When a homeowner moves into assisted living, there is always a question of how to best handle the house. There are several financial and legal considerations, and during an already challenging time, it can be pretty overwhelming. Here’s what you need to know about the options available to you or a loved one.
Turn It into a Money Maker
Rather than sell a house to make money from it, many seniors elect to hang onto their properties and rent them instead. It’s a chance to recoup some of your homeownership and assisted living expenses, especially if you do not have Long-Term Care Insurance paying the bill. Becoming a landlord is a big responsibility for the family, so rather than saddle family members with the many duties involved, consider hiring a property manager.
A property manager can ensure the home is well-maintained, advertise for renters, screen applicants, handle the ongoing rent collection, and so forth. Top-notch property managers offer support to you and to your renters at all times, too, so you never have to wonder what’s happening with your home.
Sell It Outright
Making money from your home is a smart choice, and one suggestion is to consider selling the house outright. However, while the funds from the sale could be desirable, it can be emotionally and physically exhausting. Ideally, the home will need to be decluttered to go on the market, then emptied after it sells. That’s a lot of work, and you might need to enlist family and friends to help. It also postpones wrapping things up for a bit, and you might be anxious to be clear of the property and its obligations.
In many ways, if you’re inclined to sell, it could be best to do so soon. Unless you have a disability or other qualifying circumstances, you might pay capital gains tax on the sale if you wait two years or more after your move. Also, you should keep in mind the Medicaid look-back period and how the sale might affect your future, especially if you don’t have Long-Term Care Insurance in place.
You also might want to consider setting up a life estate. As Elder Law Answers explains, a life estate protects the property from Medicaid recovery. It’s a form of joint ownership in which your home would go to a designated party when you pass on, and it can be more than one recipient if you wish. That party would assume ownership but would not be allowed to occupy the home until after your passing.
Leave It Unoccupied
One of the options available to seniors is to leave the home empty, changing nothing else. Unfortunately, this is normally the least desirable choice available, even if you have someone who can keep an eye on things.
As NOLO points out, unoccupied homes still have bills coming in, and those bills need to be paid. Property taxes, utilities, and so forth will continue to be charged to you, and if they become delinquent, they can affect your credit rating and your estate. An unoccupied home is more likely to become a victim of vandalism or theft, and on top of everything else, homeowner’s insurance sometimes won’t cover damages that occur to an unoccupied home.
If you elect to allow the home to remain unoccupied, weigh your circumstances carefully, as you might want to give power of attorney to the person in charge of its care. These documents can be as broad or narrow as you want, so you could restrict the decisions that person can make on your behalf however you wish.
Gather Professional Insights
Many of the ins and outs associated with your situation can be complex, both legally and financially. Seniors often benefit from discussing their particular details with a real estate attorney or an elder law attorney. That way you can protect yourself, your home, and your family members from a poor decision.
Moving into an assisted living facility is a big change for both the individual and their family, and knowing what to do with your home is challenging. Allow yourself some time to sort through your options. You want to feel comfortable and confident about whatever choice you make.