At what point do I just sell dad's house?

How about you go back and search for items that would be saved - legal documents, photos, etc. You could start the boxing up process for save and donate. Maybe take a lot of pics of furniture or other items and share with all of the others so family can claim items they might want (and agree to pay the shipping to get it, or come in person). You can label each item or start the boxing process for those things. There are probably many things that could be moved along now to work on the paring down work - old clothing, etc taking up room in the house.

Dad would still have his house even if he can't return and a lot of the hard work would have been started when the time comes to actually sell out.

Based on reply from Isthisrealyreal to my query/comment, it appears that ANY residence has the sane requirement:

FROM https://www.irs.gov/pub/irs-pdf/p523.pdf

Eligibility Step 2—Ownership Determine whether you meet the ownership requirement. If you owned the home for at least 24 months (2 years) out of the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement. For a married couple filing jointly, only one spouse has to meet the ownership requirement.

Eligibility Step 3—Residence Determine whether you meet the residence requirement. If you owned the home and used it as your residence for at least 24 months of the previous 5 years, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period, and it doesn't have to be a single block of time. All that is required is a total of 24 months (730 days) of residence during the 5-year period. Unlike the ownership requirement, each spouse must meet the residence requirement individually for a married couple filing jointly to get the full exclusion. If you were ever away from home, you need to determine whether that time counts towards your residence requirement. A vacation or other short absence counts as time you lived at home (even if you rented out your home while you were gone). 

However, my comments still might help anyone who has to deal with a Life Estate. Although we had set it all up years ago, I didn't fully understand all of it, nor was I aware of the tax implications, until we sold her place.

It never hurts to have MORE information than you really need! Also, see that link for more info - it does have more information, regarding things like being away for part of the time and physical/cognitive issues.

marydys;

"I'm still not understanding your logic (I've never heard of "life estate" and "remainderman" ) so maybe you are from Canada and we are talking about Michigan and California?"

No, I am not in Canada, nor Michigan or California. Where you live most likely will play no part in the sale (other than you need to travel to clean it out/fix it.) I had moved to the next state over from where mom's condo was, and it had NO impact as far as selling the place. One brother lives in my state, the other is about 1500 miles away (all 3 trustees.)

Before addressing the question about Life Estate, please either carefully read the POA doc or consult the atty who drew it up. Mom's didn't specify needing any "proof" although we could have gotten it. I used the POA to take over her finances, set up the trust account (she did have to see the EC atty and sign paperwork for the legal part of the trust and the Life Estate, but she was in very early stage and he determined she was capable of signing. The other docs, like POAs, had been set up years before and were sufficient.) Yours may indicate needing this, and it certainly can't hurt to have it in hand to use the POA. I was never asked for any "proof." Her POAs also did not say anyone could get paid for their "services", but when I said this to the atty, he said it also doesn't say I can't. You are the trustee, so unless any doc says no, you can pay yourself "reasonable" recompense. Consult the atty. Lastly, the EC atty told me I could sign ALL paperwork for the sale of the condo EXCEPT the deed. Despite her living in MC, having by then already forgotten about her condo and not knowing what she was signing, I HAD to have her sign that deed.

Perhaps you can explain what the whole "must be sold by x date" is in your situation. What you said usually falls under the Life Estate we had set up for our mother. What this does is put the house in trust (you indicate there is a trust), but allows her to live there for the rest of her life. Had we been able to keep her there until she passed, it would have stepped up the value and we would have had little or no cap gains to pay. Given her dementia and refusal to allow aides in, we had to move her. Hanging on to the place was costing too much money and although we considered rental, between hassle of being landlord (or cost of property management), RE taxes and condo fees, it wasn't worth it. In order to avoid cap gains for HER share, we had to ensure she was there at least 2 of the last 5 years, hence why I suspected his trust was a Life Estate.

