Sale or Rental of Home

[Apex]

My 86 year old mother, widow of a veteran, has moved to a retirement home and I'm trying to decide what to do with the townhome she lived in before moving to a retirement home.  I submitted the A&A application September 30 and do not expect to sell/receive rent prior to March 1.  I've met with two separate advisors who offer assistance with the A&A application process and have been advised to:

a.  Put the house into an irrevocable grantor trust prior to selling or receiving rent payments.

or

b.  Sell the house to a relative under an installment sale whereby the income will only be counted as the funds are received.

I have two questions:

1. Will moving the property into a trust or doing an installment sale allow the asset to remain an excludible asset?

2.  Assuming the A&A application is approved (say January 2011) prior to the sale/receipt of rental proceeds (say March 2011), am I correct that she could receive the benefit frojm October 1 to the date of sale/rental (assuming otherwise qualified)?

Thanks.

[vetadmin]

This is a legal question that is best answered by someone who has the experience to provide the best resolution and what's in the best interest of the applicant.

[AngelaManz]

I cannot give you specific legal advice and I do recommend that you contact a local elder law attorney who is knowledgeble about VA claims.  For many clients I work with, an irrevocable trust can be a great method of holding the home.  The home is an exempt resource since it was her residence.  Depending on your situation, you may want to simply leave it alone until you're ready to sell and then transfer the proceeds from the sale to a trust or make a gift to a family member.  The type of trust drafted to only hold real estate would be different from the type of trust drafted to hold money, so if you don't know what you are going to do with it now, it may be better to not do anything until you are sure.  Again, the VA's rules state that the residence is an exempt asset, so it should not count against her until she sells and converts it to cash.  If it is rented out, there are ways to keep it exempt without using a trust.  I would not personally recommend selling the home under an installment because those payments would be income to her and that can disrupt eligibility for VA and Medicaid, which she may need down the road. 

I don't know what kind of advisors you have spoken to, but if you haven't spoken with an elder law attorney who knows about VA, I would highly recommend that you do so.  To find one near you, check www.naela.org - National Academy of Elder Law Attorneys

Angela