OT: Helping my dad with finances post retirement

[4Rings6Stars]

I'm trying to help my dad figure out how to manage his retirement, and hesitated to post this here, but you guys have never let me down...

TLDR version--should he take a lump sum distribution from his 401(k), take small distribution as needed, or consider an annuity?

Long version--
My dad was nudged into retirement a few years earlier than he had planned and due to a few other factors, is now strapped for cash.

Some backround:
He is 65.
He has a 401(k) that he hasn't touched yet
He has a mortgage (reverse mortgage that just converted back into a "traditional" mortgage)
He is in decent health, but not great.
My mother passed away a few years ago from cancer and he is on his own.
He owns his parents' house outright after their passing about 10 years ago, but the house has since been unoccupied and is in need of serious repair before it could be sold or rented (roof, furnace, windows, electrical system, etc.). As-is, this property could be sold for about 1/3 of his outstanding mortgage on the home he lives in.


Right now, his Social Security check and some other part-time work he has been doing is not enough to cover his expenses. Mainly due to the mortgage payment that just kicked in this month. We (his kids) didn't really know about the reverse mortgage, or at least the extent of it, until he just opened up to us recently that come next month he won't have enough money to make the payment. If he works any more, it will just eat into his SS check and with his skill set and health he is not really able to find another full time job that would pay enough to make things work.

Without the mortgage payment, he would be fine. Selling the home he lives in now isn't really an option--it's been in the family for a long time and is very special to him (as well as the rest of the family).

He has enough money in his 401(k) to pay off the mortgage, and still have some leftover, but if he takes a huge distribution to pay off the mortgage he will end up paying a bunch in taxes on the 401(k) distribution.

He has spoken to a few "financial advisors", and they keep suggesting annuities. Everything I have read about annuities is that they are only good for the person that sells them.

Right now, we are looking at either selling his second home as-is or whether or not it makes sense to rehab and then sell as move-in ready. It's in a good town with a very active market, and I know filippers would be lining up for the opportunity to turn $100k profit on it. It's a few hours from where he lives currently. He inherited it when the market was hot so his basis will be significantly higher than any selling price, so no capital gain to worry about.

My brother and I will be helping him make ends meet in the short term, but it's not a sustainable option so we are trying to find a long-term solution.

I guess my main question is what to do with the 401(k)... Should he roll it into an IRA and just take small distributions as needed to fund his day to day expenses? Or should he consider an annuity? Long term, we will work on either fixing house number 2 to rent to provide him with extra monthly income or sell in order to decrease his mortgage, but either way this will take several months.

[Ken Robb]

Fixing up neglected houses when you can't do a lot of the work yourself is EXPENSIVE and it's very common to find hidden problems that lead to big increases in the anticipated budget. An owner of limited means can easily run out of money to finish a re-hab so I don't think it's a good idea for your dad to try to maximize his return by fixing up the house before selling it. In San Diego there are a couple of companies that will buy homes "as is" or work a deal where an owner contracts with them to fix it up without the owner putting in any cash and then they share in the increased value when the home is sold. These companies are also brokers so they handle the sale and the remodel. I was skeptical about these guys at first but they seem to be doing a good job. A run-down house next to a rental I owned was transformed and quickly sold for a good price by one of these companies. Because they have their own crews the work gets done quickly and they probably have formulaic options for kitchens, baths, etc. for economies of scale.
I was a real estate broker for 36 years so now I'll shut up and let Ralph and some of the financial gurus chime in.

[kppolich]

Sell both houses and take regular distributions from the 401k as intended. Start living and stop worrying about stuff. It's retirement, he's at this alone so who need a whole house to take care of, let alone 2? Sell them both, or sell the inherited one and get a condo. Then sell the other one to cover it and use the money to enjoy retirement.

[joosttx]

Sell both houses and take regular distributions from the 401k as intended. Start living and stop worrying about stuff. It's retirement, he's at this alone so who need a whole house to take care of, let alone 2? Sell them both, or sell the inherited one and get a condo. Then sell the other one to cover it and use the money to enjoy retirement.

Thank you for saving me the time by writing exactly what I would write. I would also add there plenty of rich widows to court.

I would add retiring in California is a luxury.

[Ozz]

I went thru this process with my folks a couple years ago...

He does not need the second home so that should be the first asset to go.

Regarding his primary, my folks also had had a house that was very dear to them...they built it, raised 7 kids in it, it is where we all gathered for holidays, they entertained their friends there for 40 years...

However, the bottom line was that it was their biggest asset and they had a cash flow problem...it was time to sell it. It sucked, but it is what had to be done.

We did end up using the proceeds to buy an annuity for my folks, but luckily my wife is in the Wealth Management business and knows who to trust. It provides them with income they need at a return that was not possible with other safe investments.

We started with figuring out his budget...what does he spend his money on, what is necessary, what can be cut. Then figure out the income and asset side of the budget. Then with a trustworthy financial advisor, come up with a plan.

I would be cautious of letting him speak with financial advisor alone...he is right in the middle of this crisis and might be too emotional to make logical decision.

I don't have any advice for the 401k other than you get taxed as you withdraw the funds so it is typically better to do it slowly over time rather than all at once...a CPA or CFA would be the person to talk to about this.

Good luck...

[OtayBW]

Thank you for saving me the time by writing exactly what I would write. I would also add there plenty of rich widows to court.
PM sent! :hello:

[Ralph]

It's difficult to advise from a forum like this.

If he sells both homes....would he be able to pay rent somewhere? Rent is pretty high lots of places. Around here hard to rent much for less than $1500-$2,000 per month.

While reverse mortgages have some built in extra costs.....they do allow folks to stay in their home. If the home is increasing in value 3-4 percent a year....taking income of same amount from home with a new reverse mortgage for a while would give him some time to prepare, without uprooting him from where he is comfortable. Or at least....stop the requirement of him paying a mortgage. Maybe for a short term fix.....you might look into another reverse mortgage for him. His house is just one of his assets. Might as well put it to work. You can sell a home with a reverse on it same as you can sell one with a regular mortgage. You get at closing what is left after the mortgage is paid off.

A friend of mine in his mid 70's had a mortgage on a nice home....with a lot of equity. He became unable to make his payments....so he switched it over to a reverse mortgage. Now instead of him paying on his house....he gets money from his house. Sure the mortgage has some extra expenses, and he is spending his kids inheritance, but he won't be kicked out of the house until he dies (or just decides to sell it)....then the kids can sell the house, pay off the mortgage, and split the remainder....if there is any.