When you said he had to live there for at least 2 of the last 5 years, THAT was the stipulation on the Life Estate. In your case, I don't know if this applies, but it does sound like it. The Life Estate IS a kind of trust. You need to find out if it is, because in that case only your father would get the break on cap gains. He could also get taxed on the net amount that went to him, depending on his income. Remaindermen are those listed on the trust who would "inherit" the place should your dad pass away. It could also impact his Medicare cost, one year only.

We went through this several years ago, and again, that stipulation of 2 out of 5 years really sounds like this is a Life Estate. You should, at the very least, contact the attorney who drew up the documents to check. If it is, the IRS has tables based on expected life expectancy, and it determines what % he and the "Remaindermen" get. Although we put ALL the net funds paid out by check to us back into the regular trust fund (separate from the house trust), it still resulted in cap gains for us. His share, even if the place were worth more than the exclusion amount, will be low enough that he won't have any cap gains, but anyone else on the trust will.

IF you find out it isn't a Life Estate, please post something so that others will know what this is and perhaps can benefit from the knowledge!

Mary, can you get a specific POA for the house?

That's what I did to sell my dads property in another state.

The title agency should be able to provide the form.

(Sorry for so many responses, I can't edit my posts for some reason.)

Mary, can I recommend that you create a contract that pays you and your husband for doing the hands on clean out or hire some help.

Your siblings don't have a clue about what your responsibility is. It doesn't mean that you have to do slave labor to preserve their inheritance. Make this as easy as you can for you. That attorney could probably draw it up in no time and make it legal to protect you.

Great big warm hug! You don't deserve their hatefulness, but you are lucky to know where they stand now so you can be prepared for the ugliness to ramp up and have your ducks in a row to be as insulated and protected as possible. Don't be their doormat!

I am doing this RIGHT now. I have to, there is no money to pay for the long term care facility and I am having to dip into my retirement savings, which is a bad idea. I have complete power of atty, both medical and financial, and I recently had her will redone, showing that only she owns the house (my deceased dad was still listed as owner). I filed 2 ins claims, which were approved so some repairs can happen. House is a wreck. I am calling a junk hauler for next week and I may have to use them twice. Once house is empty, clean, and roof fixed, I plan to sell it to one of those WE BUY HOUSES. I do not know if there are any legal ramifications to what I am doing. I only know I cannot afford to keep paying all her bills. Medicaid will provide nothing as long as she owns an asset, her house. There is nobody else to help, there is no money.

Dismantling a life is hard work. Makes you really respect someone who organized their life. My mom is not one of those people.

My mom knows nothing about what I just shared.

As an update to this, the trust actually said I needed two letters to do anything with the house or property so I consulted an attorney before I started cleaning it out... and the attorney said to get two doctors letters. The doctors say that he doesn't have the ability to do informed consent and that I should make financial, health living decisions. I was shocked because to me that sounds like they are saying he's incompetent .... So anyway, I have no idea if it's enough to sell but it should be enough to clear out stuff and get it ready. I'll have to consult a title company or someone like that to make absolutely sure I have all they'll need to support my authority to sell. I had no idea that as trustee I had to do all this so I'm glad I asked this question and read through some of the situations. Ironically, dad now says it's OK to sell one day and then the next day says "it's off". So it's a bit of a crazy making time with him.

I’ve been renting out my Mom’s house since I had to place her in memory care about six years ago. I was also stuck in a rut wondering what to do about her hoard; when I researched comps for rental homes in her neighborhood, I had a vision and the lightbulb went off on top of my head!

I put a few calls out to property managers and set a date to have the place cleared out before the end of the summer, and the rest is history. I’ve been pulling in nearly 30 grand a year in rental income, and the house is now worth over half a million, no mortgage. I inherited the house two years ago when my mother passed away, and will side step inheritance taxes by “living “ in the house for the next two years and renting out rooms.
Clean it up, rent it out, then cash out in a few years after all the pandemic chatter calms down. Perfect compromise. I have taken over landlord responsibilities, but you can start out with a property manager to hold your hand for the first few years.

