Q — My father is 82 and has dementia. My mother is 74 and has arthritis and glaucoma. They still live in their own home but it needs work. They are afraid they will have to sell their home to pay their medical bills. Should my parents put the house in a trust for me?
A–It appears what you’re really worried about is your inheritance. But putting your parent’s house in a trust won’t save it for you.
Your parents will still be the owners of the house, which means hospitals or whomever they owe money can go after the house if their bills aren’t paid.
If you really want to protect the house, your parents would have to give it to you, which would make them essentially destitute and eligible for public aid.
Caution. When people apply for Medicaid, the program that pays for nursing homes and medical care for the poor, the government checks back as far as 36 months to see if any assets have been transferred. This is done by matching bank account transfers to Social Security numbers.
If state investigators find your parents transferred assets to you, the money will be used to pay outstanding medical or nursing home bills.
Chicago attorney Sheldon Rosing doesn’t recommend using this technique. He says your parents would be dodging medical costs they can pay for. And the government has been pretty efficient at catching cheaters.
Maybe it’s better to sell the home and use the money to make their last years more comfortable. When they do run out of money, Medicaid will pick up the tab.
Q–My mother-in-law moved into a mixed-income retirement center in Virginia. Her rent is subsidized by a government Section 8 housing voucher. She is trying to sell an antique piano valued at $16,000.
We were going to buy bonds with the money, so she would receive only the interest. A lawyer says she will have to report the $16,000 as income. If she does, will she lose her Section 8 voucher?
A–She won’t lose her voucher but she will have to report the sale of the piano as income. According to the people who run Chicago’s Section 8 program, which, by the way, is a federal program with pretty standard rules nationwide, your mother-in-law will have to report the proceeds from the sale of the piano as income.
She can deduct from that figure any money she spent to sell the piano. This could be a commission or, say, money used for ads. But the amount she nets from the sale has to be reported as income for the year. As a result, her rent may increase for that period.
Her Section 8 voucher should be fine, however. Section 8 administrators say her income needs to go up for at least six months before they consider bumping her from the program. Because your mother is getting the money in a lump sum, she should be safe.
Q–I am a 71-year-old widow and hesitate to make decisions. I have been looking at homes in senior communities. Some of these homes are being built without basements. People tell me they are hard to heat in the winter. Is this a myth?
A–It’s certainly not one of the more common myths out there, but a myth nonetheless.
Homes built on slabs are not harder to heat or cool than those with basements, according to my heating and cooling expert.
It is true that it’s sometimes easier to control heating systems in a house with a basement just because you have better access to the furnace and ducts. As long as the home is well constructed there shouldn’t be a problem.
Plastic duct work should be built into the concrete slab. The air returns for the systems should be in the attic. Also, the house should have insulation under the concrete, a layer of gravel and then foam.
There’s nothing wrong with crawl spaces, either. But operating systems in a crawl space can be hard to get to.
Here’s something I never considered that came from Bryan Turnbo, a smart person at the Northern Illinois Home Builder’s Association. Slab-built homes have hard floors because they’re sitting on concrete, which can be tough on old knees and legs. Homes with basements have wood sub-floors which have a little more give. Something to consider.
Q–I have decided to look into a condo purchase. Are there discounts available to senior first-time buyers?
A–Discounts for seniors? No. For first-time buyers? Yes. That’s the short answer. The explanation comes from Tom Kim, vice president of community lending at Northern Trust Co.
He says you won’t find any discounts on mortgages just because you’re a senior. That would be age discrimination and lenders by law aren’t allowed to do that.
He says there are some loans that give breaks to borrowers based on their income or the location of the property. These are, for the most part, government programs that want to encourage home buying in certain neighborhoods.
As a first-time home buyer, you might be able to get a discount. Some lenders waive the application fee or offer below market interest rates to first-timers. Check a number of lenders to see what kind of deal you can get.
Resources
Fannie Mae’s public information office has free brochures, including, “Money From Home: A Consumer’s Guide to Home Equity Conversion Mortgages” and “The Home Keeper: It Pays to Keep You in Your Home.” Phone: 800-732-6643.
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Jane Adler is a Chicago-area freelance writer. If you have questions or information to share regarding housing for senior citizens, write to Senior Housing c/o Chicago Tribune Real Estate Section, 435 N. Michigan Ave., Chicago, IL 60611. Or e-mail adler@megsinet.net
