Your Parents Moved from Their Own Home to a Senior Living Community: Should You Keep or Sell Their House?

Your Parents Moved from Their Own Home to a Senior Living Community: Should You Keep or Sell Their House?

It’s time. Your family has had a number of discussions about your parent’s increasing need for care and have come to the decision that a senior living community is the best choice. Just making that decision is a big step, but now there’s a lot of work to do to make it happen.

If your parent owns a house, one of the decisions you need to make now is whether or not to hang on to the house or go ahead and sell it after a move to senior care. Like anything else in life, there can be advantages and disadvantages. We’ve outlined some options below.

Good Reasons to Keep the House After a Move to Senior Living

Chances are, someone in the family has an emotional connection to your parent’s house. If letting go of it is a difficult emotional decision for any of you, then you’ll want to think through whether or not keeping it makes sense. Sentimental reasons alone aren’t always enough to go off of, but there may be other good reasons that make it worth it.

  1. It makes sense to keep as a real estate investment. Depending on where you live, selling could mean losing more money than you would gain by hanging onto the house for a while longer. If you know the real estate market where your parents lived is on an upward trajectory, then keeping the house may be a really smart financial decision. Even if someone from the family won’t be moving in, you could rent it out and make money on it while you wait until the right time to sell.
  2. Someone wants to live there. If one of the children or grandchildren wants to inherit the house, then there may be no need to sell it. It can stay in the family and continue to be used. Your parent can know the house they loved is still in loving hands (and visit sometimes) and you can all know there’s someone there to take care of maintenance and the costs associated with ownership.
  3. You have a good use for it. Making money and making the residence into a home for another family member are both good uses for your parent’s old house, but there may be other less obvious reasons that keeping it makes sense for your family.

Important Factors to Consider If You Decide to Keep the House

Whatever reasons have you leaning toward keeping the house, it’s not a decision you should make lightly. Make sure you’re prepared to figure out all the details that go with that decision:

  • Covering ongoing costs. Even if the home entirely paid off, this includes the cost of ongoing fixes and maintenance, home insurance and taxes.
  • Deciding on financial details. This can be the tricky part for a lot of families. Everyone needs to be on the same page of the script when it comes to paying for the expenses associated with keeping the house and how to use any profits from renting it out, if applicable. If your family is prone to disagreements, hanging onto the house may cause more trouble than it’s worth.
  • Figuring out who will live there (if anyone). If you’ll be renting the home, you have to do the work in finding good renters, which may take some time. If someone in the family wants to move in, you just have to make sure everyone in the family is okay with the arrangement. If you’re leaving it empty, you need to make sure someone stops by frequently to check on things and deal with the aforementioned ongoing maintenance.
  • Keeping up with ongoing maintenance. Someone will need to take on the responsibility of making sure the house stays in good condition. That means fixing things that break, keeping the yard maintained, etc. It’s a lot of work and can especially be hard if someone isn’t living in the home.

Good Reasons to Sell the House After a Move to Senior Living

Whether you feel an emotional connection to your parent’s home or not, for some families, there will be more reasons to sell it than there will be to hang onto it.

  1. Keeping the home would cost too much (and require too much work). As mentioned earlier, keeping the house will mean becoming responsible for a number of associated costs from home insurance and taxes to various repairs. This especially becomes an issue if no one is living there. Vacant homes can often fall victim to unexpected issues such as frozen or leaky plumbing, roof leaks, and a multitude of other concerns. Unused appliances and other mechanical features in a home can easily become compromised with lack of use.
  2. No one in the family lives close. If adult siblings live in different parts of the country, taking care of the house either while standing empty or acting as a landlord to renters is a lot harder when the individuals are not in the same city or even the same state. If your parent moves into a senior living community close to one of the adult children, then there is really nothing keeping anyone tied to the city their home was in. Going back just to deal with house matters will likely feel more like an annoyance than anything else.
  3. You want the money from the home’s sale to pay for senior care. Staying in a senior living community can be expensive. If the value of your parent’s home is high enough, selling the house may seem like the most practical solution in order to obtain the money you need to help pay for your parents senior living care. Selling now could pay off in how you’re taxed and is dependent on the profit made from the sale of the home. You will want to check your financial or tax advisor, but typically there are no capital gains taxes for up to $250,000 if you are single and $500,000 if you are married. This will hold true as long as the parent had owned the home for at least the last two years and treated it as their primary residence.

Ultimately, if no one in your family feels up to the task of dealing with the maintenance and costs associated with keeping the house, then selling it just makes sense.