You need to sell the house ASAP. Your dad is no longer living there and he has cognitive issues. Since your siblings are not helping with the house and maintenance, then YOU need to do what is best for you. If you have the time to deal with the house and getting it ready to sell, then do it. This would be one less issue to deal with in the future.

excellant answer, took a good year to clean out brother in laws house, just made it b4 the county mailed a tax that if it wasnt sold would b auctioned off for back taxes and it was a hoarders heaven. the back of the house was only a crawl space and the gound underneath was so rotted out, had to b gutted, i feel sorry for the buyer ( had three buyers b4 that) after gutting the back of the house which contained the kitchen and bathroom couldnt b brought up to code so county boarded up, now it looks like bad news and the buyers still have to pay back the loan.

Your father would have to be deemed by the court to be incompetent in order for you to activate your POA (or in a coma/unable to respond during an accident/etc). It takes 2 docs to testify on the issue. If you want to clean it go ahead; if you have keys what's stopping you? You know he's not in state and you are taking care of his affairs...you let it get messy. In fact as the trustee I would argue it's your responsibility since you are making money from being the trustee. It's his money not yours that is paying. Also, sell or not, your paying Uncle Sam anyway. Let your father enjoy the time he has left instead of you pestering him to do something he already told what his wishes are. I would love to see you try to sell his property without permission which requires his "real" notarized signature...oh please, can I watch? Legal comedy is my favorite... Perhaps counseling: for you I mean.

Is there anyway you can just get rid of what is clearly trash (like old newspapers, zip ties, stuff like that)but not throw anything else away, but maybe box things up in a organized manner (like all kitchen stuff) in boxes marked as such and keep them in the kitchen, and do the same for the rest of the house.  you can have one box for pictures, one for knickknacks.  Keep them in one central location and IF he no longer is coming back home it shouldn't create a problem.  And when the time comes, all of the family members can go thru each box and see if there is something they want.....or to be put out for public auction or maybe donate.  If you do one room at a time, it will make it easier.  You can also check with an elder attorney or whomever you dealt with in getting the POA and trust.  Good luck.  you just never know what you might find.

Good coverage for Life Estates:

https://www.elderneedslaw.com/blog/life-estate-deed-income-tax-issues

Of interest was the section "What are the income tax consequences on sale of real property subject to a life estate?"

When you mentioned living there 2 of the last 5 years, it triggered a memory, hence why I thought the home was in a life estate in another comment I made. From the section above, what it would do is negate HIS cap gains, but does nothing for the remaindermen:

"However, the IRS provides an exemption amount (currently $250,000 for single and $500,000 for married owners of real property). This personal residency tax exemption is available if the owner(s) have lived in the subject real property for 2 of the last 5 years. It essentially means that no capital gains is paid on the first $250,000 of gains for a property owned by a single individual."

So, understand that even if you manage to sell it within the time frame, the bulk of the gain will be taxed to the remaindermen. The share for your dad is calculated based on IRS tables, and will likely be pretty minimal (and per another comment I made, it will likely impact his Medicare cost in 2 years time.)

Getting it sold by then will NOT eliminate the cap gains owed on the rest. Mom was about 94 at the time of the sale, and her share was about 9-10% of the total net. So, the other 90% or so WAS subject to cap gains. If you do like we did and put all the funds into the trust for his future care, DO keep enough to cover the cap gains you will have to pay. I was stupid and put all the money in, then had to distribute to us from the trust to cover the taxes, then had to claim that the next year (if done same year, only one time, but I made a second distribution after the end of year - DUH!) I would expect his share to be about the same %age (lower life expectancy for males and he's just a tad younger than mom was.) So, how much would his cap gains be, if you drifted beyond the 2 years? Good question for an IRS Enrolled Agent. He's likely pretty low income, so you might not "save" as much as you think. It's more important to get the unoccupied insurance, fix/clean the places and prep it for sale.

