Q: After reading several magazine and newspaper articles, my wife and I, both in our mid-70s, are considering "selling" our home to our children for $5 so that, should either of us enter a nursing facility, the house would be saved. We would, of course, remain in the home and then "rent" it from our children. We purchased our home for $50,000 many years ago, and even in today's depressed real estate market, we know it's worth at least $250,000. Will this work?

A: Before we answer your question, there are several caveats to which we believe everyone should adhere.

First, it's not prudent to engage in any type of planning -- especially if it involves transfers and shifting of assets -- without receiving advice from a qualified attorney and, where taxes are concerned, a Certified Public Accountant or tax specialist.

Second, it's not wise to engage in haphazard planning based on articles you may read or what you may hear on television or radio. If you are serious about making a plan that involves your hard-earned assets, you need to engage professionals who can explain the pros and cons of your actions and help you avoid the pitfalls.

Third, since you placed quotation marks around the words "selling" and "rent," one can only assume that the transaction you describe would be a sham. And guess what? It wouldn't allow you to beat the system. If it were as easy as you seem to think, everyone would be doing it.

Here, by "selling" a $250,000 home to your children for $5, you and your wife are, in effect, making a gift to your children of $249,995, which will require you and your wife to file a gift tax return by next April 15. While there may be no tax due, you have given your children the home at your cost basis of $50,000, meaning that when they sell it after both of you die -- or before, if you are unlucky -- they will pay capital gains taxes on the difference between the carryover basis of $50,000 and the sales price.

In addition, if you carry out this "plan" and pay your children rent, the rent money will be income to your children, and the residence will be depreciated -- causing greater capital gains when sold.

If either you or your wife enter a nursing facility within five years of the date of this gift and apply for Medicaid, the penalty that this significant gift will generate will begin to run on the date the resident would have otherwise qualified for Medicaid benefits -- if you hadn't given this gift. This means that, based on the average monthly nursing-home cost in your state, you will need enough cash to pay for your care for years until you receive Medicaid benefits.

And, to add to your "thinking points," consider that by transferring your residence to your children, you will lose your homestead property-tax benefits, and should either of your children have debt problems or get sued, your house might become the source of repayment. If the latter occurs, you could find yourselves out in the street.

Moreover, what if one of your children passes away before you and your wife do, and your least favorite son-in-law or daughter-in-law inherits your child's share and decides that the house must be sold?

Taking the NextStep: Without a coordinated long-term-care plan, it is dangerous and foolish to give away assets. Seek out professional assistance before you do anything.