Q: For 5 years I have been renting in the home of an elderly gentleman. In addition to rent, I've contributed financially to the household expenses and provided assistance, such as driving, cooking, shopping, etc.

He has recently sold his home and is moving out of state and has asked me to accompany him as his caretaker, companion and home/affairs manager.

His income is a modest pension and Social Security. His financial worth/value is primarily his home; therefore, because he can neither afford to pay me for my time as his caretaker nor support any of my personal expenses and needs, he has suggested that he can give me the house – a barter of time in exchange for real estate. (Probably not uncommon as the elderly don't want to go to nursing homes and can't afford expensive care.)

He has 2 children to whom he will leave his savings; however, unfortunately, they are not interested in providing a home or care for him now. How to best go about this real estate arrangement is the question?

E. L.
Annandale, VA

A: You are wise in trying to get this settled before actually pulling up roots and heading South in this uncertain living arrangement.

Before I give you any suggestions, let me encourage you and this gentleman to visit an estate attorney who can lay out for you all your options.

The elderly have more than $1 trillion in home equity to use for long-term care, according to ElderWeb.com (www.ElderWeb.com), and many elderly (aged 75 and over) are starting to turn to alternative methods of long-term care as you have described.

You’ve mentioned several aspects of this proposed arrangement that need addressing and they’re not all real estate related.

1. How the property will pass from his ownership to yours upon the time of his death.
2. How you will be assured possession instead of his heirs if and when this happens.
3. How you will share in the equity of the property if you need access to it to take care of him if he becomes incapacitated.
4. Who will be responsible for upkeep of the property, taxes, insurance, etc., while you both are living there. Will it be part of your compensation?

Your most immediate options are, as you mentioned:

First, buy the property together in Joint Tenancy with Rights of Survivorship (this way if you die before he does, he still has access to the property; but if he dies, you are the complete owner of the property and his heirs can’t come knocking at the door for possession of the house.)

Secondly, you can have a living trust drawn up that provides you with power of attorney to control the assets in case he needs access to the equity to pay bills. (However, keep in mind that if you’re using the assets for his long-term care, then there may not be anything left to “pay” you for all your years of service.)

Thirdly, you can have him buy the house outright with your name as the sole title holder – however, that would leave him no equity and out of a house if you die before he does.

Finally, does he have sufficient resources for long-term care expenses without the equity in the house? If not, then he may be tempted to use the house as a means of paying for expensive care. If that happens, how are you getting paid?

This is more than just a real estate situation – you’re also dealing with his long-term care. How is that provided for outside of the resources in the house?

Again, it’s going to cost some money up front, but I would schedule time with an estate attorney to iron out all these financial wrinkles before making a long-term agreement.

Published: February 14, 2003

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