[WSBAPT] father trying to preserve inheritance for children

Tue Aug 21 09:53:51 PDT 2018

If he is already in his 80s, a lot depends on his current health, the ability and willingness of the kids to save the funds he gives them and/or gift the contract back to him if care is necessary, etc.

There won’t be gift tax unless the contract value is quite large, though a gift tax return is required if the gift is more than $15,000/person/year. I’d be more concerned about income/capital gains taxes. Dad is probably realizing gain with each payment, along with reporting and paying taxes on the interest portion. Does transferring the contract accelerate that gain? Who is in lower tax bracket? Dad or kids? They probably ought to have a chat with their tax preparer before taking that step.

Another concern is how dad will pay current living expenses if he gifts away the note/contract. Does he have enough other income to meet his needs? Or will kids need to supplement?

I find that folks generally have an outsized concern regarding Medicaid in relation to the actual risk of long term care expenses.

Heather

Heather S. de Vrieze
Attorney-at-Law
[cid:image001.jpg at 01D013C2.30F35160]
3909 California Avenue SW
Seattle, WA 98116-3705
(206)938-5500
heatherd at westseattlelaw.com<mailto:heatherd at westseattlelaw.com>
www.westseattlelaw.com<http://www.westseattlelaw.com/>

For your advanced planning, please note – Heather will have an extended time out of the office at the end of the summer. Leaving August 28th and returning September 17th. Please plan accordingly.
Click here to connect with de Vrieze | Carney on Facebook:   [FB Logo] <https://www.facebook.com/DeVriezeCarney>

CONFIDENTIAL & PRIVILEGED. This e-mail message may contain legally privileged and/or confidential information.  If you have received this e-mail in error, please notify the sender immediately and delete all copies of this e-mail message and any attachment.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Jenna Brozik
Sent: Tuesday, August 21, 2018 7:29 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] father trying to preserve inheritance for children

Heather,

Why not gift (assign) the real estate contract to the heirs now?  I understand there will probably be gift tax but if he doesn’t go into a nursing home for another 5 years he will miss the “look back” period for medicaid.

Thanks,

On Aug 20, 2018, at 11:21 AM, Heather deVrieze <heatherd at westseattlelaw.com<mailto:heatherd at westseattlelaw.com>> wrote:

I’m afraid there are limited options available to single individuals in their 80s to preserve assets if long term care becomes a reality. Even if he hadn’t sold, and the “farm” could have been considered his home and therefor an exempt asset, there would have been a lien if he received Medicaid benefits.

It is quite straightforward for his estate to collect on the real estate contract if client dies, a Personal Representative can assign the seller’s interest in the contract to the heirs.

It is also possible that if long term care is needed, the children could buy dad’s interest the contract, shop it around, and have the kids pay fair market value, which may be significantly less then the total of the remaining payments.

Heather

Heather S. de Vrieze
Attorney-at-Law
<image003.jpg>
3909 California Avenue SW
Seattle, WA 98116-3705
(206)938-5500
heatherd at westseattlelaw.com<mailto:heatherd at westseattlelaw.com>
www.westseattlelaw.com<http://www.westseattlelaw.com/>

For your advanced planning, please note – Heather will have an extended time out of the office at the end of the summer. Leaving August 28th and returning September 17th. Please plan accordingly.
Click here to connect with de Vrieze | Carney on Facebook:   <image004.png><https://www.facebook.com/DeVriezeCarney>

CONFIDENTIAL & PRIVILEGED. This e-mail message may contain legally privileged and/or confidential information.  If you have received this e-mail in error, please notify the sender immediately and delete all copies of this e-mail message and any attachment.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Jenna Brozik
Sent: Monday, August 20, 2018 10:43 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] father trying to preserve inheritance for children

Hello list mates,

I drafted a will for my client in 2015.  He has a farm and left the farm to his two children in equal shares in the will.

Since then he has sold his farm and has a owner held contract for 20 years.  He gets payment for the farm once a year until the farm is paid off.

My client is worried that he won't be around to collect all the payments.  He is in his eighties.  He is also afraid that when he goes into a nursing home, the nursing home will consider it income and it will ruin his chances of Medicaid.

Does anyone have any suggestions so that he can preserve the farm so that his children inherit it?

Thanks in advance,

Jenna Brozik
Attorney at Law
Prinz & Brozik PLLC
445 S Grand Ave
Pullman, WA 99163
(509)338-0908 / (509) 338-3527 (fax)
jennaprinzlaw at gmail.com<mailto:jennaprinzlaw at gmail.com>

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