Meanwhile, I do highly recommend seeking both legal advice to ensure everything is A-OK for the sale AND find an IRS Enrolled Agent to handle the taxes after the sale. Some POAs require proof that your dad isn't competent before you can step in. Even before selling the condo, the 20+ pages that came from the trust fund for tax prep glazed my eyes! I let the Agent do it. Not any more expensive really for this service AND you know they have to stay up-to-date with IRS rules. I had him take over mom's taxes, as her MC is fully deductible (AL is not - only certain medical needs, but MC is) and I didn't want to mess with it!

Your dad gave you POA and made you Trustee so that you could make decisions when he could no longer do so himself. He trusted you to do the right thing when he signed those documents and now it is time for you to take action.

My parents told me, in no uncertain terms to NOT to hire home health aides and NOT to sign up for the service provided at the retirement community that would ensure they got their meds. I was scared of my dad's temper too, but the truth is that your dad is very old and frail and you are a full-grown adult who knows what is best for him. Trust yourself.

See my video on YouTube about role reversal with parents. Enter Kathleen Vallee Stein.

Good luck!

I was faced with a similar situation. My father lived locally and allowed me to 'rent' his home after he had to move into a senior living apartment. Slowly and unobtrusively I began clearing out the clutter that he'd long forgotten about. Out of sight, out of mind. Although we continued to have dinner at his house, I was able to reduce the work I'd knew I'd one day have to deal with. Do what you can quietly. Often parents resist because the idea of dealing with it is not only overwhelming, but yet another piece of their independence gone.

As POA for a married couple friends of mine, once I got them situated in a memory care apartment, over time, I began on their condo, going through everything. Some stuff was easy to just toss. Any old family photos and things pertaining to their personal history, I kept for other family members to have access to. With no children of their own, it was only distant relatives that might have an interest. Books I could donate. Some of their furniture was antique, so I had an antique dealer gathering to see if they were interested and if so, how much would they pay to take it. Regular furniture could go to Bridges or Goodwill, which is where their clothing went. Then I had a real estate friend go through and point our things that should be taken care of, replaced, improved before putting up for sale. All this took me 2 1/2 years just working every so often and no more than 4 hours at a time. Once the condo was fixed up properly, my real estate sales friend put it on the market at the asking price I suggested and the second couple that saw it, bought it. During all this activity, I never said a word to my friend in memory care about what I was doing. I could see no upside to talking about it. He gave me all this authority to act on their behalf, so I did--thoughtfully and carefully. All the money from the sale bought another year or so memory care fees. It was so smooth with no other family members to contend with. I was also executor of their estate, so I knew their intent if they should die while any of this stuff was still there, and it only involved cash assets, not property items. So, I would definitely begin with the clean out. If anything looks special, hang on to it for a while or email a family member about any possible interest. Most of the stuff is pretty easy to get rid of--things that at his age even if he were able, he would never use again.
Good luck. Even 2 summers may not be enough, so the sooner you begin, the better. His end can't be that far off.

Call up a friend there and get her to find you 3 reputable realtors-- then call them and explain the situation-- always be up front-- it will keep you legally safe. Then ask them each to give you a CMA-- a comparative market analysis. To establish a sellable price. Ask them each for names, numbers, and post-listing information of how each of the sales transpired and if they had to drop the price once or twice. And of course the listing price and the sale price of each property which is rather close in proximity to your Dad's home. Then get someone you trust to go through his possessions and find what should be stored and what should be sold, and what should be donated.
Once the house is bare, have it cleaned professionally, then list it with the best realtor. In six months it should sell. When it does-- go to the closing and collect the check. Then deduct expenses including travel, and give the balance to your father and tell him all his "good stuff" is in storage. In the mean time, go through the stored stuff, and pear it down to a small 10 x10 storage room hopefully at a reputable place.
IF he is mad at you, tell him you love him and you know he is not going back to Michigan. Does he have any dementia ? if so then he will eventually forget after you take him out to eat as many times as it takes. --- I had to do all this in Heidelberg, Germany. I never asked a soul what to do-- I just did it. And I did it all with a very small European car the size of a Mini-cooper. Just do it. Good luck, God bless.

marydys: Imho, as his Agent, you should move forward with purging out the hoarding mess and getting his house ready to be placed on the market for sale. Good grief - he was going to sell it over a DECADE ago and did not!

