Living in mom's basement, legal-like
April 21, 2024 9:59 AM Subscribe
We are consolidating households with my mother in her home, and I'm trying to think through all the issues we need to make sure we handle.
This is going to be a change of state residence from California to Texas, and that's the primary thing I'm trying to make sure we do correctly.
We're going to go talk to mom's State Farm agent tomorrow to move our auto/renter's policy to Texas, which will give us one of the two pieces of required paperwork to get driver's licenses. I have had a bank account here since I was a child.
It seems like a good idea to me to sign a lease with mom, so we have an actual legal documentation of residence and can carry our own renter's insurance on our stuff, but my concern is if this creates any liabilities for my mother. She is retired and on Medicare, but as far as she knows there's no prohibition on making any kind of income. It probably wouldn't be a terrible idea to have me documented as an official resident in the house if something really bad happened.
The relationship is solid so that is not a concern. While she is still in decent health today we have already been making sure all our ducks are in a row if that suddenly stops being the case, since my father died a few years ago. I am her only living relative (and she is my only living blood relative, and aside from her all I've got is my spouse), so we do not anticipate any sudden family drama.
We will not actually be here all the time, as we are generally working away from home, so mostly we are not dealing with roommate issues. I don't expect her to need to evict us, in other words, though it might not be a bad idea to have the option should my husband or I suddenly be replaced with an evil twin.
Is a lease an actual bad idea though? Is there anything else we should do or not do just to prevent any undesirable liabilities on either side? Mom's in between lawyers at the moment (she keeps outliving them) and I don't know that this is a serious enough situation to need billable hours thrown at it.
This is going to be a change of state residence from California to Texas, and that's the primary thing I'm trying to make sure we do correctly.
We're going to go talk to mom's State Farm agent tomorrow to move our auto/renter's policy to Texas, which will give us one of the two pieces of required paperwork to get driver's licenses. I have had a bank account here since I was a child.
It seems like a good idea to me to sign a lease with mom, so we have an actual legal documentation of residence and can carry our own renter's insurance on our stuff, but my concern is if this creates any liabilities for my mother. She is retired and on Medicare, but as far as she knows there's no prohibition on making any kind of income. It probably wouldn't be a terrible idea to have me documented as an official resident in the house if something really bad happened.
The relationship is solid so that is not a concern. While she is still in decent health today we have already been making sure all our ducks are in a row if that suddenly stops being the case, since my father died a few years ago. I am her only living relative (and she is my only living blood relative, and aside from her all I've got is my spouse), so we do not anticipate any sudden family drama.
We will not actually be here all the time, as we are generally working away from home, so mostly we are not dealing with roommate issues. I don't expect her to need to evict us, in other words, though it might not be a bad idea to have the option should my husband or I suddenly be replaced with an evil twin.
Is a lease an actual bad idea though? Is there anything else we should do or not do just to prevent any undesirable liabilities on either side? Mom's in between lawyers at the moment (she keeps outliving them) and I don't know that this is a serious enough situation to need billable hours thrown at it.
Signing a lease will make your mother, legally, a landlord or business, and there may be certain legal requirements that she will need to meet. For instance, rentals are often required to have a separate entrance for the rental unit. There’s also the matter of whether her home is zoned such as to allow (again, legally) renters.
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She is retired and on Medicare, but as far as she knows there's no prohibition on making any kind of income.
There are no income restrictions associated with Medicare.
Is she receiving Social Security, though? There are outside income restrictions on SS until you reach your “full retirement” age. After that, there are no restrictions on outside income.
posted by Thorzdad at 11:20 AM on April 21 [1 favorite]
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She is retired and on Medicare, but as far as she knows there's no prohibition on making any kind of income.
There are no income restrictions associated with Medicare.
