Legal Question in Real Estate Law in Minnesota
Parents give cabin to children-with constraint?
Hello,
My parents own a cabin in MN. They're both in their 70s, but very healthy. They're considering turning their cabin over to me and my two sisters. The problem is my mother's fear that if she needs care down the road, she'll be stuck in a gov't-run retirement home for lack of funds. My father says that if the cabin is not turned over to us soon, the gov't could take it from us if she requires funds later in her life (within 5 years I belive).
My question is about my suggestion to my mom - that the cabin be given to me and my sisters, but that a legal agreement be drawn up saying that if my mother does need to enter a care facility later, we will cover the costs of a private facility, or, if too expensive, we will agree to sell the cabin to generate the funds necessary. Is this possible to do, legally? Basically, I need a suggestion as to what direction to take when we meet with a lawyer to satisfy my mother's fear that giving the cabin to us might cause discomfort to her later if she hasn't the money to pay for a nice care facility if she needs it.
I hope my question is clear, and thanks for any suggestions!
1 Answer from Attorneys
Re: Parents give cabin to children-with constraint?
First, I assume that when one of your parents need long-term care, they will be residents of Minnesota. If their permanent residence will likely be somewhere else, you need to talk with an attorney familiar with that stat's law because these requirements come from both the fed.s and the state, and states are not unifrm in their rules.
You are correct that the fed. govt. state (through the county) currently looks at gifts up to 5 years prior to a need for medical assistnce (MA) for long term care facility (nursing home). A person will not qualify for MA until an amount equal to those gifts has already been expended on her long-term care. So there is a sense in which yo don't have to wrry about gifts more than 5 years old. However, the fed. and state govt. can and do periodically change the qualification requirements. Not that long ago, property could be transferred to the next generation via a life estate to avoid the MA lien, but now that's not available and people who re-titld their land to use that method are out of luck. Similarly, the number of years we look back for gifts has changed (lengthened) over time, and usually the rules are those in place when you apply for MA, not the rules in place when you did your planning. It's also important to understand that as fed., state and county budgets get tighter there will be continued (probably heightened) pressure to make qualifications more strict. You should thus first consider long-term care insurance. If it is available and affordable (and age 70 is often a gray area for this) it is probably your parents' best financial protection in this regard (understanding that I don't know their financial situation and if I did my comments might be different).
If your parents still want to transfer the cabin, you can enter intoa contract that requires the children to pay for long-term care to whatever extent you negotiate. Your parents should have a clear understanding of who the lawyer represets and the disadvantages of having one lawyer represent both children and parents.
Also, if you gift the cabin you should get advice on whether there will be any gift-tax consequences.
If you have further questions, you can e-mail me directly at
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