Making the MIL a dependant - am I nuts

[Travis Waldher]

The deal,

My MIL lives on disability, and gets free medical care as long as she doesn't have any sort of income. (which she doesn't) I'm not 100% clear on how all that works, just know that she can't sell her home without loosing medical.

My wife likes the house she grew up in - no way in hell we are paying what she wants and could get for it though. Needs WAY too much work.

So, I had a hairbrained idea:

MIL signs over house and property to us. This should make her a dependant, qualifying her for my medical. (which is signifigant)

We would then sell our home, in 5-6 years I should be able to get about 250,000 in equity out of it.

That equity would be used to build a shop, with an attached MIL apartment, built for a disabled person and the way the MIL wants it. So it's basically her place. I could see $80,000 being spent here.

We would buy a nice 35+' travel trailer - figure up to $50,000. This would be our home for about 9-12 months. Something that has a room for us and bunks for the kids, multiple slideouts.

The MIL's house would be gutted. It's been smoked in for 30+ years, it needs extensive electrical work, plumbing, floor joist work, etc. I would do 90% of all work. I think I could rebuild the inside of the two story house, and hire the roof work out for under $60,000 - but would have a reserve budget of an additional $60,000 in case I get started and discover it's going to be a redo from the ground up.

When all is said and done, the MIL gets to live in a new apartment to her liking, while retaining most of her independance.

She can collect her social security as income, we would also supply her money as a monthly income. All of her medical would be covered. Basically, she wouldn't have to worry about medical or income until the day she dies.

In exchange, we own our home outright before we are 40yo.

Am I nuts for thinking this is a good idea? Also, is it true that you can sell one home a year without getting hit with capital gains tax?(I'm doubting it) Needless to say, tax accountants and lawyers (of the non-PBB style) would be involved when this would happen.

[Murph]

Originally Posted by Travis Waldher

The deal,


MIL signs over house and property to us. This should make her a dependant, qualifying her for my medical. (which is signifigant)

I'd check this out with HR first.


Andy

[PTSchram]

The first $250K is immune from cap gains, per my accountant and real estate folks.

As for the disability status, find a good eldercare lawyer before you do soemthing that might cost the MIL her disability and you $.

Lastly, I live in my childhood home and love it! 43 years in June.

[Travis Waldher]

Originally Posted by Murph

I'd check this out with HR first.


Andy

I looked in to all the medical documentation for my plan. I'm 90% certain this is going to work.

The plan states any of my dependants, no definition of age or relation restrictionts are made. Since dependant is a legal term, it stands to reason that as long as she is dependant on me, she will qualify for medical, dental, life insurance, etc. Of course, if I kick the bucket, that makes her a receipient of part of my life insurance, etc. too.

Of course, I'm only 90% certain.

Once we have family buy in, the MIL (who appreciates and is pretty open to this idea) agrees, I'll take the next steps to confirm this is true. Draft up contracts to limit my exposure to the other siblings that may want money out of the house in the event of her death (they dont' want the house - bad memories), etc, etc etc.

[Travis Waldher]

Originally Posted by PTSchram

The first $250K is immune from cap gains, per my accountant and real estate folks.

As for the disability status, find a good eldercare lawyer before you do soemthing that might cost the MIL her disability and you $.

Cool on the capital gains.

As for the disability status - I'm assuming she'll loose it. And that's fine, my plan is to replace her lost income (all of $600/mo). But we would have to agree on a value, as we are also assuming her medical bills, utilities, transportation, etc. She just pays for her own food

[Foolish]

You have to reside in the home for 2 years not to get with capital gains. The first 500k is under a tax umbrella (BUT it has to have been your principal residence for at least 2 years!). 250k per owner. You and your wife are presumable on the title whether it be through tenancy in common or joint tenancy.

I hope your wife doesn't have any siblings cause if you go this route I see a nasty lawsuit.

I still think you are nuts for wanting to move in close proximity to your MIL

[sceep]

yes you are nuts.

tell the MIL to write yer wife into the will for the house.

then off her.

[Travis Waldher]

Originally Posted by Foolish

You have to reside in the home for 2 years not to get with capital gains. The first 500k is under a tax umbrella (BUT it has to have been your principal residence for at least 2 years!). 250k per owner. You and your wife are presumable on the title whether it be through tenancy in common or joint tenancy.

I hope your wife doesn't have any siblings cause if you go this route I see a nasty lawsuit.

I still think you are nuts for wanting to move in close proximity to your MIL

we've lived there for 3 years now, both wife and I are on the title to the house.

wife has 2 brothers and a sister. One of them isn't going to be an issue, the other probably won't be a issue, the sister on the other hand - especially with her husband will probably be an issue. Because of this, research will be done before anything exchanges hands, lawyers will be involved. I need to make sure that both the MIL's interests and our interests are protected. I don't want either side directly involved getting screwed.

I get along ok with the MIL, and the way I see it, my wife and I will end up her care provider as we are the only ones in a stable and strong enough financial position to do it. So no matter what I'll be around her more and more often as the years go on anyway. Besides - I'm away from home 13-15 hours a day right now. That leaves a couple hours at night and weekends - I wouldn't be around *that* much.

IMO - family is family, as long as they are upstanding people they need to be supported.

[Low-Buck J4K]

Is MIL hot? If so then hell yes!
If not > NO.

[rockota]

Why buy a trailer? Wouldn't it be cheaper to rent an apartment?

[Travis Waldher]

Originally Posted by rockota

Why buy a trailer? Wouldn't it be cheaper to rent an apartment?

Ohh.. because we could use it for recreation at the same time.

On top of that, there isn't any apartments nearby.

If I'm going to build a shop, a MIL house, and rebuild a house - my ass is going to be very busy for a good year spending every waking moment I have working. So, staying on site with wife and kids would at least allow some family time. Plus, by then they'll be 6-7 years old, that's old enough to do some construction work.

[rockota]

Originally Posted by Travis Waldher

Ohh.. because we could use it for recreation at the same time.

On top of that, there isn't any apartments nearby.

If I'm going to build a shop, a MIL house, and rebuild a house - my ass is going to be very busy for a good year spending every waking moment I have working. So, staying on site with wife and kids would at least allow some family time.

Got it.

[ALLJACKEDUP]

I would check it out with her free medical pervider, moving her in may kill her medical do to your income.

[Travis Waldher]

Originally Posted by ALLJACKEDUP

I would check it out with her free medical pervider, moving her in may kill her medical do to your income.

Thats just it, she would be on MY medical plan.

[DavidVanVorous]

Just fer grins;
1. Check into the disability thing vs. her being on your insurance. Sometimes insurance folks have issues with preexisting conditions and dont want to get involved.

2. What is the state and fed definition of what a dependant is. Most times it requires something like 66-70% of ALL things like clothing, shelter and food to be compliant.

D.

[Travis Waldher]

Well, when I got married, the insurance provider didn't ask or care about any pre-existing conditions my wife had.

The only annoying thing they did was send her pamplets about eating better because she was overweight.



































While she was pregnant.