Is she receiving Social Security, though? There are outside income restrictions on SS until you reach your “full retirement” age. After that, there are no restrictions on outside income.
posted by Thorzdad at 11:20 AM on April 21 [1 favorite]
It's not clear what a lease would get you. Lots of people live in multi-generational households with no lease. You say you are trying to prove residency, but, once you have your driver's license with an address on it, it seems like that is covered?
If you are worried about not having a legal interest in the house, I would think about asking your mom to add you to the title for the house, as a "tenant in common" or "join tenant" (i.e., a co-owner). There are a lot of websites about parent/child real estate issues like this. One advantage is that you can arrange it so the house would pass to you automatically without any probate. A lawyer in your jurisdiction can advise on the ins and outs.
posted by Mid at 2:12 PM on April 21 [1 favorite]
If you are worried about not having a legal interest in the house, I would think about asking your mom to add you to the title for the house, as a "tenant in common" or "join tenant" (i.e., a co-owner). There are a lot of websites about parent/child real estate issues like this. One advantage is that you can arrange it so the house would pass to you automatically without any probate. A lawyer in your jurisdiction can advise on the ins and outs.
posted by Mid at 2:12 PM on April 21 [1 favorite]
In terms of the house being passed onto you, Texas is one of the few states that allows for lady bird seeds. This was beneficial to my mother in law in Michigan in receiving her mother's house when she died. Your local lawyer will be able to best advise.
posted by icaicaer at 3:57 PM on April 21
posted by icaicaer at 3:57 PM on April 21
IANAL and IANACPA but I believe there are definite income restrictions for Medicaid (not to be confused with Medicare) and I believe these vary by state. My mother was able to pay for her time in a nursing home month to month, but died before she ran out of funds at which point she probably would have had to change to a "Medicaid facility or bed".
Perhaps you feel that your living in the same residence would avoid the need for a nursing home, but as you say you will not be home all the time. That is why my mother needed to go into an assisted living facility and later a nursing home. It just wasn't safe for her to live alone and we couldn't quit our jobs. My mother did see an elder care attorney before these changes were made (and the meeting was private, we merely drove her there).
Please ignore any of this that does not apply to your situation. I just thought I'd mention these points in case any do apply.
posted by forthright at 4:21 PM on April 21
Perhaps you feel that your living in the same residence would avoid the need for a nursing home, but as you say you will not be home all the time. That is why my mother needed to go into an assisted living facility and later a nursing home. It just wasn't safe for her to live alone and we couldn't quit our jobs. My mother did see an elder care attorney before these changes were made (and the meeting was private, we merely drove her there).
Please ignore any of this that does not apply to your situation. I just thought I'd mention these points in case any do apply.
posted by forthright at 4:21 PM on April 21
Actually accounting properly for, and paying correct taxes on, rental income for a portion of a house you own is pretty complicated. It can affect everything from the owner's income (now they have rental income, business tax return, etc etc) to the basis of the house for tax purposes and the tax deductibility of the mortgage interest (now a portion of the house isn't the owner's primary residence but rather an income-generating business property), and on and on.
I feel that a lot of people just ignore this angle altogether, but possibly a simpler way to deal with is to have something like a roommates' or family agreement where you agree to pay a certain sum towards general household expenses. Maybe you pay all the utilities and monthly groceries, or something like $X month towards general unspecified household expenses, rather than even talking about paying rent, "the rent", specifically paying part of the mortgage, etc.
Just an angle to consider.
posted by flug at 8:35 PM on April 21 [2 favorites]
I feel that a lot of people just ignore this angle altogether, but possibly a simpler way to deal with is to have something like a roommates' or family agreement where you agree to pay a certain sum towards general household expenses. Maybe you pay all the utilities and monthly groceries, or something like $X month towards general unspecified household expenses, rather than even talking about paying rent, "the rent", specifically paying part of the mortgage, etc.
Just an angle to consider.
posted by flug at 8:35 PM on April 21 [2 favorites]
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posted by LadyInWaiting at 10:10 AM on April 21 [4 favorites]