Case Study: Sarah Jane O’Conner Can’t Move On

Jan 17, 2023
Estate Planning
Case Study - Sarah Jane O’Conner Can’t Move On | AmeriEstate Legal Plan

Sarah Jane’s husband passed away 12 years ago, leaving her alone in the large house they raised their two children in. Knowing that the house was the most substantial asset she could pass on to her children, Joe and Laura, Sarah Jane wanted to ensure she protected it.

Uncertain about how to proceed, she had asked friends and family members for advice. Several told her that the best way to protect her home was to add one of her children to the deed.

Cause for Concern

Sarah Jane had a valid cause for concern. She wanted the family home to go to Joe and Laura, but two potential issues worried her. First, though she was in good health when her husband died, his illness depleted them of much of their resources. If she required long-term care or needed to go into an assisted living facility, she wouldn’t have the funds to pay for a lengthy stay.

If Sarah Jane couldn’t pay out of pocket for these services, she would need Medicaid to cover them, as Medicare benefits do not include long-term care coverage. If the government pays for this type of care, then when she passes, the state can seek to recover costs through a process called estate recovery.

Another cause for concern was taxes. When her children inherit the home, they may owe capital gains taxes. Estate taxes weren’t a concern because the house didn’t pass her state’s or the federal government’s threshold. She did not want their inheritance to be a burden.

No Available Options

After a family meeting, they all agreed that adding Joe to her deed was the best option. He wanted to live in the home and would buy his sister out of her half when the time came. It all sounded great until this past year.

Sarah Jane was still in good health but was slowing down and didn’t like driving as much as she used to. She also found it harder to take care of the place and was a little afraid of falling down the stairs. She wanted to move into town, closer to everything she needed. Some great single-story condos met her needs, and two of them were on the market.

She invited her son over to talk to him about what she needed. Joe was empathetic, but he wasn’t in a position to buy the house yet. He also still wanted to raise his kids there. He didn’t want to sell the house and wouldn’t agree to it. Though he promised to help her care for the home, Sarah Jane knew he had little time to do so.

Unfortunately, Sarah Jane eventually found herself stuck in a house she no longer wanted to live in, something that could have been avoided had she spoken with an AmeriEstate attorney experienced in estate planning and tax laws.

Find Out a Better Option

AmeriEstate understands the difficult choices facing seniors regarding how to manage their estates. We are here to help you understand your options so that you can make an informed decision. Contact us today to schedule a free consultation.