What to Do With Your Assets Before Moving Into Independent Living

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What to Do With Your Assets Before Moving Into Independent Living

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AdobeStock_421351129For many aging adults considering independent living, the idea of selling off significant assets, including their current home and other treasured possessions, can seem contradictory to the “independent” part of the equation. 

Yet, there are times in which liquidating assets represents the best option. There are pros and cons to most strategies for dealing with your assets before moving to a retirement community. Each option needs to be considered carefully, with your specific situation in mind. 

Why You Might Need to Sell

Some people are able to fund their new home in a retirement community through savings and income from IRAs, pension funds, or other assets. For them, a total downsize scenario may not be a necessity. Some even opt to retain their former primary homes for a variety of reasons, such as being able to use it as a guest house for traveling friends and family.

Often, however, keeping your former home and paying for a new one in an independent living community just isn’t feasible. In addition, funds from the sale of that primary home or other assets might be needed to move to the retirement community.

In addition, there are certain conditions in which you might be eligible for Medicare or Medicaid to supplement funds for your new independent living community. 

Alternatives to Selling

If selling your primary or vacation property isn’t right for you, but finances are still a concern, you have other options. Talk to your financial advisor, as well as people in your life who might be willing to manage some of the details. Here are some ways to avoid selling your house if you prefer not to do so:

Rent Your Home

These days, rental options include long-term and short-term (i.e., Airbnb-style) situations. By generating income that can help pay for your new home in a retirement community, a rental arrangement can also help you hold onto property to which you’re emotionally attached or wish to pass down to your children. 

However, it’s important to understand, that rental properties require some type of manager. Factor in the cost of a professional manager if you need one, or talk to trusted relatives who live nearby. 

If you choose to go the rental route, you can be as loosely or fully involved as you want to be with property management. Outdoor-mounted and “doorbell” cameras can help you keep an eye on your property from the comfort of your independent living community. You can also monitor all electronic correspondence and bank deposits related to the rental by staying in touch online.

Transfer the Title

In some cases, you may be able to transfer the title of your home to a family member who is currently living there, although it’s essential to check the most current state and federal laws before doing so. 

In general, circumstances such as a sibling or child who has lived in the home with you for a specified period of time and who provided you with a certain level of care may allow you to transfer the title to them. 

In addition, a disabled minor may be given the title to the home, or it can be put into a trust to benefit a disabled person under 65. Again, it’s important to ask a lawyer for the most current guidelines before giving the title to someone else.

Considering Additional Assets   

If you will be funding part of your retirement community expenses with Medicare or Medicaid, you will likely be required to liquidate savings plans such as 401Ks, pension funds, bonds, and IRAs. The same holds true of anything that is not a primary residence, including cars, boats, valuable art collections, vacation homes, or investment property. 

Not surprisingly, many people have researched whether there are exceptions to these stipulations. Unfortunately, transferring these assets to family members is considered out of bounds by the CMS in most cases. Unless your situation meets precise standards, attempting to be “creative” with these assets could result in a sanction for a time in which you won’t be eligible for Medicare or Medicaid.     

If you’re not sure where you fall in terms of current rules and regulations, you’re not alone! A financial advisor is crucial to help you understand which steps to take to maximize your resources. If family members are helping you make decisions, they may want to consult an eldercare lawyer to find the most sensible way to deal with your assets. 

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Kristin Davenport
By
December 16, 2021
Kristin Davenport is the Director of Communications for Episcopal Retirement Services (ERS). Kristin leads ERS’s efforts to share stories that delight and inspire through social media, online content, annual reports, magazines, newsletters, public relations, and events. Kristin earned her BFA in graphic design from Wittenberg University. She joined ERS in 2014 after a 25-year career as a visual journalist and creative director with American City Business Journals. Her role at ERS has ignited her passion for making Cincinnati a dementia-inclusive city, and she spends time with residents as a SAIDO® Learning lead supporter. Kristin is the executive producer and co-host of the Linkage Podcast for ERS. Kristin and her husband Alex live in Lebanon, Ohio, with their two daughters. She also serves as a Trustee and the President of the Lebanon Food Pantry and is a board member for ArtScape Lebanon, where she teaches painting and has an art studio, Indium Art.

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