Doesn't sound to me like anything you do...take 401K or whatever....makes the burden of his mortgage payment easier. Big tax bill from sell off part of his retirement plan probably more than cost of a new mortgage. Spend down the house value, and let the 401K grow. it all balances out.

All investment products are just tools. Use what you have.

[biker72]

Sell the older house that needs work. It may cost more to fix it than it's worth.

Go back to a reverse mortgage on the house he's in now. Get cash flow going the receiving direction.

Roll the 401K into an IRA with Schwab or Vanguard. They both have low cost index ETF's and mutual funds. Try not to take any distribution until you have to (age 70.5). If you decide to do a rollover make sure to do it electronically. Fewer problems that way. Ask me how I know.....:)

[Hilltopperny]

I just renovated a log cabin in the Adirondacks and am renovating my home as well. The costs of building materials is high and if I were to have to pay for the labor it would have been at least double what I have into both.

I agree with kppollich and joost. Sell the home he inherited and if he can't make ends meet with that sale then it's probably time to sell the other home and find more cost effective living. I had the opportunity to buy my childhood home and I passed on it. Sure there were memories and sentimental value, but when looking at overall costs and the market I decided that a smaller home with a little more property was a better fit for me and my family.

Sometimes it's hard to prioritize things when we have an emotional attachment. Looking at things from a logical perspective can help separate some of those feelings. Hope it works out well for you all.

[AngryScientist]

We (his kids) didn't really know about the reverse mortgage, or at least the extent of it, until he just opened up to us recently that come next month he won't have enough money to make the payment. ....

...

Selling the home he lives in now isn't really an option--it's been in the family for a long time and is very special to him (as well as the rest of the family).



i agree with the others, and i'll put it bluntly, to be helpful with my best advice.

you (kids/family collectively) should to get together and convince your dad that the sentimental attachment to the house is not worth going bankrupt over. take some pictures, and cherish the memories you have. cut the ties to the physical property, as the days you remember there are gone. sell the houses and let your dad live the rest of his life off the equity he has earned over his life.

i speak from experience here. the sooner you make the hard (probably inevitable) decision, the better you'll all be.

[54ny77]

Is your father rational, highly emotional or totally mentally detached from the situation right now?

That will be 95%+ of the battle.

The other ~5% can be figured out objectively for best outcome/strategy with help of a good financial (i.e., future investment as well as tax side of the equation) and estate planning professional.

That's my $0.02.

I've unfortunately been thru what you have with an elderly relative, and then some believe me. Cashflow is king, unrealized equity doesn't pay the bills.

Importantly, try to keep some balance for yourself. You'll be better off for it. Good luck with it all, it's a lot to take on--willingly or unwillingly.

[HenryA]

This kind of re-framing of the story might help:

The house you grew up in was a wonderful place to raise a family and now he has done that, and with success. Its time to move that great house on to another family so they can raise a family in it.

Also on the other house, plenty of people need a place to live and moving that house on to someone else might a be a kindness to the new owners.

My other thought is whether he’d fit into your home? If all concerned got along OK, it might be a good solution. Just be sure it made everyone truly happy. Let him slip you a little money now and then to feel like he’s paying his way. This may or may not be appropriate but I’d probably do it if I needed to. I am about the same age as your father and if I needed to I would do it as long as it was a happy thing for all.

[Chris]

Lot's of good advice. All that I have to add is to keep all siblings or interested parties (those who may lay claim to any inheritance - even if there won't be any) in the loop and document that you did. There's always someone who did nothing while their parent was alive but had plenty of complaints about how things were managed once they are gone.

[wc1934]

This kind of re-framing of the story might help:

The house you grew up in was a wonderful place to raise a family and now he has done that, and with success. Its time to move that great house on to another family so they can raise a family in it.

Also on the other house, plenty of people need a place to live and moving that house on to someone else might a be a kindness to the new owners.

My other thought is whether he’d fit into your home? If all concerned got along OK, it might be a good solution. Just be sure it made everyone truly happy. Let him slip you a little money now and then to feel like he’s paying his way. This may or may not be appropriate but I’d probably do it if I needed to. I am about the same age as your father and if I needed to I would do it as long as it was a happy thing for all.
Great post Henry!!!

[saab2000]

Sell the older house that needs work. It may cost more to fix it than it's worth.

Go back to a reverse mortgage on the house he's in now. Get cash flow going the receiving direction.

Roll the 401K into an IRA with Schwab or Vanguard. They both have low cost index ETF's and mutual funds. Try not to take any distribution until you have to (age 70.5). If you decide to do a rollover make sure to do it electronically. Fewer problems that way. Ask me how I know.....:)

I like this.

The annuity idea seems very bad. So does the lump sum 401k distribution.

[rwsaunders]

Ralph for the win as a reverse mortgage worked in my Mother-in-Law's particular case. Beyond the financial benefits, it allowed her to remain in her home which was also a benefit in terms of maintaining her independence. I explained to her at the time that her home was an asset that she had invested in over the years and now it was time to tap the investment. We also retained an attorney who specialized in elder care and estate planning so that family emotions were kept at bay and an air of neutrality was established.

Doesn't sound to me like anything you do...take 401K or whatever....makes the burden of his mortgage payment easier. Big tax bill from sell off part of his retirement plan probably more than cost of a new mortgage. Spend down the house value, and let the 401K grow. it all balances out.

[4Rings6Stars]

Thanks to all who took the time to think about this and post a recommendation.

To address a few issues...

He already had a reverse mortgage of sorts on the house and that has now ended and converted back into a traditional mortgage. I don’t have all the info on that, but I’ve asked him to get more information about it for me so I can learn exactly what it is and what the terms are. He had apparently been drawing cash from it for a number of years to help finance primarily repairs to the house, college tuition for my siblings and me and medical bills for my mother when she was fighting cancer. Money was tighter than I knew as I was growing up and my parents, while not the best with their finances, never really spent any money on themselves and sacrificed a lot for their kids. That’s why I feel bad for my dad and compelled to help.

The house he lives in now has been in the family for generations and is where my siblings and I were raised. It’s on a bunch of land (90% of which is in a forest management / conservation trust or something along those lines) and in the middle of nowhere. I would buy it from him now if I could and let him stay there, but I’m just not in a place now where I could swing it— I’m in my late 20s, just bought my first house about a year and a half ago and we have two boys under 3.

My father is very clear that he wants to live on the property as long as he’s able to and I want to help him do that if I can. I do have space for him in my house and have offered that as an option—it will likely come to that some day, but hopefully not for at least several years.

I need to find out more about the current mortgage status and also help determine the best option for property number 2.

[paredown]

The second house seems to me to be the place to start, assuming the market where it is is decent.

