-term care insurance is a good thing to have but a bad thing to think about needing. Why someone goes into a nursing home determines what funds that care. My dad had a stroke and his health insurance covered it until the determination was made that no amount of rehabilitation would improve his condition. That means that he needed to pay or have long-term care insurance, which he did have. Unfortunately, he had his final stroke a week later and he went back to the hospital for his final week. If he didn't have LTC insurance, it would have depleted any money or investments he had and when he got to a certain point, he would have gone on Title XIX and that would have paid it until the end. If he had gone in voluntarily (as in, not having a medical reason to be there, not being able to go home and needing rehabilitation), he would have had to pay as he went. "It medicaid to get in a nursing home. " What does this mean? It takes medicaid to get into a nursing home? No, it doesn't. It takes cash/assets or Medicare/Medicaid. Some places will require the resident to sign their assets over to the facility if there's nobody left in the family or other method of payment.
"I cut this piece four times and it's still too short."
""It medicaid to get in a nursing home. ""Don't ask me. I only wrote it. It does not have to make sense <G>.I think that I ment "if medicaid is used to get in a nursing home".But I know what you mean. My mother had Parkinsons. For about a year she was in an "assisted living" appartment. Just provided one mean a day, cleaning, and having an emergency call system.Then she keep moving into increasing levels of nursing home care. I would have to look it up, but probably 4 or 5 years where she went through all of here assests.About the last 3 months where on medicaid.But it was interesting that only certian phsyical beds qaulified for medicaid. And the staff knew that the funds where limited and put her in that bed while she was still paying.But they had to move her out for a couple of months when they had some one else that needed medicaid.
If they had a set number of beds for Medicare/Medicaid patients, it was probably a for-profit facility, which have the worst record for care deficiencies, BTW. My mom's step-monster said there were two things she didn't want- she didn't want to lose her mind and she didn't want to die penniless. Twofer! She went into a home after my GF died (who had all of the assets and anything she gave away went to her side of the family from he!! unless it was useless) and lived to 103. She was totally senile after she hit 95. The County claimed eminent domain on the farm he bought way back when after she kept refusing the offers they made when they decided to add a turn-off from the highway.
"I cut this piece four times and it's still too short."
Your area is cheap. In a lot of places they are $10 now.
Actually I suspect that they don't say that the sales are for $1, but rather $1 and other valuable consideration.
That is common in many places.
But in Jackson Co (KC area), MO there is a new rule requiring the filling of sales amount so that the county tax collector has better date to use for adjusting values.
But if I am not mistaken that is filled as a separate document. The dead will still say $1 or $10.
If there was a mortage you can get some idea by looking at the value of the mortage. But that is only a guess as you don't know if it was 100%, 95%, 80%, or less financed.
Edited 12/2/2006 12:55 pm by BillHartmann
The procedure of reregistering an asset from a single (or joint) ownership to that of a trust (which is commonly done for estate planning purposes), involves the exchange of something of value. Since the asset is going from an individual to himself in another form, there really is not a sale or buy issue involved for tax purposes. However, the legal beagles have found it necessary to "formalize the transaction" with this exchange of something of value issue. Commonly a dollar.
No one is really buying something for next to nothing. This is simply a legal paper shuffle.
Aha! Transferring title to a Living/Revocable Trust sounds like a reasonable explanation. I'm thinking about that myself.
But that does not explain why these $1.00 deals are showing up now for the first time, in such numbers, when I never saw them published ever before around here. Mebbe I'll go down and read the deeds...Thanks for the input!