Should I Sell Our House Before or After My Spouse Moves Into Memory Care?

Should you sell the home you shared before or after your spouse moves into memory care in Orange County? Begin with your spouse's care, then yourself, then the house.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. You don't need to decide everything at once.

This article is general information, not legal or tax advice. Please talk with an estate planning attorney and a CPA about your family's situation.

This question often decides the timing. If the house is owned by both of you, your spouse usually needs to sign the sale documents, or someone with legal authority must sign for them. Common paths include:

• A durable power of attorney. California's court self-help center explains that a durable power of attorney lets the person named keep making financial or legal decisions as long as it exists. Ask your attorney whether your spouse's document covers selling real estate.
• A living trust. If the house is in a trust, the trust document names who can act as trustee.
• A court process. California Probate Code Section 3100 begins a part of the code covering community property when a spouse lacks legal capacity. It sets out a court process for certain transactions, such as selling a home. Conservatorship is another option.

The self-help center also notes that before a conservatorship is granted, you must show that less restrictive options, like a power of attorney, would not work.

If your spouse can still take part in decisions, talk with your attorney soon, since some planning requires the capacity to sign.

Selling first can make sense when:

• You need the proceeds to pay for care and don't have other funds.
• The house is too much for you alone, with stairs, a yard and upkeep.

The tradeoff is pressure. Preparing a home for sale while arranging care is a lot for one person.

Waiting can make sense when:

• You want your spouse settled first, without the stress of showings.
• You need time to decide where you'll live. You might stay a while or move closer to your spouse.
• Your family needs time to sort belongings. My article on what to do with 40 years of belongings can help.

For a closer look at a similar question, see selling before or after moving to assisted living.

The home sale exclusion. IRS Publication 523 says you may be able to exclude up to $250,000 of gain, or up to $500,000 for married couples filing jointly. For the full joint amount, each spouse generally must meet the residence requirement.

Time in a care facility can count. Publication 523 explains that if you become physically or mentally unable to care for yourself, and you used the home as your main home for at least 12 months in the 5 years before the sale, time spent in a licensed care facility counts toward the 2-year residence requirement. A CPA can confirm how it applies to you.

Property taxes on your next home. If you're 55 or older and buy a replacement home, the State Board of Equalization explains that Proposition 19 may let you transfer your home's taxable value to a replacement anywhere in California, if you buy within two years of the sale. You may make up to three transfers.

Your life matters in this plan too. Think about what would make daily life easier, such as less upkeep or a shorter drive to visit your spouse. My article on downsizing to a single-story home may help, and a senior move manager can take on much of the sorting and packing. You can learn more on my downsizing page.

If your family is facing this decision, I'd be honored to help. Let's start with a private planning conversation with your family about your goals and timeline, alongside your attorney and CPA. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.