The Colonel’s Plan – Next Steps

I’m off schedule this week–too much going on. I had planned to have this entry posted Monday, and to be doing my FIAWOL piece tonight. But the FIAWOL piece isn’t edited yet. It can go up tomorrow. Hope to get back on track next week. 

January 30, 2018

Dear Daddy –

Well, overall the meeting with the attorney went very well. Turns out he was from Cape Henlopen, Delaware. He commented on Mother’s Henlopen Lighthouse bag, in which she’d placed all the property deeds and our written plan for the split. She hadn’t wanted to take it—she thought it looked unprofessional. Turns out it established a little bit of a bond. 

When we initially told Mr. King that Mother wanted to give away all of her real estate, he said he advised against it. For one thing, the capital gains taxes, if we ever sold any of the properties, would be outlandish. Of course, we never do intend to sell, but it was something to think about. He also said that, if Mother went into a nursing home any time in the next five years and ran out of money, the State would demand that we surrender the deeds to pay for her care.

Nursing home care—not assisted living or retirement living—costs about $8,000 monthly. The average stay is six months, but it could go one for years. Patients usually die completely broke. Medicaid will not cover the cost until the patient has no more than $2,500 in cash to her name—no property whatsoever. It all has to be sold. And any real property given away in the last five years is seized. 

Scary. But it also had me mentally calculating how big a “war chest” Mother would need if she went into a nursing home today and lived there for five years. She would need about a half million dollars. Adding up her long term care insurance, her income, and the price I was planning to pay her for your house, we arrived at a much higher figure. I shared that with Mr. King, and he said he was feeling better about our plan. He shared that his own grandmother had done exactly what Mother was planning to do, and he had been able to keep the house for his father despite a nursing home stay before she died. 

I then asked for a discussion of capital gains. I know the rate is 25% of the difference between the amount for which you sell a property and the basis, or price that you can establish you paid to get the property originally. He explained that the basis for gifted property is the amount the giver paid to get it. Well, your properties were amassed between 1953 and 1983. Their purchase prices are practically zero in comparison to their current market worth. On the other hand, if the properties are inherited instead of being gifted, their basis becomes their value on the day their previous owner died. 

But two things had to be taken into consideration: I plan to pay for the house on Simpson Road, which establishes a basis for me much higher than what you paid for it in 1966. Plus, if it’s my primary residence when I sell it, there’s a $400,000 exemption from capital gains. And for all the property, the basis changed when you died. Your half became worth half of their value on May 6, 2017. So Mother’s basis is now a little more than half the value of each property. And that’s the basis we would get if she deeded it to us today. 

“I’m starting to feel better about this,” Mr. King said as we talked. By the time the meeting was over, he looked at Mother and said, “Evelyn, I think gifting these properties now is your best option.”

So next step number one is for me to call a Maryland title attorney who will help us put Simpson Road in my name.

Next step number two is much harder… what do I do with my house? Renee thinks we have no option but to sell it. And I know selling it might just break her heart. We’re discussing other options. We can rent it for a good deal more than we pay in mortgage every month. Assuming it doesn’t sit empty for long periods, we could afford to keep it and pay a management company to rent it out for us. And the rental would even exceed the mortgage on the amount I want to pay Mother, although that doesn’t include Simpson Road’s very high taxes. 

And it doesn’t pay us back for losing the home Ethan and Christian grew up in. Yes, we’ll build a new home together—the home you started. 

But change isn’t easy. I’m afraid I’m just that much more sentimental than you were. 

It’s funny, I talked to Mother about this, and she said she feels little attachment to the house on Simpson Road. It would be easy for her to sell. Her attachments are to the houses you sold long ago in Fairfax and on Long Island. “We lived very different lives, then,” she said. Charles and Susan think so too. 

But I never lived those lives. I lived the weird—dysfunctional?—life that we lived in the unfinished house in Clarksville, putting on winter coats to walk into the living room, hammering and sawing until all hours of the night, hiding the pieces of grand rooms under filthy surplus equipment. 

And I’ll tell you a secret, Daddy…. I didn’t hate that life. There were times I was angry at you. There were times you were unfair. There were times I resolved that I, as a father, wouldn’t do certain things you did. And mostly I haven’t. But I can’t resent you or the life you delivered me to when we moved into that house. Susan and Charles remember carpeted floors, painted walls and immaculate housekeeping. I had to wait for those, until I had my own home. 

But I remember your plan, and all the carpet, paint and housekeeping in the world isn’t worth that much. 

Love, 

(Still conflicted)

Steven

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