Important Factors to Consider if You Decide to Sell the House

If you’re leaning toward selling the home, there are a few important factors you need to think about before making a definite decision.

  • The condition of the home. If it’s an older house and especially if your parent hasn’t been doing much work on the upkeep, then the house may not be in good condition to sell now. You’ll need to consider the fixes and upgrades that need to be made to attract a buyer, or decide if you’re willing to make less on the sale in order to forego the work.
  • The local real estate market. Before you decide to sell, talk to a local real estate agent. You need to find out what the home is worth now and what the expectations are for what the market will do in the coming years. If you’re hoping to use the sale to pay for assisted living for instance, then you need to understand what you can expect to make from the sale of the home before you can be sure the math will work.
  • The work of selling. While a good real estate agent can take a lot of work off your plate, you’ll still need to clear your parent’s things out of the house, make the recommended upgrades and do the associated paperwork. Someone in the family will need to be prepared to take those tasks on.
  • Your parent’s readiness to sell. At the end of the day, the home still belongs to your mom and/or dad. Senior parents may need a little psychological room to give up “their home” in stages and renting out the property can be temporary solution. If they’re not ready to give up the house yet, you should try your best to respect that. Although, if you simply can’t afford to hang onto it after they move, you may not have a choice.

Deciding whether to keep your parent’s house or sell is ultimately a personal decision that depends on your particular circumstances and feelings and those of any other family members that have a stake in the decision.

Managing Your Parents’ Finances

Managing Your Parents’ Finances

Managing Your Parents’ Finances: How to Cover the Bases

At this time of year, many folks have either met with their financial consultant or tax expert for their income tax filing or are at least in the process of gathering the necessary documents for that process. Household finances and budgets can tend to be at “top of mind” during the next several weeks up until the April tax filing deadline. If you are in a situation this year where you not only have to be concerned with your own household finances but now suddenly find yourself responsible for your parents’ finances as well, it may seem a bit daunting.

Managing your own money isn’t easy under the best circumstances, so it’s not surprising that most people feel overwhelmed when it’s time to step in and take over the management of their parents’ finances. But as is the case with any large project, what feels impossibly complex taken as a whole, becomes much more doable when separated into manageable segments. By separating the process of managing your parents’ finances into sequential steps, you’ll find yourself far less stressed. Listed below are eight steps that can help you move forward.

• Locate all accounts and documents

Your first responsibility as your parents’ financial manager is to do some investigating. If your parents are competent to discuss their finances, get a head start by asking them Five Basic Questions about their finances.
Once you’ve determined appropriate answers to your inquiries, start going through files as you’ll want a clear picture of every asset they have. Start with savings and checking accounts, retirement accounts, investment accounts, and pensions. But that’s just the beginning. You’ll also want to locate the paperwork for your parents’ mortgage (if applicable) and any other real estate holdings as well as the account statements for their credit cards. You should also find out about every insurance policy your parents have in place, including life insurance, annuities, and long-term care insurance. Discuss where they store valuables, and whether they have one or more safety deposit boxes. And…don’t forget to ask your parents if they’ve ever purchased or inherited any individual company stocks. (It’s often surprising how many seniors have original stock certificates squirreled away.

• Establish Power of Attorney

If you’ve been designated to help your parents with their money and assets, you may already have power of attorney (POA) for finances. If not, you’ll want to get this taken care of. Having Power of Attorney allows you to access your parents’ financial records so you can act on their behalf. You’ll need this designation to research account balances, transfer funds, pay bills, write checks, make deposits and withdrawals, and open safe deposit boxes. In other words, with a financial POA designation, you can take care of your new responsibilities without having your hands tied.

• Gain access to all accounts

In addition to Power of Attorney, or sometimes in place of this designation, banks and other financial institutions often have their own forms that establish access to your parents’ accounts. Once your parent signs these forms, (he/she may or may not need to be present, depending on the institution’s rules), you can write checks, make payments and withdrawals, check on account balances, and do all the other things an account holder does.

• Compile a list of debts

The first and most important of these would be the mortgage on their home. Even if it’s determined that it’s already paid off, you should if at all possible see if there is documentation that you can have in hand that 100% verifies nothing further is owed. If there is still an outstanding balance, it behooves you to find out the amount. Down the line, it may become important to understand how much equity your parents have in their home, in which case you’ll want to have the home appraised so you can compare the appraisal to the amount still due on the mortgage. Next, check if there is an equity line of credit on the house, or any other debt/lien attached to the house. If your parents have taken out a reverse mortgage, it’s especially important to understand the associated terms.