...in addition to my previous post, another reason to do it now is that you seem to feel good & healthy now...who knows what & how your health will be like if you wait 2 years or 5 years...SELL IT NOW!!! More hugs 🤗

Marydys,
After my Uncle passed away in October, I became my Aunts POA.
I knew she was not safe at home alone. Couldn't drive, forgot to eat etc...
I had no choice but to sell her home. She needed the money to afford assisted living. She's been told hundreds of times that her home has been sold, but still doesn't remember.
Does Dad need the money for his expenses?
I think it's totally reasonable to take your time sorting the contents of his home and get it ready to sell.
He will never appreciate the capital gains savings, but if he truly is never going to return to his home then you would be doing him a favor in the long term.
Don't feel quilty!! It will have to be done sooner or later. Sounds like sooner maybe financially beneficial to him.
Hang in there!
God bless!!

Yes...clear out & sell ASAP. You’re POA...do it! You don’t want Cap Gains problem. Don’t discuss ...just do it! Don’t ask Father...he’s not going back there..don’t discuss with siblings ...they have NO SAY in the matter. Hugs 🤗

I have a similar situation with my 94 year old mother. (She's in assisted living for 2 years) I have power of attorney, trusts, Etc. and have been slowly dealing with the 90 years of "collection" inside the house while maintaining the house and yard.
Since you have all the appropriate paperwork and legal authority, if you can tolerate the siblings storm that I would expect in my family... I would go forward with the summer cleaning and sale of the house... as you see fit. Then, just insure that all the legal paperwork for the estate is in order as the trustee. Good luck.

I was running into a similar situation. My mother didn't want to sell her home and as I get older, I truly understand the angst she was experiencing on all different levels.
I debated, and made Ben Franklin 'balance sheets' and asked people and fretted over my dilemma so much that it made me sick and I felt guilty every time I looked at my mother because I was going to do this behind her back.
I should have done what she always taught me to do first: pray about it. So I sat down and put myself in HER shoes. I tried to imagine the reasons she wanted to keep a house she would probably never return to, retain belongings that she wouldn't ever get to use, and property that would require money to maintain.
It boiled down to a number of undisputed facts that none of us are keen to admit: (1) that she was going to die in the not-to-distant future; (2) the house represented all her memories, and without them, she would forget her life and become a 'non-entity' with dementia; and (3) it represented 'security' - the kind that we, who have never lived through a depression (maybe until now), can't possibly understand.
The anger and resentment she displayed stemmed from losing control of... everything. And so I decided to call in a friend who was a realtor and have the three of us sit down and discuss the options. I stressed to Mom that we were not going to sign anything that day. We were just getting information and a professional opinion from someone who had experience with lots of other families who were facing similar decisions. She relaxed and almost looked forward to the meeting.
Donna spoke to HER - NOT to me - as if she was a functioning adult who 'knew how many beans made five' as Mom was fond of saying. She talked about the market, the real estate taxes, the maintenance costs, the condition of the roof, etc. and the dollar amount that Mom could realistically expect to glean from a sale. She told her that storage garages were a great option to use for belongings she wanted to keep, and she had several names of reputable people who would clear out anything that she didn't want anymore. Additionally, Donna told her that the house could be sold "where is, as is," a phase I had never heard before. Mom wouldn't have to have anything updated or repaired, and could leave the heavy hope chest in the attic and the piano she never played in the dining room if she so chose.
With the assurance from me that I would never place her in a nursing facility, etc., but could use some of the equity to help with her care at home, as well as the cost of the storage unit that housed her keepsakes, she relaxed. Mom accepted all this information from Donna, but you can be sure she wouldn't have listened to a word if it had come out of my mouth! By the end of the day, Mom was anxious to have Donna come back so she could sign the papers.
After it was done, I often asked her if she wanted to go to the house or drive by it, and she always said no. It was as though that phase of her life was over, and she was free to start living the new one! A burden had been lifted from off HER shoulders. Who would have known? She lived several more years with me and passed peacefully in my arms.
All situations are different. You have to do what is right for you and your family, but I just wanted to give you a little different perspective.

