Reply to Christopher Phelps's Post: Since June 13 and your very thorough answer I have discovered that my parents went to an attorney in 1999 to ask for protection for their home to never be taken from a nursing home and to ensure my inheritance
. The attorney set up a life estate. Until about 6 days ago, my parents nor I had any idea about what this meant, the implications, nor that there was such a thing. Since we are trying to sell their house and my husband and I are trying to buy them a house to be closer to us
for their care, lots of questions have come up regarding this situation. My questions now are:
1. When their house is sold, will my husband and i have to pay capital gains on the profit? This will be substantial, because they bought their house in 1960.
2. Since there is a warranty deed drawn up, can I deed it back to my father and then he could sell his house and retain the profit and pay no capital gains? Or does he have to meet the 2 year requirement of owning the house. (He definitely meets the "lived there" criteria)
3. If no capital gains are involved, should we simply sell the house, (we are all in agreement) and there is nothing to worry about?
4. If he does have to meet the 2 year requirement of ownership and he was not the owner under the life estate, but rather I was the owner (I'm not even sure if that's how it works), could we possibly get around the 2 year requirement because of the ailing health and the necessity to be near me, their only child
, to have care provided to them?
5. If we are totally screwed for the next two years, is there any recourse on an attorney who offered such poor advice to two middle class, trusting elderly people, who thought they were protecting their child. Since this has all come to light, I have discovered that nursing home cannot even take your property. That a home does not count against you. Plus, I have discovered that my father would never qualify for a medicaid facility anyway, because of his pension
and social security. Is there any recourse, because the attorney misguided them into something that was not necessary for them and was not their intent?
Thanks, XXXXX XXXXX desperate. We have found a home for them and need to make an offer, but cannot afford to be hit with a capital gains tax.