You’ll also want to make sure you have all the information you need about your parents’ credit cards and any other outstanding debts. Follow up thoroughly on any creditors’ notices you find in the mail, such as bills that have gone to a collection agency. Because it may be hard for your parents to talk about credit card debt and other debts, it may be best to contact the companies directly to find out what is owed.

• Explore Social Security benefits

It’s likely that Social Security payments make up a significant portion of your parents income, so it’s important to understand how much that benefit is. You also may find it’s worthwhile to explore, or at least ask, whether your loved one(s) is getting the maximum benefit they are entitled to. The rules surrounding Social Security are complex, particular those governing widowhood and divorce and…there are cases in which someone qualifies for more than they are receiving. An eldercare attorney or financial planner can help you with these issues.

• Make sure documents are up to date

Life is long, things change, and older adults are forgetful. Combine these three factors and the chances are high that some of your parents’ documents and policies are no longer current. Review your parents’ wills and trusts…is everything up to date? Take the time to go over the list of assets included in the trust. Is everything there that should be? All too often, people have moved money and opened new accounts, then forgot to amend the trust to include them. Check designated beneficiaries on all accounts. Is the right person (or persons) listed?

While it’s not a financial document, take this opportunity to review your parent’s Advance Health Care Directive as well, since it’s very important to make sure it still reflects your parent’s current wishes, including the right person as health care agent. If you discover that your parents do not have an Advance Health Care Directive, you are strongly urged to have those documents put in place. An Advance Health Care Directive helps loved ones, and medical personnel make important decisions during a crisis. Having an advance directive in place ensures that your parents’ wishes regarding their health care are carried out, even when they are unable or incapable of making their wishes known.

Next, you’ll want to perform more in-depth research into the terms of insurance policies, loans, and other financial vehicles such as annuities. Do the terms of insurance policies make sense for your loved one’s current situation? It’s not unusual to discover that the terms and costs of life insurance policies no longer make sense for this phase of your parent’s life. If so, your parent may be paying too much for benefits they no longer need.

• Check on taxes

You might be surprised at the number of older adults who one day no longer remember to pay their income or property taxes. And those mistakes can cost you dearly in penalties. In fact, too many years of unpaid property taxes can result in a house ending up on the auction block. Look for tax returns from the last few years and if you don’t find them, call the IRS. Your local assessor’s office should have your parent’s property taxes on file.

• Review investment strategies

If your parents have money invested in mutual funds, stocks, or other investment vehicles, now is the time to take a look at the investment strategy being employed and make sure it best suits their needs at this time of life. Since your parent is no longer saving for the distant future and may need that money soon, this typically means money should be moved away from riskier investments with a longer return, e.g. from stocks into more conservative investments such as bonds. Ultimately, your investment goal is to make sure the money is there when they need it.

5 Most Important Financial Questions to Ask Your Parents

5 Most Important Financial Questions to Ask Your Parents

1 . “Do you have a Durable Power of Attorney (POA)?”

The Durable Power of Attorney is considered one the most important personal legal documents for any older adult to have. Along with a healthcare proxy, it will give whomever your parent designates —whether it be you, one of your siblings, or someone else — the power to make financial and legal decisions (or, in the case of a healthcare proxy, to make medical decisions) if your parent is incapacitated. Without a Durable Power of Attorney in place, you’ll have to go to court to get appointed as your parent’s guardian. That’s the last thing you’ll want to have to think about in a time of crisis, and it’s a notoriously complicated and messy legal process. With a durable Power of Attorney and healthcare proxy in place, you can seamlessly make decisions and access accounts on your parent’s behalf without getting the courts involved.

2. “Have you updated your will, insurance, and retirement account information recently?”

Many people never take another look at their insurance policies or investment account beneficiary designations after they sign the initial papers, but both should be reviewed every year. Beneficiary designations — who will receive the proceeds from an account if the policy or account holder dies — can be affected by any change in family circumstance, like the birth of a new child, a death, or a divorce. A yearly financial and insurance review also provides a good moment for your parent to review their asset allocation and evaluate whether they have enough or too much life insurance (if the children are grown and the spouse has other funds on which to live if there is a death, for example, your parent could think about cutting back on the amount of life insurance they carry to save money on annual premiums).

3. “Do you have plans or insurance in place to pay for long-term care if it’s needed?


