I wouldn't give him the house at all. I would simply tell your dad you bought the house for him to live in rent-free. Keep the house in your name. This sounds counterintuitive, but I have a really good reason
mhoran_psprep touches some on this
If they have to move out of the house, then their ability to get government aid for their nursing home expenses could be impacted.
There's a word you need to have in the back of your mind: Medicaid. You might be thinking "Wait, my Dad has Medicare. Medicaid is for poor people." It generally is, but there's a lesser known reason for Medicaid enrollment: he might need a full-time nursing home. I don't know how well off he is, but a full-time nursing home runs into eye-watering sums of money per month. We're talking as much as $10,000/mo. That's not pocket change, and if he lingers on that adds up VERY quickly.
I hope at this point you have a power-of-attorney that allows you to create trusts. Most stock power-of-attorney documents don't list that one. I would consult an attorney that specializes in family law if you need a re-draft. That power is about to become super important.
When you apply for Medicaid in this circumstance, you will have to draw him down to about $2000-3000 in current assets. You will then have to provide a mountain (I am not exaggerating) of documentation, including any bank statements, investments, assets, etc. These record requests extend back 5 years. When this process is done, Medicaid will penalize him (i.e. you) in months, based on how much disallowed transfer happened over the last 5 years (i.e. he gave you money, a vehicle, etc.). If he owned the house you want to give him at any point in that time frame, Medicaid will want to look at that, and they will penalize you if they think you sold it for less than market value. You will then be directed to fork over any income (like Social Security) to the nursing home and Medicaid will chip in the rest.
The key for your father at that point is drawing him down to the minimum. Arkansas has something called a Miller Income Trust.
If your income exceeds the limit, you may meet the income
eligibility criteria by setting up an Irrevocable Income Trust (also
known as a Miller Income Trust or MIT.) An Irrevocable Income Trust is established by signing a legal document and setting up a
special bank account to fund the trust. This account must only
be used for your income trust. All your countable income must
be placed into the bank account each month and your trustee
must only make payments (disbursements) from the account
according to Medicaid policy and procedures as shown on the Long Term Care/Assisted Living Post-Eligibility Income Worksheet (DHS-712.) At the time of your death, funds remaining in the account are paid to the Arkansas Department of Human Services for reimbursement of Medicaid expenses paid on your behalf.
Most states have some variant of this. Basically, you shove all his assets above the minimum into that trust and then apply for Medicaid. That way, you avoid having an essentially broke family get penalized after having forced them to go broke first. The MIT does not count as an asset for the purposes of Medicaid. You can then use the trust on his behalf for his care above and beyond the nursing home. When he dies, the MIT will inform Medicaid and Medicaid will be reimbursed for its expenses. If the expenses exceed the amount the MIT has, they will simply pay out whatever they have. If there's any left over, they take a cut and send whatever is left to you.
This is a VERY expensive way to do this, especially if you sold a $300,000 house in the middle of all this.
Keeping the house in your name also has the benefit of not having to potentially probate it. If you have any siblings, and the will does not list the house as returning to you, this may lead to a costly legal battle where none of you get the house in the end (your lawyers will thank you for your business, however).
