My mother is starting the process of selling her house and downsizing to an affordable apartment. The house sale will leave her a fair amount of cash that she will use to close the gap between her expenses and her income.
I want to make sure I highlight this: she will need access to the money on a regular basis, but the money should easily last her the rest of her life.
My mother has been exceptionally frugal and smart with money for her whole life. However, she is concerned that as she ages, she will be less equipped to make smart decisions, and could be susceptible to scams, or people taking advantage of her kindness.
The current plan is for her to gift the lion's share of the money to me. I would supply her with money when she needs it. She would also keep a set amount (let's say $10K) that she would have complete access to, and I would continue to top up this fund if she spent part of it on legit expenses--assuming she stayed of sound mind, etc.
A few disclaimers here. My sister and I are the sole heirs to my mother's estate. My sister and mother completely trust me not to spend or run away with the money. Also, I don't need the money, nor do I expect to (barring any crazy unforeseen events). My wife and I have discussed it, and our half of any inheritance will be put in trust for my sister's kids (and their kids).
Upon my mother's passing, I would give the remainder of the money back to her estate so it could be distributed according to her will. This seems problematic for a number of reasons, but the one upside would be that after five years, the money would no longer be considered an asset from a Medicaid perspective, so she would be able to move into an assisted living facility (I am just starting to read up on this, so there are likely ethical considerations to this aspect anyway).
So I guess my questions are:
- Does this seem reasonable overall?
- What other options do we have that would meet the above criteria?
- Would we need a lawyer for this?
- Would there be any tax implications?