I would not do a major renovation--but do a flipper's renovation--curb appeal (front yard redo), wash siding, fresh paint, rip out old carpets, clean etc. If the kitchen is awful--maybe paint the cabinets and do new countertops. The problem with selling as-is, is the discount rate is pretty high, since the market will be flippers or young folks without money, and either way, you will not do as well.

I was looking after a house for a local realtor where the elderly owner mostly moved out and left the rest of his stuff scattered around. The house was filthy, carpets were not cleaned and a bunch of low hanging fruit to make it look better (kitchen cabinet doors hanging by one hinge, faucets dripping--easily repaired) were left undone because he was old, tired and done with the house. The yard was a mess as well. The place looked like it was on its way to becoming a crack house.

It sat, and sat, and finally sold at a huge discount.

I agree with the poster who said starting into a major renovation can uncover stuff you don't want to deal with, but maybe you and your brother's family could deal with a blitz clean/painting/address defects/yard clean couple of weekends. The payback would be huge and the house will sell more quickly. If you are pressed for time, there are a lot of people who clean and paint for a living--hit your local Benjamin Moore or Glidden paint store, and ask for a recommendation for a painter for example. Do some nice flowerpots for the front stoop--make it look like a home.

[bobswire]

Sell both houses and take regular distributions from the 401k as intended. Start living and stop worrying about stuff. It's retirement, he's at this alone so who need a whole house to take care of, let alone 2? Sell them both, or sell the inherited one and get a condo. Then sell the other one to cover it and use the money to enjoy retirement.

Ditto, as a 74-year-old retiree I agree. I rent, live alone though have a girlfriend, am healthy and enjoying life as much now as any time in my life.

[morrisond]

Thanks to all who took the time to think about this and post a recommendation.

To address a few issues...

He already had a reverse mortgage of sorts on the house and that has now ended and converted back into a traditional mortgage. I don’t have all the info on that, but I’ve asked him to get more information about it for me so I can learn exactly what it is and what the terms are. He had apparently been drawing cash from it for a number of years to help finance primarily repairs to the house, college tuition for my siblings and me and medical bills for my mother when she was fighting cancer. Money was tighter than I knew as I was growing up and my parents, while not the best with their finances, never really spent any money on themselves and sacrificed a lot for their kids. That’s why I feel bad for my dad and compelled to help.

The house he lives in now has been in the family for generations and is where my siblings and I were raised. It’s on a bunch of land (90% of which is in a forest management / conservation trust or something along those lines) and in the middle of nowhere. I would buy it from him now if I could and let him stay there, but I’m just not in a place now where I could swing it— I’m in my late 20s, just bought my first house about a year and a half ago and we have two boys under 3.

My father is very clear that he wants to live on the property as long as he’s able to and I want to help him do that if I can. I do have space for him in my house and have offered that as an option—it will likely come to that some day, but hopefully not for at least several years.

I need to find out more about the current mortgage status and also help determine the best option for property number 2.

I'm a financial professional from Canada. It sounds like what happened is that your Dad maxed out the amount he could borrow on his reverse Mortgage which typically is a lot less than a conventional Mortgage to allow room for the interest to accrue over time to protect the Mortgagor. He then probably got a Conventional Mortgage with a much higher limit than the Reverse and lived on that for a while and paid his mortgage payments with that. The odds of getting another Reverse are probably quite low.

The grandparents House has to go and you should probably put him on a Fixed income/budget. Given he is so young - Annuities may be a good idea with the 401k. But take the money from the Grandparents house and buy an annuity as well.

In reality the big property should probably go - pay off the mortgage and use the remaining principle to fix up the grandparents house and have him live there if it's a lot cheaper to run. Then you are maintaining some family history.

Big properties are expensive.

[cnighbor1]

annuity
There are many versions
Most the fee (think big fee) are paid up front
which reduces the amount invested and the overall return over years
But look for one with out those fees
Still annuities not a great investment has seller is looking to make a lot of money thru fees charged
Just invest funds
I like systems
Find one like merriman or others that use a system to invest
Picking one stock or bond or mutual fund at a time has no direction

[bobswire]

annuity
There are many versions
Most the fee (think big fee) are paid up front
which reduces the amount invested and the overall return over years
But look for one with out those fees
Still annuities not a great investment has seller is looking to make a lot of money thru fees charged
Just invest funds
I like systems
Find one like merriman or others that use a system to invest
Picking one stock or bond or mutual fund at a time has no direction

I have a female friend who started investing in the early 80's with Vanguards Total market with as little as $25 a month. Today her retirement funds are well over a Million dollars, mine, not so much. I was doing good in the late 90's investing in High Tech through Janus, I took a beating when the "internet marktet" crashed. Slow and steady beats high risk long term.

[veloduffer]

I just went through a similar process with my parents. Despite being in investment/credit risk my whole career, my father wouldn’t listen to my financial advice, even to consult a financial professional. My father passed earlier this year and now I have reconfigured my mother’s financial situation to focus on capital preservation (we are near a next recession within the next few years) and dividend/interest income to supplement social security.

A few things:
1) Get a financial advisor that can provide advice for a fee for each visit (rather than one that works on commission or annual flat fee based on percentage of assets).

2) 401K: if the investment choices in the 401K are good for your goals and risk appetite, you may want to leave the money there. If unsure, it could be rolled into an IRA and self-directed based on the advice from the advisor. I changed the assets to focus on relatively stable values and dividend income through a mixture of ETFs and stocks.

3) Sell grandparent’s house and put the money into account for further investment. He may need the money for future healthcare costs.

4) Draw up a budget and find where to cut costs - for example, does he pay life insurance premiums? You may want to let it lapse or cash in for the surrender value.

Does he qualify for property tax reductions for seniors (varies by locale and may have none available) - for example, my mother qualifies for 50% reduction in property taxes on Long Island, which is significant.

5) Senior discounts - he may qualify for other discounts for seniors (hardship) on his utilities and medical prescriptions.

6) Current house - if he refuses to sell and/or your family is interested in keeping for inheritance, can your family members contribute monthly to the upkeep and mortgage? If not, it may result in forestalling the same conclusion - selling the house or foreclosure to the bank if he runs out of money (e.g. medical emergency - medical debt is #1 cause of personal bankruptcy in the US).

At the very least, you could work on a transition plan to downsize. When you project the financial costs to your father to continue living in the home, it may sink in that he could run out of money.

As another posted, it is unlikely he can obtain another reverse mortgage.

If you have some other questions, you can PM me.





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[Ken Robb]

Can Dad sell off part of his big piece of land and keep a small parcel with his house on it?

