This is for you who have aging parents or parents who need to make decisions about what they should discuss with and consider with their parents/parent/sibling regarding what I would define as estate planning.
The house: If the family is nearby and one has the luxury and ability to allow their parent/parents to stay in the home and be mobile, that is always the best as the stats show that the more active we are as we get older, the better the quality of our life.
Here in Chicago, the issue is the real estate taxes, the maintenance of the homes (roofs, electrical, aging plumbing, etc.) and most seniors have those 1.5 story homes and the washer and dryer are in the basement! The amount of bad weather with the increasing real estate taxes, utility bills coupled with the ongoing maintenance generally forces a decision of what to do with Mom or Dad as they can’t afford to stay in their home, they are getting to sick or weak and need daily care or it is too dangerous for them to be alone.
Financial: One needs to look at the long and short term with their parent. What is their medical history and how healthy are they? Do they require more daily care?
If your parent doesn’t have enough money, then there are a couple of options:
- Renting out the family home to cover those additional expenses as one may want to see the market change in a positive way. Note: I rented out my grandmother’s home when I was 18 as I oversaw her financial and real estate. My Dad wanted to sell the home and I told him that I wanted to wait and since Nana didn’t need to sell, because there was enough money for her for the care facility where she stayed. So, I rented it out for a couple of years. The result: The home was worth 5 times what we would have gotten for it if we had sold it when I was 18. And yes, I know 18 is young, but I was a smart protege of my Grandfather.
- If you need the cash, then one could sell the home and use those monies to take care of their parents.
- The other is a reverse mortgage – which you would have to check with a lender about but that is also an option.
It all depends upon the equity in the home and the market area where the home is located. Some areas rebound faster then others and that is because of two factors: supply and demand and the diversity of housing is balanced.
Money Matters but more importantly, it is so important to think ahead of the game and have all your alternatives figured out so when something changes in your loved ones life, you won't be rushing around like a chicken with your head cut off and the transition is easier on our loved ones.