I'd like you to not worry about a capital gain so you stop fretting about the house... to this end, check with your or your dad's CPA or other competent professional and see if the step up in basis for an inherited property still applies. Everything I inherit from mthr comes to me at a higher basis - the amount it was worth on the date of death. That probably means his estate would have a higher value if it has to be probated, and since there are several siblings, that will probably be a factor. But I also think there is no federal estate tax until it is worth 5M. Since dad is still competent, he could retitle the property to make it a TOD... or if he's going to be going on Medicaid, that house will be sold to pay for MA and it won't matter whose name is on there. I think the most important persons to talk to are a CPA and attorney.

You’re in a tough spot. If it were me, I’d do exactly what you suggested this summer and take him to Michigan. It might just be too overwhelming for him to imagine selling but it sounds to me like he’s been planning it for years. You could spend quality time with your dad and sort through the things you’ll need to eventually do anyway. He might feel better to be included and get to say goodbye. What better time than now, in my opinion. Good luck with everything. You’re a great person for taking this on.

There are people that will buy the house and get rid of the stuff for you. We are called real estate investors. I suggest that you ask your family to take what they want out of the house, if anything, and sell the house to a real estate investor. This person will donate items to non-profits in the area and trash the rest. All you need to do is google "real estate investor" in your area and let them know your situation. You won't get high $ for the property, but you will get a fair price. After all they are in business to do the work, that you would rather not do. Enjoy your summer! (I would buy it, but I live in Oregon.)

Is the trust irrevocable and is the house in the trust? If yes, then you will still be dealing with capital gains if you sell it. These are never easy decisions and I am sorry you are having to go through this. My brothers were in agreement with the sale of my Mom's house and it still wasn't easy. Best of luck to you.

You need a financial POA to sell his home. You can however "help" with maintenance by sorting his stuff, packing valuables, dumping garbage... Maybe your dad will agree to rent out his place until he is "ready to move back," it would still be his and it would be better maintained with a family caring for it.

The simple answer, is no. You have been entrusted with POA to carry out your father's wishes, which were clearly conveyed to you when he was of sound mind. Whether you or your family disagree or are bored or don't like messes or taxes or your father wouldn't know or find out, or whatever other rationalizations you can think of, is irrelevant. The home resale market is in gridlock anyhow. If you need to sell the house after your father passes, and are concerned about time to sort through stuff, I suggest you rent a storage unit and do it there. But not until he passes.

Start going through things at the house. There is probably about 1/2 of all stuff that your dad will never miss or care about. Start with that. Catalog anything of sentimental or actual value; be respectful of that. Having the extra time now will allow you to go through things carefully. I found a few forgotten savings bonds, military medals, and precious family letters that would likely have ended up in the trash if I had been cleaning out my parents' house under a short deadline. Clean. The more you do now, the better it will be for you later. The house will be ready for an estate sale, and then to be put on the market when the time comes. If by chance, your dad returns to his home after your first pass, he really won't know the difference. And the person who recommended you go check the house, they are correct. Houses are meant to be lived in. When neglected, all manner of things can go wrong, and you father certainly doesn't want to lose value in the home or heaven forbid, the home become a "tear down."