[Ken Robb]

Maybe explore selling the big property but Dad retains a life estate? Ask a local lawyer about that idea. I won't try to explain it but it's kind of like the ultimate reverse mortgage.

[buddybikes]

Lesson to be learned here.... Don't over extend yourself as you plan for retirement - make sure house, cars, etc paid off well in advance. Get rid of that too big house before you need to.

[NHAero]

How the heck do you find this person? I've been trying here in MA and totally have been striking out.

[QUOTE=veloduffer;2354032]

1) Get a financial advisor that can provide advice for a fee for each visit (rather than one that works on commission or annual flat fee based on percentage of assets).

[fa63]

How the heck do you find this person? I've been trying here in MA and totally have been striking out.


https://www.garrettplanningnetwork.com/home

[Frankwurst]

Another option for starters is, depending on the value of the second house, sell it on a land contract. Some people would jump at the opportunity to buy a fixer upper without jumping through the bank hoops and expenses with a little smaller down payment. Amortize the the balance over 15 years at an interest rate slightly higher than the banks current rate with a balloon and rate adjustment in 5 years so you can raise the rates if necessary. It might make it easier to sell and provide your Dad with a little extra monthly income. Do not cash out the 401K. The taxes will be ridiculous. Talk to a CFA or CPA on what to do there. Good luck. I hope it all works out well.

[veloduffer]

How the heck do you find this person? I've been trying here in MA and totally have been striking out.



[QUOTE=veloduffer;2354032]



1) Get a financial advisor that can provide advice for a fee for each visit (rather than one that works on commission or annual flat fee based on percentage of assets).



Look for a Certified Financial Planner (CFP), who have to be certified by the Certified Financial Planner Board of Standards. In other words, they have a fiduciary responsibility to work in your best interest. Many only charge by the visit/consultation. You can look for one in you area here: www.cfp.net



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[marsh]

My in-laws recently sold their house of 45 years in rural Maryland and moved in with us. The house was paid off, but my MIL is in declining health and they were all alone in a remote location. They held off as long as they could, my FIL was the architect, and it was on a little lake next to a nice wooded area. There were more than a few tears shed, they were planning on staying there until the end.
Maybe do what you have to to help your Dad stay in the house a few more years, and keep working on him to think about life after home ownership?

[Ken Robb]

Another option for starters is, depending on the value of the second house, sell it on a land contract. Some people would jump at the opportunity to buy a fixer upper without jumping through the bank hoops and expenses with a little smaller down payment. Amortize the the balance over 15 years at an interest rate slightly higher than the banks current rate with a balloon and rate adjustment in 5 years so you can raise the rates if necessary. It might make it easier to sell and provide your Dad with a little extra monthly income. Do not cash out the 401K. The taxes will be ridiculous. Talk to a CFA or CPA on what to do there. Good luck. I hope it all works out well.

I saw a few of these deals go wrong when the buyers defaulted and the not-rich sellers didn't have the money for the ensuing legal procedures to reclaim the property. Even when some of them ultimately "won" they had to get by without any income while the battle raged.

[cmg]

Lesson to be learned here.... Don't over extend yourself as you plan for retirement - make sure house, cars, etc paid off well in advance. Get rid of that too big house before you need to.

well said. many have retirement show up as a surprise.

[Frankwurst]

I saw a few of these deals go wrong when the buyers defaulted and the not-rich sellers didn't have the money for the ensuing legal procedures to reclaim the property. Even when some of them ultimately "won" they had to get by without any income while the battle raged.

I'm not saying it's the best option. I'm just saying it's an option. I think if you get a large enough down payment, work references, a release to check the buyers credit scores and various other references to minimize risk it can work. But you are right things can go wrong. It is a gamble. I did it with a house we owned in Florida I needed to sell asap. Not without a few hiccups but in the end it worked. :beer:

[Ralph]

The financial situation being discussed is not that un common these days.

Folks retire with decent assets.....at least on a financial statement.....something to be proud of.

However....the assets don't provide enough income to live well. And it can be difficult to sell and restructure the assets to provide that income....with just spending some principal on a regular basis....hoping that can last until death.

A nice home is a nice asset....or is it just a money pit that is a big part of your asset base....and providing no income?

The American dream for many years has been to "own their home free and clear". So what is that worth? Can you sell it when you get old, downsize to something simple, and use that money to rent and pay bills in a nice area? In a low interest rate time for savers who live on income? How many retirees are mentally equipped to rely on income from the stock and bond markets? I'm retired from the financial business.....and I would not be comfortable advising anyone to spend more than $30,000-40,000 per year from a $1,000,000 portfolio of financial investments. And we all know how hard it is to accumulate a 7 figure asset base to live on. Most don't get close.

It's a tough world out there for us retirees. You younger folks think about all this. Skills and jobs you can do part time well into old age not a bad idea. Especially if you enjoy it.

[veloduffer]

The financial situation being discussed is not that un common these days.

Folks retire with decent assets.....at least on a financial statement.....something to be proud of.

However....the assets don't provide enough income to live well. And it can be difficult to sell and restructure the assets to provide that income....with just spending some principal on a regular basis....hoping that can last until death.

It's a tough world out there for us retirees. You younger folks think about all this. Skills and jobs you can do part time well into old age not a bad idea. Especially if you enjoy it.


For work my team just did a study of the US consumer before the Financial Crisis and today.
- About half of Americans don’t have any retirement account (401k, IRA), and those that do, the median balance is $17k for 56-61 yr olds.
- About 38% of ‘middle income’ Baby Boomers expect to rely on Social Security as their primary source of income; before the recession it was less than 30%.
- Medical debt (from deductibles and insurance gaps) are the #1 cause of personal bankruptcy.
- Avg consumer debt is higher than the recession due to auto and student loan debt. The avg auto loan balance is around $31k and duration of almost 6 yrs due to buying more expensive vehicles (namely SUVs and trucks).
- Many state unemployment funds have not been replenished during the economy recovery; the next recession/high unemployment could be significantly harder.

And when you consider that trust funds for Medicare Hospital Insurance (HI) and Soc. Security OASDI deplete in 2029 and 2034, respectively, the American safety net is seriously under stress. With the tax cuts enacted this year, US government debt is 100% of GDP at around $21 Trillion and the annual deficit will be greater than $1 Trillion; in the not so distant future (especially with interest rates rising), interest costs on the debt will be the largest item in the annual Federal budget - larger than Medicare and SS.

I could go on about the structure of the labor markets, etc. but the outlook is kind of dire/dim. The US govt and consumer is too leveraged.