Even if your parent is in good health today, they’ll likely need some type of long-term care eventually —and cost can be substantial. Costs for nursing home care can range from $8,000 – $10,000 a month depending on the state you reside in. Typically, neither health insurance or Medicare cover any of these expenses, so your parent should have some type of plan in place to pay for such care should it be needed. Long-term care insurance is a good option and can be added to existing life insurance policies, possibly at a discounted rate. Medicaid also covers some nursing home costs, but your parent should consult an elder law attorney now to find out if they qualify for Medicaid. If not, the attorney may advise spending down assets — literally. He or she can advise you about the methodology of spending down without gifting or transferring assets until your parent meets the strict income requirements necessary to qualify for Medicaid. Without a plan in place to pay for long-term care, you and your siblings will be on the hook to pick up the cost unless your parent has very deep pockets. Another excellent resource to discuss the whole access to Medicaid is your county’s Aging & Disability Resource Center (ADRC). They have counselors on staff that help guide you through the process as well.

4. “Who’s advising you?”

Although most adults are fiercely private about their finances and want to maintain their independence, it’s important in case of an emergency that you know how to contact your parent’s attorney, financial advisor, accountant, and insurance agent. At the same time, as your parent ages, you can keep an eye on whether their financial and legal advisors are scrupulous, objective, and well-versed in elder financial issues, with no vested interest in selling specific products. Getting the details on exactly who is advising your parent is a good way to protect him them from scams as well as to ensure they have funds in case of an emergency.

5. “Where is all this stuff?”

If your parent has a stroke or heart attack, the last thing you’re going to want to worry about is what his/her social security number is, what health insurance is in place, or whether the mortgage has been paid. That’s why it’s important to sit down before a crisis hits and find out what kind of bill-paying system is in place, the status of any insurance, and where all the important papers are kept. Although some parents may balk at sharing this kind of personal information, you should provide reassurance that you don’t have to see any private papers now — you just need to know where they are to ensure financial well-being in the event they are not able to take care of themselves.

What Are Advance Directives and Why Are They Important?

What Are Advance Directives and Why Are They Important?

What happens if you experience a catastrophic accident or illness that leaves you unconscious or unable to communicate? How do you make sure your wishes about your medical care are known? Having an advance directive is the answer.

By planning in advance, you can get the medical care you desire while relieving loved ones of making major medical decisions during moments of grief or crisis. Advance directives help reduce confusion and disagreements about medical care.

Many people think advance directives are only for the elderly. However, unexpected end-of-life situations can happen to anyone at any age. It’s important for everyone to prepare an advance directive. There are two kinds of advance directives:

A Living Will

Living wills are legal documents. They state your wishes regarding the care you want to receive if you are incapacitated.

When you create a living will, consider the importance you place on being self-sufficient and independent. You’ll need to decide what medical interventions are acceptable and whether you want your life extended if there is no hope of recovery.

• A living will typically covers situations involving:
• Resuscitation
• Mechanical ventilation
• Tube feeding
• Dialysis
• Comfort care
• Organ and tissue donation
• Donating your body for scientific reasons

Medical Power of Attorney

A medical power of attorney is also known as a health care proxy. This option allows you to name another person, such as your spouse or adult child, to make medical decisions for you if you are unable to do so. A medical power of attorney is not the same as a power of attorney that allows another person to handle your financial or legal affairs.

Choosing the right person to act on your behalf regarding important medical decisions is vital. Even if you have other documents covering aspects of your care, not every situation can be anticipated. The person you choose to represent you should meet the following criteria:

• Willing to discuss medical care and end-of-life issues
• Ready to adhere to your wishes and values
• Able to be your advocate if disagreements over your care arises

Important Points to Remember About Advance Directives

• States regulate advance directives differently. Click on following End-of-Life Planning – A Guide for Wisconsin Residents to view specific end-of-life information as it is outlined for residents of the State of Wisconsin.

• Advance directives can be modified, updated, and canceled in accordance with state law.

• Individuals with residences in multiple states may wish to have advance directives in each state, but you will want to research this scenario thoroughly. Will Other States Accept My Living Will & Health Care Power of Attorney?

• Ensure your health care proxy has updated copies of your advance directive.

• Give your advance directive to your doctor and other relevant medical care providers.

Advance directives are an important part of health care. No one can predict when unexpected medical situations will happen. Ad advance directive helps loved ones, and medical personnel make important decisions during a crisis. Having an advance directive in place ensures that your wishes regarding your health care are carried out, even when you’re unable to make your wishes known.