My parents have just sold their house and they are thinking about getting a divorce. What should they do with the proceeds check while they see if they want a divorce?
Thinking about a divorce can happen over a period of years, or not at all. If your parents are at the point of needing help, that includes financial planning for both, equally. It is good you are asking this now, because failure to plan is planning to fail.
As you know, a home is only one aspect of their financial picture that would have to be addressed. You did not give their ages, where each is living now, if they are abusing each other, if one requires care and the other doesn't, or if you have POA and need to take over.
If their situation can be improved by moving together into assisted living, try that. For a divorce, see a divorce attorney.
Secure the funds anyway you can-do not cash the check until there is a plan.
If your parents are at the "separation" point, then if they can, split the equity money 50-50 so that it can be used for new living spaces. It is better if the separation is "legal", thus done through a divorce attorney. Now, if there is capital gain from the sale, your parents were still married, so they probably can still use the $500k deduction against capital gains. Best to talk with a CPA or Elder Law Attorney.
They should deposit it in the account of their choosing, then divide it between them if they divorce. The division of assets will be part of the divorce settlement. If one doesn't trust the other not to clean the account out, then they should require both signatures to make a withdrawal.
If either parent will be needing any kind of Medicaid support for care within the next 5 years, they should NOT give any of the proceeds away to friends or family without a written caregiver agreement that is properly documented, Medicaid compliant, and reports to the IRS for taxes. A bank account that both parents have to sign to have withdrawals would keep the money in a place that both people know what's happening with it. Consult a lawyer.
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If your parents are at the point of needing help, that includes financial planning for both, equally.
It is good you are asking this now, because failure to plan is planning to fail.
As you know, a home is only one aspect of their financial picture that would have to be addressed.
You did not give their ages, where each is living now, if they are abusing each other, if one requires care and the other doesn't, or if you have POA and need to take over.
If their situation can be improved by moving together into assisted living, try that. For a divorce, see a divorce attorney.
Secure the funds anyway you can-do not cash the check until there is a plan.
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