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[fa63]

The US govt and consumer is too leveraged.



Yep. And all politicians do is keep kicking the can down the road...

[fkelly]

I'd echo the advice to put emotion aside and sell the properties. If you do a careful accounting of the annual costs of maintaining them, including properties taxes, insurance, etc. you are likely to have your eyes opened. That said, in the situation you describe even getting a complete accounting may be difficult.

One thing to beware of in addition to what's been said here. When you go to sell the property, any buyer is going to have an inspection done. And for various reasons, including I'm sure legal liabilities, inspectors are MUCH more particular than they were a decade back. If the place has not been carefully maintained they are likely to find ALL SORTS of issues.

Four years ago I sold my deceased Dad's townhouse in SOCAL. We started out replacing the carpet, repainting, doing some basic electrical fixes, patching up an atrium. Maybe 20 to 30k worth. Inspectors came in and found more electrical that didn't meet code, another 10k. Then a buyer backed out. Another buyer a month later, another inspector. Found mold in a wall. OOPS, containment unit required. A week of rebuilding the wall. Found signs of termites in the attic that the previous inspector had missed. Another 30k down the drain before the place could be sold.

And, if I had waited it just would have gotten worse.

And yeah, get a fee paid certified Financial Planner off the list, but also find a way to check their references carefully. Don't buy financial products that have built in commissions or a percent of assets.

[AngryScientist]

For work my team just did a study of the US consumer before the Financial Crisis and today.
- About half of Americans don’t have any retirement account (401k, IRA), and those that do, the median balance is $17k for 56-61 yr olds.
- About 38% of ‘middle income’ Baby Boomers expect to rely on Social Security as their primary source of income; before the recession it was less than 30%.
- Medical debt (from deductibles and insurance gaps) are the #1 cause of personal bankruptcy.
- Avg consumer debt is higher than the recession due to auto and student loan debt. The avg auto loan balance is around $31k and duration of almost 6 yrs due to buying more expensive vehicles (namely SUVs and trucks).
- Many state unemployment funds have not been replenished during the economy recovery; the next recession/high unemployment could be significantly harder.

And when you consider that trust funds for Medicare Hospital Insurance (HI) and Soc. Security OASDI deplete in 2029 and 2034, respectively, the American safety net is seriously under stress. With the tax cuts enacted this year, US government debt is 100% of GDP at around $21 Trillion and the annual deficit will be greater than $1 Trillion; in the not so distant future (especially with interest rates rising), interest costs on the debt will be the largest item in the annual Federal budget - larger than Medicare and SS.

I could go on about the structure of the labor markets, etc. but the outlook is kind of dire/dim. The US govt and consumer is too leveraged.

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Hugely interesting, thanks for posting these facts.

Question: when you say half of americans have no retirement account - who is included in the 100% number. is that ALL US citizens, including children, or 18+ people, or?

that figure is startling though, no matter what. scary stuff really.

[saab2000]

Hugely interesting, thanks for posting these facts.

Question: when you say half of americans have no retirement account - who is included in the 100% number. is that ALL US citizens, including children, or 18+ people, or?

that figure is startling though, no matter what. scary stuff really.

I got religion on retirement savings about 12 years ago and it was quite an eye opener. Since then I've been a huge saver and my chats with many folks indicates that most people put zero thought into this. At best, they're putting away a few percentage points into a 401k but many people opt out or don't opt in and many people cash out their accounts when changing jobs because they don't realize they are portable accounts from one job to another.

Additionally, most folks have no idea what's in their account and many are in high cost mutual funds that chip away enormous amounts of their savings in fees.

Since I figured this out I've tried very hard to contribute the IRS maximum every year, at the cost of not having a luxury car or fancy vacations. I hope it's worth it in the end.

This thread should serve as a reminder to all of us to be vigilant about our own savings and retirement planning. To use the old cliché, save early and save often.

[MattTuck]

I meant to respond to this thread when it was first posted, but got distracted.

A few things.

First, make sure his 401(k) and other financial holdings are allocated properly for his age/situation... meaning, as low risk as possible. In grad school, I did a project on a person's lifetime investment plan, and did a lot of monte carlo modeling. The biggest take away is that a big hit to your asset base right when you retire is incredibly hard to over come. You don't have time on your side to let it build back up, and you are drawing it down every month.

Second, I'd look into the possibility of borrowing money to renovate the older house, and then rent it out. Having a real asset that throws off cash each month, and that you can write off your expenses against could be worth it. If the rental market is not good, or there are other issues that make renting it out impossible, then obviously don't do that. Best option is probably to try to get him into a 1 or 2 bedroom apartment.

You said he is 65. No idea on his health, but I can tell you about my grand parents. They went through a fair bit of expense in adding an apartment to their house when they were about 82. The idea was that they could have either rental income from renting it out at first, and then when they needed more help, they could offer it for free to a nurse/home health aid in return for care. 2 years after it was completed, they were in assisted living, and 3 years after that, they were both dead. All this is to say that this is not the time to be making decisions with an expected payback of 20 years. Get him in a good situation for the time being. Get his monthly expenses as low as possible, and (as much as this is practical) limit the chances of unexpected expenses.

[veloduffer]

Hugely interesting, thanks for posting these facts.



Question: when you say half of americans have no retirement account - who is included in the 100% number. is that ALL US citizens, including children, or 18+ people, or?



that figure is startling though, no matter what. scary stuff really.


For clarification, it’s American households/families. The number was 53% had some sort of retirement account, according to the Federal Reserve Consumer Survey. This doesn’t include pensions, though. However, few companies offer defined benefit pensions any more and many pensions are underfunded (particularly in the public sector) and could see benefit cuts.

Some of this is due to a significant portion (51% of the private, non-farm workforce) of the workforce works in small businesses. Also, only 14% of employers offer a 401k style plan; nearly all large businesses offer a plan.

There’s a debate about whether states can mandate that employers offer a retirement plan or auto-enrollment into state-sponsored IRAs.

TD Economics and the Fed had data that showed that since 2004, the net worth (assets less liabilities) was negative for all households except the top 10% of income earners. Only the top 20% of income earners had regained all recessionary losses. Most of this is due to housing debt and falling prices, but also the increase in student loan debt, particularly with parents’ taking out loans to finance education.


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[veloduffer]

I meant to respond to this thread when it was first posted, but got distracted.



A few things.



First, make sure his 401(k) and other financial holdings are allocated properly for his age/situation... meaning, as low risk as possible. In grad school, I did a project on a person's lifetime investment plan, and did a lot of monte carlo modeling. The biggest take away is that a big hit to your asset base right when you retire is incredibly hard to over come. You don't have time on your side to let it build back up, and you are drawing it down every month.



Second, I'd look into the possibility of borrowing money to renovate the older house, and then rent it out. Having a real asset that throws off cash each month, and that you can write off your expenses against could be worth it. If the rental market is not good, or there are other issues that make renting it out impossible, then obviously don't do that. Best option is probably to try to get him into a 1 or 2 bedroom apartment.



You said he is 65. No idea on his health, but I can tell you about my grand parents. They went through a fair bit of expense in adding an apartment to their house when they were about 82. The idea was that they could have either rental income from renting it out at first, and then when they needed more help, they could offer it for free to a nurse/home health aid in return for care. 2 years after it was completed, they were in assisted living, and 3 years after that, they were both dead. All this is to say that this is not the time to be making decisions with an expected payback of 20 years. Get him in a good situation for the time being. Get his monthly expenses as low as possible, and (as much as this is practical) limit the chances of unexpected expenses.

The first point is a good one. My father lost about 40% of his retirement assets in the recession, as he was all in equities. For years I tried to have him reallocate but he was stubborn and was trying to get it all back through the equity market. To avoid drawing down, he took a HELOC on the house and used that to fund expenses until he fully tapped that out. The house needs repairs and with the HELOC debt on top of it, my parent’s have to move. We will sell the house “as is” as any prospective buyer would probably gut and reconfigure the rooms (e.g. open space).

I would also add one should hold cash (or in a money market) equal to 6-months of living expenses. This is to avoid the double whammy of having to draw downs your retirement accounts when the market is hitting lows.





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[BikeNY]

- About half of Americans don’t have any retirement account (401k, IRA), and those that do, the median balance is $17k for 56-61 yr olds.


That is scary! I don't know which is worse, that half of all Americans have no retirement savings, or that the median balance for those that do is only $17k for that age group.

If anything, it makes me feel a bit better about my 401k balance!

Back on topic: I agree, the first thing to do ASAP is get rid of the unused property.

Then you need to work on getting him to realize that his current house/property is just a financial drain now. Unless you or one of your siblings wants to buy it and live in it, it just doesn't make sense to keep it.

Taking the time to calculate the actual costs of the place may help, as others have mentioned. Make sure to include everything!

[kppolich]

If the family properties really mean that much to everyone involved another option is to have your father sell them to someone in the family who has a desire to own and keep them. That being said I would never do this. Someone will most likely take offense if a deal was given to someone else and this could turn into a bigger thing.


That being said, if I valued my parents house that much, I would probably buy it from them and they would continue to live there and take care of the place. I would handle the mortgage and it would be mine when they passed away. Again, I wouldn't do this because material things don't matter that much deep down for my family.


I would still:

1. Sell the other property in need of repair
2. Put that money into the family home
3. See if that makes the mortgage do-able for your dad.
4. Adjust from there.

[4Rings6Stars]

Thanks again for all the thoughts.

We have a family meeting planned with my dad this weekend to talk through a lot of this stuff.

I'm generally leading towards a combination of selling the second property and using a portion of the 401k to come up with some way to pay the mortgage on the family home. Whether that is via an annuity or just taking distributions as needed. I will also run the numbers (or ideally find a CFP who can help) to determine whether it makes sense to pay off a chunk of the mortgage with the proceeds of the second property or invest that money and use distributions and/or purchase an annuity.

[Ozz]

...Since I figured this out I've tried very hard to contribute the IRS maximum every year, at the cost of not having a luxury car or fancy vacations. I hope it's worth it in the end.

This thread should serve as a reminder to all of us to be vigilant about our own savings and retirement planning. To use the old cliché, save early and save often.

+1 - Best advice I got from an older co-worker (mentor) as to max out my 401(k) every year....I was probably 28 at the time...I wish I got it a couple years earlier....time and compound interest is the best friend of all young people!

[veloduffer]

+1 - Best advice I got from an older co-worker (mentor) as to max out my 401(k) every year....I was probably 28 at the time...I wish I got it a couple years earlier....time and compound interest is the best friend of all young people!



And if you can, save even more.

Healthcare costs are high and rising, and you need more service in your old age. The national avg assisted living cost is $3,750 monthly ($45k annual) and nursing home is $7,150 monthly for a semi-private room ($85.5K annual). Some 65% of nursing home residents are on Medicaid because they don’t have the funds to pay.


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[Ozz]

And if you can, save even more.

Healthcare costs are high and rising, and you need more service in your old age. The national avg assisted living cost is $3,750 monthly ($45k annual) and nursing home is $7,150 monthly for a semi-private room ($85.5K annual). Some 65% of nursing home residents are on Medicaid because they don’t have the funds to pay.


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We pay a pretty penny every year for long term care insurance...we've had it awhile...looked are redoing it a couple years ago and what they writing now does not even come close to what we have in benefits or cost...get it while you are young!

[veloduffer]

We pay a pretty penny every year for long term care insurance...we've had it awhile...looked are redoing it a couple years ago and what they writing now does not even come close to what we have in benefits or cost...get it while you are young!


LT Care insurance is a difficult financial decision. Premiums have been rising sharply, surprising many current policyholders. For some policyholders, the premiums have become too expensive and they have dropped the coverage/policy. And benefits on new policies have been greatly reduced.

Many insurance companies don’t write the business anymore, as they can’t estimate the costs and price it correctly. There’s a only a few big insurance companies that still have this product line.



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[54ny77]

i've found they typically jam it into a whole life policy package, can't buy it separate. at least from the folks i spoke with.


LT Care insurance is a difficult financial decision. Premiums have been rising sharply, surprising many current policyholders. For some policyholders, the premiums have become too expensive and they have dropped the coverage/policy. And benefits on new policies have been greatly reduced.

Many insurance companies don’t write the business anymore, as they can’t estimate the costs and price it correctly. There’s a only a few big insurance companies that still have this product line.



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[Ralph]

IMHO LT Care insurance is a difficult decision. What you are really insuring is the person's assets, not paying a nursing home bill. If the person has enough money in old age that they will always be able to pay the nursing home bill, no matter how much or for how long......then a LT care policy can help preserve some assets for a later generation.

But if that person has modest assets, that will be used up quickly in a nursing home, then IMHO a LT care policy is a waste of money. Medicaid will pay the bill anyway.

My mother in law did what she was supposed to do in life. She was a retired nurse (WW11) who saved her money all her life. She raised her kids, educated them, then cared for an ailing husband, who finally passed away. In her late 80's she still had more than $100,000 in savings, after using most to care for her ailing husband.

In her early 90's, she was in and out of the hospital a few times on medicare. The last time in the hospital she was advised to go to Rebab. So after her last surgery.....she went to rehab.....medicare pays for 20 days......then she still had to stay another month, then she became a permanent resident of a fairly nice skilled care facility.....at about $9800/month. So she spent her own money until she was broke and qualified for Medicaid.

She had purchased a LT care policy when she was about 65 years old.....premium about $2300/year....from John Hancock (a great company to deal with now BTW)......which would reimburse up to $100/day after a 100 day waiting period.

So now.....Medicaid takes her SS check minus $105/month for personal use, and the state takes her LT care reimbursement. If she did not have the LT care policy, the state would pay all her nursing home bill. BTW....The states don't pay but about 1/2 what a private person pays....so individual paying residents partially subsidize the Medicaid system. So while she still thinks she did the right thing in attempting to be able to pay her bill....she did spend more than $50,000 for the LT policy that was unnecessary....as we look back on things.

So just realize that you are unlikely to be able to afford enough LT care insurance to pay a full skilled care nursing home bill. And if a person is wealthy enough to be able to afford that kind of bill, a LT Care policy will help preserve some of the family assets. If the person is of more modest means.....then Medicaid (currently) will pay her bill. Most of the people where my mother in law live have their bills 100% paid by Medicaid after they surrender their SS checks. They have long since spent down their savings. They are not lazy, shiftless, or in any way not great Americans...as many are portrayed. Many are WW11 veterans. They did what they were supposed to do in life. They just ran out of money before they died. At almost $10,000/month, how many of us could pay our way for a long time? This system needs a permanent fix and a source of funds.

[54ny77]

nailed it, 100%.


IMHO LT Care insurance is a difficult decision. What you are really insuring is the person's assets, not paying a nursing home bill. If the person has enough money in old age that they will always be able to pay the nursing home bill, no matter how much or for how long......then a LT care policy can help preserve some assets for a later generation.

But if that person has modest assets, that will be used up quickly in a nursing home, then IMHO a LT care policy is a waste of money. Medicaid will pay the bill anyway.

My mother in law did what she was supposed to do in life. She was a retired nurse (WW11) who saved her money all her life. She raised her kids, educated them, then cared for an ailing husband who finally passed away. In her late 80's she still had more than $100,000 in savings, after using most to care for her ailing husband.

In her early 90's, she was in and out of the hospital a few times on medicare. The last time in the hospital she was advised to go to Rebab. So after her last surgery.....she went to rehab.....medicare pays for 20 days......then she still had to stay another month, then she became a permanent resident of a fairly nice skilled care facility.....at about $9800/month. So she spent her own money until she was broke and qualified for Medicaid.

She had purchased a LT care policy when she was about 65 years old.....premium about $2300/year....from John Hancock (a great company to deal with now BTW)......which would reimburse up to $100/day after a 100 day waiting period.

So now.....Medicaid takes her SS check minus $105/month for personal use, and the state takes her LT care reimbursement. If she did not have the LT care policy, the state would pay all her nursing home bill. BTW....The states don't pay but about 1/2 what a private person pays....so individual paying residents partially subsidize the Medicaid system. So while she still thinks she did the right thing in attempting to be able to pay her bill....she did spend more than $50,000 for the LT policy that was unnecessary....as we look back on things.

So just realize that you are unlikely to be able to afford enough LT care insurance to pay a full skilled care nursing home bill. And if a person is wealthy enough to be able to afford that kind of bill, a LT Care policy will help preserve some of the family assets. If the person is of more modest means.....then Medicaid (currently) will pay her bill. Most of the people where my mother in law live have their bills 100% paid by Medicaid after they surrender their SS checks. They have long since spent down their savings. They are not lazy, shiftless, or in any way not great Americans...as many are portrayed. Many are WW11 veterans. They did what they were supposed to do in life. They just ran out of money before they died. At almost $10,000/month, how many of us could pay our way for a long time? This system needs a permanent fix and a source of funds.

[Ozz]

IMHO LT Care insurance is a difficult decision. ..This system needs a permanent fix and a source of funds.

I agree....we just didn't want to have to rely on the state to take care of us.

Both our grandmothers had Alzheimer's/dementia and were in care facilities for 15+ years.

Also, I don't think all facilities accept Medicaid. If I have to be put in a facility, I would prefer it to be somewhere nice, and not have to bankrupt my family to pay for it.

With any luck it will be wasted money.

[Ralph]

I agree....we just didn't want to have to rely on the state to take care of us.

Both our grandmothers had Alzheimer's/dementia and were in care facilities for 15+ years.

Also, I don't think all facilities accept Medicaid. If I have to be put in a facility, I would prefer it to be somewhere nice, and not have to bankrupt my family to pay for it.

With any luck it will be wasted money.

My experiences were with my mother in NC, in a facility that did not accept Medicaid. So she bought into a retirement community early on, where she went thru the independent living, assisted living, then skilled care....stages before she died. Since she had put up some money when she first went in, the costs did not increase as much as some other options. The family was able to handle the cost all the way in a very nice place.

My experience in post above with my mother in law is in Florida. As you say, all facilities do not accept Medicaid, but my mother in law is in a place here in Central Florida that does.....along with private pay....and it's pretty nice......but not as nice where my mother was in NC....that was private pay only. BTW....I am not sure that "niceness" and fancy dining rooms, etc.....transfer over to quality of care. Had good luck with both kinds of places in that regard.

Good luck with your journey ahead. I take care of making sure my mother in law's bills are paid.....and that she continues to qualify for Medicaid. it's a constant battle. My wife does most of the visiting, and that's a pretty steady thing.

As has been said many times.....the sick and elderly get good care......but not much care for the care givers.

[Burnette]

Hope it works out for you OP, just wants to say that this is an awesome thread, I learned a bit here.

[donevwil]

Hope it works out for you OP, just wants to say that this is an awesome thread, I learned a bit here.

Same here, very informative.

Moved my mom into independent living a few years ago at her request.

[Ralph]

Independent living, and then assisted living, in a retirement facility......is way less expensive than being in skilled care. If a person (or couple) can live mostly independently, then live with some assistance in the stage called assisted Living, the cost is about 1/2 of skilled care. Hopefully....private pay people can stay until the end in assisted living.....or almost to the end.

My mother and now my mother in law need more than assisted living. They needed skilled care. And most LT care policies won't pay anything until one needs help with some "activities of daily living" such as taking meds, eating, dressing, showering, toileting, etc. And that is usually skilled care.

[echappist]

This thread should get stickied, not just for the personal financial advice but also for the scary realities of assisted living/ skilled care arrangements. The part about people eventually going on Medicaid for skilled care, just frightening. The country (and most of us) are nowhere ready to deal with the reality when the floor falls out for the social safety nets.

Before I socked away my first 15k into my 401(k) equivalent vehicle, I had already spent more on vehicles (by which I mean bikes). Many here can afford to do that, but looking back, that was an awfully dumb move on my part. Learn to live frugally, set personal finance goals and readjust those goals based on realities of life, and reward yourself with something nice after hitting said goals. That perhaps strikes a better balance.

[54ny77]

in my experience with a grandparent staying in a care facility, it is a huge indignity of having to wipe out a life's savings, even if modest, then be "allowed" to keep a couple of hundred bucks or so (netted from social security or pension) to buy such luxuries like toilet paper....

obviously our family helps supplement a multitude of personal expenses out of pocket.

yes i fully understand and appreciate there is an actual cost (and that cost, as described here in this thread, is HUGE) that has to be paid for a lot of services provided, and if one has assets then it is justifiable to use those assets to pay for the services. nothing is free.

but the hoops one must go through to even get in a decent facility (and i'm not talking luxury), let alone eventually reaching the point where you're technically destitute financially and ward of the state....to me is absolutely demoralizing.

elder care is such a huge topic and hits very close to home for our family. personally, i'd rather kick the bucket peacefully in my sleep at some point when i'm sorta old, rather than go into crippling old age in a nursing facility and wonder if someone's going to change my depends diapers.

[Ralph]

In Florida......it is helpful to do some advanced planning....years before the end. A surviving spouse (of a spouse on Medicaid in a nursing home) is allowed to keep the homestead home to live in, is allowed to keep a vehicle, and some of the couples financial assets. But this is where it gets tricky....and planning is necessary. Some of this depends on how the assets are titled.....and how long since the assets were retitled. There is a 5 year claw back period in Florida. So whatever planning you do....do it 5 years before needing it. And just because you can keep a vehicle and home, doesn't mean they allow you enough to maintain those things. The SS check and probably IRA and pension assets will be taken by the state of the person in the nursing home.

And.....if the home is worth over a certain amount, at death, the state might want some of the sale proceeds back from the estate. if too much of a couples assets were "hidden" in an expensive home or vehicle (to be sold later by the heirs as a way around the rules), the state doesn't really allow the surviving spouse enough funds to maintain and pay taxes on an overly expensive home. So some thinking and planning is necessary for couples of modest means......even if the surviving spouse gets to keep the home and vehicle and some cash. Imagine other states have similar rules.

[BikeNY]

Some very good information being exchanged in this thread, so thanks everyone. This probably isn't the right place to ask this, but I'm going to throw a question out. My father passed a number of years ago, and my mother is looking to move from NY to FL, sell her house in NY, which is paid off and worth probably 3-4 times what she will buy in FL. She is 75 and in pretty good health, but I'm starting to worry about all the stuff being discussed here, assisted living basically taking all of her money. So does it make sense to get her assets out of her name? I realize if something happened in the near future they will look back a number of years, sounds like 5 in FL.

We will be talking things over with a CFP as a family, but just wanted to get some info beforehand.

Thanks!

[54ny77]

Yes and be very mindful of the clawback period.

Talk with an elder care estate attorney for best tax and family planning strategies.

Some very good information being exchanged in this thread, so thanks everyone. This probably isn't the right place to ask this, but I'm going to throw a question out. My father passed a number of years ago, and my mother is looking to move from NY to FL, sell her house in NY, which is paid off and worth probably 3-4 times what she will buy in FL. She is 75 and in pretty good health, but I'm starting to worry about all the stuff being discussed here, assisted living basically taking all of her money. So does it make sense to get her assets out of her name? I realize if something happened in the near future they will look back a number of years, sounds like 5 in FL.

We will be talking things over with a CFP as a family, but just wanted to get some info beforehand.

Thanks!

[Ralph]

Some very good information being exchanged in this thread, so thanks everyone. This probably isn't the right place to ask this, but I'm going to throw a question out. My father passed a number of years ago, and my mother is looking to move from NY to FL, sell her house in NY, which is paid off and worth probably 3-4 times what she will buy in FL. She is 75 and in pretty good health, but I'm starting to worry about all the stuff being discussed here, assisted living basically taking all of her money. So does it make sense to get her assets out of her name? I realize if something happened in the near future they will look back a number of years, sounds like 5 in FL.

We will be talking things over with a CFP as a family, but just wanted to get some info beforehand.

Thanks!

When you get her to Florida, would suggest you buy an hour of time from someone who specializes in Elder Law....and go over those questions.

But based on what you say about her assets, doubt if she will qualify for any state help, so how you title things may not matter much. Lawyers like to do trusts, but for estates under (is it now $10,000,000 that is estate tax free?), don't think it's much necessary, especially in Florida you can add TOD (Transfer on Death) instructions to about any financial asset. Retirement accounts already have beneficiary instructions, financial accounts can have TOD instructions, A home can be titled however you want, A WILL can instruct, and the only items that would go to a probate court are those items not already transferred some way by a title or beneficiary. About everything my wife and I own is either in joint name with rights of survivorship or has TOD instructions. So maybe the only items from our estate that would go to a probate court W/B my bike parts, tools, and fishing rods LOL.

I'm not a lawyer.....so double check everything I say.

[54ny77]

Couple different ways to possibly skin the cat, but so many possible solutions are dependent upon the tax picture of everyone involved as well as expectations of roles/responsibilities, control, trust (not a trust entity, but rather trust in individuals involved), etc. As I mentioned before and as Ralph says, you need to see a very good elder law attorney who also specializes in tax issues or has a partner/colleague who has that expertise, and esp. one who is fluent in FL & NY law (and licensed to practice in both).

When you get her to Florida, would suggest you buy an hour of time from someone who specializes in Elder Law....and go over those questions.

But based on what you say about her assets, doubt if she will qualify for any state help, so how you title things may not matter much. Lawyers like to do trusts, but for estates under (is it now $10,000,000 that is estate tax free?), don't think it's much necessary, especially in Florida you can add TOD (Transfer on Death) instructions to about any financial asset. Retirement accounts already have beneficiary instructions, financial accounts can have TOD instructions, A home can be titled however you want, A WILL can instruct, and the only items that would go to a probate court are those items not already transferred some way by a title or beneficiary. About everything my wife and I own is either in joint name with rights of survivorship or has TOD instructions. So maybe the only items from our estate that would go to a probate court W/B my bike parts, tools, and fishing rods LOL.

I'm not a lawyer.....so double check everything I say.